Taking a momentary detour from our Investor 101 Series, today we’re talking about what happens after you find the perfect deal and leave that settlement table a proud new property owner.
It will make or break your real estate investment performance.
After all your hard work to find and acquire your property, don’t hand over management to someone (or a team of someone’s) without these key tools.
1. Communication style and responsiveness.
Communication: Whether it’s phone, text, email, or good old fashioned written USPS delivered paper mail, you need to be able to communicate with your PM, and trust that they are communicating with your tenants, vendors, and any other relevant parties in a timely manner. Set expectations on channels and timelines up front.
Style: How does your PM communicate with you? Are they professional and courteous in their communications? Do they answer your questions fully and follow through on their commitments with integrity? Are they clear in their written communication, or does style and tone leave something to be desired? This is how the PM will represent you to your tenants.
Responsiveness: If you’re terrible with phone calls but respond to texts in 0.25 seconds, make sure your PM knows this and responds to you just as fast (or within acceptable-to-you bounds of accommodation). Similarly, identify with your PM the expected response times for phone calls, texts, emails, emergency/non-emergency situations, and how and when your PM will contact you for anything requiring owner approval before proceeding with a repair or situation remediation.
We human beings can be … different from day to day. We have our quirks and unique response mechanisms given the scenario in play. People rent for a variety of reasons, and your PM will be the front line of response to tenants – or prospective tenants – often in the midst of the highest stress events of their lives.
To manage this with due care and composure, your PM needs to know when and how to zig, zag, or foxtrot depending on the circumstance. Your rockstar PM must have within their toolkit enough awareness and emotional intelligence to respond appropriately to any given situation.
The counter-balance to this adaptability is, of course, enforcing the legal contract signed between all parties. Your PM cannot be so understanding as to leave your tenants with no accountability. Which brings us to:
Not only to you, the property owner, but also to the tenants, and to the terms of the contractual relationship agreed to and signed off on by all parties. As your representative, your PM must represent integrity and accountability.
The building under management is not only four walls and a roof, but represents the safety and sanctuary of *home* to its inhabitants. It also represents the owner’s livelihood and legacy to their own family. Particularly when contentious scenarios arise, your PM must understand this core truth at the heart of the entire operation, and be able to illuminate this to both sides.
How to vet a prospective PM for this quality? Any PM worth their salt and technological savvy will have an online presence and reviews. Check it. Ask about difficult scenarios when interviewing, and how they were ultimately able to work out a resolution. Ask for – and actually follow up with – existing or previous client references.
In addition to these fundamental qualities, your rockstar PM will have business tools to maximize operational efficiencies for managing your property. Specifically:
Whether Apple or Android, Mac or PC, Quickbooks or Excel, your ideal PM will have a system that works for them. Ask for an overview. This will not only familiarize you with their operations, but also confirm that the team member you are interviewing will actually be doing the work (or identify when and where in the process flow there is a handoff to a different team member).
Depending on your PM’s size, type, and scale of portfolio, there are a variety of property management software systems available. Ask how and why they went with their specific platform, and if there are any major pain points that you should be aware of, as an owner.
For our operations, we invested in a full-solution property management system which integrates the complete lifecycle of property management. Marketing; Leasing; Document Creation, Management, Templates and eSignature; Communications (Email and Tenant/Owner Portal Conversation); Inspections, Maintenance and Work Orders; Calendaring; Rent Collection and Owner Disbursements; Accounting; Bill Pay; and Reporting are all integrated.
By streamlining the functions of business operations, your PM will have more time, energy, and focus to devote to the other aspects of their responsibilities, including tenant relationship management, proactive property maintenance and improvements, and keeping up with industry changes to ensure legal compliance and awareness of any future impacts to your investment.
Our solutions: Propertyware. (Property Management) G Suite. (Business Operations) RingCentral (Business Communications, Call Routing) ShowMojo. (Marketing, Immediate Automated Rental Inquiry Responses, Self-Showings)
5. Third-Party Services and Subcontractors.
Whether a large property management company or a single-person operation, there is going to be the need to outsource certain services. Ask your PM how and when they use in-house vs. external service providers.
When a tenant calls with a running toilet or leak – is a plumber the first call, or does staff try troubleshooting on the phone with tenants first, then perhaps a handyman visit, and only when all lower-cost options are exhausted call upon a fully licensed and insured (and costly – at $75-$150/hr, depending on the job and your location) plumber?
These response scenarios will quickly impact the NOI of your investment, so best to know upfront what your PM’s standard operating procedure is. As real estate investors first, we founded our property management function to oversee our investment performance.
We approach repairs and maintenance with a clear grasp of their impact to the investment performance overall, and take every step to find the most cost-effective repair in any given situation. When called for, however, a verified and vetted professional is well worth their cost.
To keep our vendor list up to date, we regularly screen, test and cultivate relationships with service providers for all aspects of property management. We also make every effort to consolidate services across our portfolio to economies of scale price discounts for our owners.
Our solutions: Membership Associations: National & Local Association of Realtors, National & Local Apartment Association, National Association of Residential Property Managers, Local Chamber of Commerce, Local Trade Organizations.
Add to all this a healthy dose of resilience and appreciation for all the team members involved, and you have yourself a truly rockstar property manager.
I hope this article has helped identify how key a role your property manager plays in your overall real estate investment strategy, and some considerations when evaluating either your current or a new PM relationship.