Over the years I have had many people asking me, in my opinion, what is most important in investing in real estate? Everyone always assumes their price, location or time in the market correctly. After more than 1,300 transactions in the real estate market mainly to investors around the world, I can say without a doubt that property management is the most important part of the investment puzzle. In real estate, you can make a mistake in price, choose an iffy neighborhood, or hire a bad contractor and still be profitable. Hire a bad property manager and you can lose your shirt from day today Do not misunderstand me, location, price and rehabilitation are huge factors in investing in real estate and are very important. With a rightful real estate management company in place, though you can make a mistake or experience down the turn in the market or in the neighborhood and continue to realize a good return on investment through positive cash flow. A good property manager protects your investment in the long run.
Of course, the next question is “how to find a good property manager”? Here are some tips for choosing a good management company. This does not necessarily mean that it is not necessarily you; someone else will manage your property.
Get a referral. Usually, when you invest, there are people in your peer group or sphere of influence who invest in the same market you are or know someone who also invests in the same market. Ask them, whom they use, whom they have used and why they have changed. Find out what they like about their management company, but more importantly, find out what they don’t like about them. A management company can do a great job of placing tenants, but it lacks communication; without communication, you are sunk! Access to the management company is very important for the investor’s peace of mind. There is nothing worse than leaving a message or sending a few e-mails, and all you hear is a cricket in the background. At first, you assume that they are busy and will soon reach you. After some time, however, investors start to wonder why nobody reacts and then panic appears. Did the tenant leave? Did the management company run away from my money? DID MY HOUSE BURN DOWN? In general, none of the above is true, but a good property manager will respond within 24 hours of the inquiry.
Ask the management company that you are considering doing business with references. Ideally, I believe you want 5 to 10 references from previous clients as well as current clients who have been with the management company for more than 1 year. If they are not ready to provide you with any previous customers, pass them on to them. When you get references, we invite you. Ask them the same questions about what they like and don’t like.
Download a list of policies and procedures from the management company. You need to know how they handle real estate marketing for tenants, late payments, evictions, service calls, inspections, bookkeeping, payouts to owners, etc. A good management company will have this information easily accessible.
Find out if the management company is licensed in the state in which you are investing. Most states require that the property manager is a licensed real estate agent and are accounted for with their state property council. There are many “property managers” out there that are not, but have taken the opportunity to increase their income while investing is hot. Although they may be cheaper, don’t use non-LICENSE MANAGEMENT MANAGEMENT! You will not be able to appeal to the police.
Find out what software the management company uses. There are several good property management programs that are Web-based, such as Buildium and PropertyWare, which give the property owner the login of the portal, so you can access your account online 24 hours a day. A good real estate management company will record all calls to tenants, maintenance problems, payments, delays in notifications, etc. to your computer program. This is beneficial for both parties because most of the investor’s questions or concerns can be solved by logging into the program and looking at the information at your fingertips. This eliminates many phone calls between the property manager and the owner. It also helps the landlord to narrow down questions or concerns by addressing specific information on their portal.
The reason for the investment is to earn money. You need to know when the money comes in, where it is for, what your expenses are, and when you receive payments. Most management companies agree on accounts for 1 month in arrears. Rents collected in 1 month are paid the following month for the simple fact that not all expenses are paid in arrears.