If you are reading this article, I am going to assume you are an investment property owner who has never hired a property management service or you have wanted to review them more critically. Vetting a property manager is tricky: you must quickly build a trusting relationship with a stranger to protect your livelihood.
As a professional manager who has worked with the largest rental property portfolio owners in Canada, I can assure you that not all property managers possess the same ability nor commitment to shared long-term success. In this article, I will review investment property owner considerations as well as define what makes a good property management professional. My hope is this article will help you determine if hiring
a third-party property management service is right for you.
The first thing an owner needs to consider is what their goals are for the investment property. When these are clear the expectations on a property manager become more accurate and realistic. Ask yourself: are you hiring him or her so you can move on to other things in life, solve an immediate problem or upgrade the property? Different property management businesses will offer different service arrangements: it is important to take the time to talk to someone in their organization to confirm if their offerings meet your
goals. No one wants to pay for a service they are not using to the fullest. A good property manager is a realist: he or she should clarify expectations to meet specific goals and is ambitious to seek new achievements for the investment property.
Real estate and property management success is dependent on people-to-people interactions and effective communication. There is no structure for a management company that excludes people skills.
An automated email reminder can reach a tenant in arrears but it cannot convince the tenant to pay or move out. When dealing with a property management business are you talking to a single professional or multiple voices? Are the contractors they bring in constantly doing a poor job?
Every real estate management professional has their unique way of dealing with others but their results determine if their way is effective. A good property manager communicates exceptionally and accepts responsibility for the outcomes of their interactions.
Let us run through a common scenario where our first two points are violated and what the results end up being. A landlord hires a property management service to lease a vacant unit for a commission. The management service successfully leases as quickly as possible at a rent rate similar to the price of the previous tenant. The property manager promptly receives the commission for a job done then moves on. The new tenant stops paying rent after a few months. What went wrong? Even with scare details, obviously the property manager ought to have analyzed the potential new rent price and carefully taken
the time to market then achieve it. Speculating on missing details: how thorough was the property manager in screening the tenant? Was the tenant’s ability to pay known? While the landlord should be skeptical of screening practices, the property manager ought to have communicated their practices in advance and any red flags on a potential tenant as they arose.
Entering the rental market is difficult: opportunities are abundant, laws are ever-changing and the parties involved are often unfriendly. While pursuing investment property goals in this environment, it is easy to become confused and seek answers from any free source in order to make progress. Oftentimes, free advice does not capture the whole story or is missing alternative solutions. A property manager’s job is to manage expectations for the parties he or she is interacting with; including yours! A good property manager demonstrates integrity and competence by advising on what you need to hear versus what
you want to hear.
Ideally, your investment property requires little capital to maintain and barely any effort as the income flows in smoothly. Should this occur, are you certain you have maximized your potential gains and minimized losses? As with running any business, continuously evaluating your time and cost commitments is necessary. In the opposite scenario, the investment property is losing money and taking up all your time as problems pile up. A third-party property management professional provides value in both scenarios
and will navigate through any uncertainty. A good property manager recognizes problems and opportunities early then acts with urgency and creativity to capture nuanced solutions.
Let us run through an unfortunate scenario where the property management service competently demonstrates themselves. A landlord has hired a property manager to complete turnover move-out arrangements before leasing. The previous tenant showed little respect for the residence by living in filthy conditions: they never cleaned and allowed a pest infestation to form. The property manager advises that a pest control company is needed to administer a minimum of two treatments which will result in at least
two weeks of extended vacancy. The landlord is distressed and fears that the property will not be leased for longer. The property manager arranges a strict schedule for treatment dates, a follow up inspection to confirm pests are exterminated, other maintenance and a marketing plan. The landlord has avoided legal risk if he or she had leased a unit with pests to a tenant while also reducing their losses.
SOLO has fascinating articles and reference materials on increasing revenue streams and potential opportunities, legal updates, rental market considerations and more. I would encourage readers to check out these resources and join the growing community.
If you have questions about this article or are ready to engage a professional property
management service, check my website for contact information at cadetpropertymangement.ca, LinkedIn or follow me on Twitter @PropertyCadet.
