If you're thinking of adding real estate rental properties to your investment portfolio, you'll want to find an experienced property manager to oversee the properties for you. Many property owners don't understand the time and effort it takes to manage a rental property. Here's a quick tutorial on points of consideration:
Qualifying a Licensed Real Estate Property Manager
Your property manager should be a licensed real estate broker in your state. Ask friends and family for a referral, search Yelp or Thumbtack or contact a local real estate company and ask for someone who specializes in rental property management. Some of the key attributes you should look for in a property manager are:
1) That she/he currently owns or has owned his own rental properties.
2) That she/he has experience and has been managing properties for a minimum of a few years.
3) That she/he has experience managing the type of properties you own, whether it be condos, attached properties or single family homes.
4) That she/he has successful systems in place for finding tenants, qualifying them, signing leases, collecting rent, dealing with problems and emergencies and so on.
5) That her/his property management fees are reasonable and in line with the industry.
Support During Your Purchase
A licensed real estate property manager is qualified to help you find the right rental property to purchase. They should be able to help you calculate your return on investment as you'll want a profit once your mortgage and other expenses are factored in. Once you close on your rental, they should be able to list your property for rent in the local multiple listing service. She/he should then have systems in place to qualify and secure the tenants.
Property Management Fees
A property manager typically charges a commission equal to one month's rent to list the property for rent, process applications, qualify a tenant and get a lease signed. After that, the fee to manage the property is typically between 8 to 12 percent a month, with 10 percent being the average. So, if a property rents for $1,500 per month, the average monthly fee to the property manager is $150 per month.
Property Management Systems
An experienced property manager will have systems in place to collect applications, pull credit and background checks, qualify tenants, offer advice about which tenants to approve and more. To remain in compliance with Fair Housing Laws, he should have an application for rent that every applicant uses. He should have a legal lease with addendums that every tenant signs. He should pull credit and background checks from the same credit bureaus and background check companies. He should not discriminate. Your property manager should find you financially qualified tenants to rent your properties.
Additional Responsibilities
Your property manager should collect the monthly rent from the tenants, have access to industry professionals to deal with problems or emergencies with your rental properties and take care of and schedule services for these problems and emergencies. Your property manager should have a system in place if rent is late. She/He should schedule property maintenance, such as furnace and air conditioning clean and checks, to maintain your home's value high.
