by Peter Nelson | Feb. 19, 2015
Homeowners and property owners are faced with this decision every day — how to shop for a property manager and select the right one. It is a daunting task. Here you have a property worth $1/2 – 1 million dollars or more and a owner is expected to hand over what may be his/her single largest asset to a total stranger. It doesn’t have to be so difficult.
Don’t ask about the fees!
Most owners start out wanting to know what the fees are because that is a pretty easy gauge to measure against. I mean, it doesn’t take a rocket scientist to figure out that 8% management fee is better than 10%, right? Well, as it turns out, there is absolutely no correlation between the fees charged by a PM firm and their level of service. Hmmmm…on to Plan B.
Here’s the real question you should be asking!
It is pretty widely agreed that the most important task of any PM firm is tenant screening. So this should go to the top of the list. A savvy owner will ask first and foremost “What is your tenant screening process about, and what kind of success rate do you have with it?” That will usually weed out a few of the companies, although the second part of that question will usually be spun in such a way that it will be difficult to verify. So be careful of the answer.
And here’s why!
The difference in price between one of those high-priced firms and the bargain basement PM firm amounts to $100/month max for most properties. That amounts to about a $1,000/year savings. But the damage that can be done by a bad tenant will exceed that by thousands or tens of thousands of dollars! So don’t get caught spending $10,000 to save a thousand!
About Peter Nelson
Peter Nelson is CEO and Founder of Full Service Property Management, along with his wife, Ruth. He has been managing property since buying his first rental in Boise, ID in 1985. Over the years Peter and Ruth have had to shop for a property manager 8-9 times over the years to manage their rental portfolio…with some very mixed results! Now that he is a professional property manager, Peter has seen both sides of the owner/PM fence and can help other owners avoid costly mistakes when selecting their next PM.