We recently had a happy tenant in Kansas City ask for a referral to a property management company in another city. We don’t have an office in the city where they are relocating, so the best way to find a reputable property management company is to use the NARPM website. (NARPM stands for National Association of Residential Property Managers.)
We’ve seen plenty of “property management companies” that are actually run by one person in a truck. And we’ve seen property management companies that could really use some education and certification. NARPM is a great measuring tool for vetting a property management company. To learn more about the many ways NARPM helps property management companies to do business ethically and professionally, visit this page on the NARPM website.
Below we’ve listed five things that can have a direct, financial impact on the owner of a property. These things tell you a lot about how a property management company does business. The way property management companies do business will affect not only how much money their clients receive, but also how much “turn” they have on a rental property.
Not being attentive to renter emails/calls/requests will aggravate a renter. This is a factor in causing them to want to leave at the end of the lease. Having a renter move out is always the most expensive time for an investor, so the longer the renter stays, the better the financial return to the investor.
Having maintenance calls go to a call center where the property manager is not really minding the gate is a problem. Example: We had a renter get really mad that we had charged her a late fee (she had paid her rent one day late) so she jumped online and within 15 minutes had submitted 11 separate work orders for mostly silly, incidental things.
Had the property manager not been paying attention, those 11 work orders would have gone out to 11 different vendors with 11 different service call fees.
Ask the company how they market their properties. Unfortunately, most property management companies don’t market properties like we do.
Most companies wait until the property is totally vacant, clean and ready to go before they’ll start showing it to prospective renters. Doing it that way results in a national average of 31 days of vacancy between renters. Every time a renter moves out, a new renter must be found.
We use our own leasing agents to show the house while the renter is still living there (messier in practice, but better for our clients.) Our average number of days of vacancy between renters is only seven days. (Saving our clients almost a month of rent every time a renter moves out.)
Do they screen prospective renters? If so, what do they check?
Most property management companies do some sort of screening (usually credit report and income verification) but some do it better than others. When we screen prospective renters, we do credit reports, background check for criminal activity, evictions, landlord collections, bankruptcies, income verification, judgements and more.
Ask them what their eviction rate is. Many will be between 7% and 12%. (If they don’t know what their eviction rate is then that should be a big, waving red flag.) Our eviction rate is less than ½ of 1% because of all the screening criteria we have in place.
These are important things to ask about when choosing a property management company. And remember, a great place to start learning about property management companies to consider is your local chapter of NARPM. The Kansas City chapter of NARPM is located here.