The Top 3 Questions You Must Ask a Property Manager Before You Hire Them

Updated: Mar 7

I’ve been syndicating multifamily properties for years, and I’ve watched other syndicators and investors make the same mistake over and over again: they try to manage their properties on their own. I’m sure you’ve heard the expression “penny-wise and pound foolish,” and it’s never been more accurate when describing someone who is trying to save money by managing a multifamily property by themselves.

It’s ironic that one would think they’re saving money by taking on the property management on their own, because most often they end up leaving money on the table. There are no economies of scale involved, and frequently new owners aim for rents that are below market value without realizing it. An experienced property manager will know area rents, and they’ll also know how to lower expenses and increase property income. With those facts in mind, why would anyone take on the property management themselves?

Choosing the Right Property Manager

I live in California, but I invest in and syndicate properties in Texas, Georgia in Florida. Logistically, it simply wouldn’t be humanly possible to manage all of my properties on my own. Instead, I hire one of the strongest property managers in each market. They have an in-depth knowledge of competition, rents, concessions, and a variety of other factors that go into properly managing a multifamily property.

A strong property manager will know how to screen out problem tenants, as well as act as a strong point of contact for tenant problems and concerns. Because of his or her experience, they will help to decrease tenant turnover by resolving any problems quickly and effectively. This is particularly important because many times tenants refer their friends and business colleagues to the property if they’re happy with the way the property is managed and their problems are resolved.

Another job that a strong property manager can take on is the marketing. They know the market, they understand the competition and what the property’s strengths are, and they use that knowledge to effectively market available units. They may use social media, ads placed in apartment guides or other forms of advertising, but they know how to leverage the property’s assets.

One area investors often overlook is how a property manager can save them money on maintenance and repair costs. They have built relationships with vendors over the years, and know which ones are reliable and cost-effective. Effective property managers continually review existing maintenance contracts like landscaping or painting, for example, and solicit competitive bids to ensure that the costs are in line with other companies.

As you can see, there are many different ways that the right property manager can positively impact your investment. I’ve found that finding the right one starts with asking the right questions.

Question #1: Do you have appropriate experience in my exact business plan?

There’s no question that many qualified property managers have extensive experience managing multifamily properties. The bigger question is, is their experience directly related to your business plan?

I specialize in investing in value-add properties. This is a unique business plan that involves many different strategies to bring out the full value of the property, with the ultimate goal of increasing the monthly income by raising rents. It may involve renovating, repairs, and upgrades to bring the property to a competitive level with other properties in the market that would justify a rent increase.