Everyone wants passive income. That’s one reason investing in rental properties is so popular. However, while rental properties can be profitable, it’s not as if there’s no work involved in running them. It takes time and energy to screen potential tenants, collect rents and arrange for repairs and maintenance. Hiring a property manager is one way to deal with the challenges of owning rental units. But that task presents challenges all its own. What’s the best way to find an affordable, trustworthy property manager?
The answer is screening and management. It’s important to ask the right questions before hiring anyone. Property owners should inquire about a candidates’ experience. For example, it’s important to know how many units a potential manager has handled before. It’s also important to gauge their understanding of non-discrimination laws. If someone is violating fair housing laws, landlords can face expensive fines. Finally, whether the potential manager is a company or an individual, it’s important to come to an agreement about property management fees. Some companies use a flat rate. Some individuals will seek an apartment of their own and other considerations.
All told, experts say there are dozens of questions a potential manager should be willing to answer before a landlord takes a chance on them. In addition to the basics, a property manager should understand the importance of renter’s insurance and require it. They should be willing to provide information about occupancy rates in the other buildings they’ve managed. Ideally, they’ll be able to show that they’ve been an asset to other owners. A successful property manager will have some flair for showing apartments and getting people to sign on the dotted line.
Once a management team is in place, the landlord still needs to periodically ensure that everything is running smoothly. Some landlords have needed to fire managers for violating policies or attempting to institute cash fees with tenants. As a property owner, it’s a good idea to adopt the maxim, “trust but verify.” Tenants and property managers can be key to a successful investment and a sound stream of monthly passive income. In the wrong circumstances, however, they can be a liability, not an asset. It’s possible for landlords to lose their investment to mismanagement and bad tenants.