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I have owned rental real estate for four years and have 14 units in Michigan, 1,200 miles from where I live. These units are the main reasons I was able to reach Financial Independence since their returns have been very nice.
But even before I moved halfway across the country I needed a property manager. I was working at a very demanding career and couldn’t afford the time commitment of active management.
So I found an awesome property manager and life has been good ever since.
This post will detail the process I used to find my property manager and how you can do the same.
But first, a bit of background…
The plan was perfect. My real estate mentor was going to help me find some great rental properties. I’d buy them through him (he was a real estate agent too) and he’d manage them for me. Easy-peasy.
Once we got our first place he told me he didn’t really have time to manage it for me. Uh-oh.
Thankfully I had some time to find an alternative. The place needed a few months of remodeling to get up to snuff. This gave me time to find a property manager. That’s the good news.
Related: Estimating Rental Property Expenses.
The bad news was that I had never hired a property manager before and had absolutely no idea how to do it.
My mentor served as a sounding board but he wasn’t really familiar with the property management options in our area since he managed his own places. So I was pretty much on my own.
Fortunately, as a business executive, I had hired hundreds of people. Over two decades of filling jobs, I had developed a system to find and hire good people. I applied those same principles to find a property manager.
I started with a list of what I was looking for in a property manager. Of course, there were the basics of being able to do the job and manage the various tasks associated with it (finding tenants, managing tenants, maintenance, etc.), but there was more. I wanted someone who I thought was:
With this set of criteria, I was off to find my manager.
I then started a three-step process to help me find the right person:
I began to network with those I thought might know and recommend property managers — my mentor’s contacts in real estate, colleagues at work, friends I knew in the real estate business, people at church, business contacts, etc. It seems like I asked everyone I knew for a recommendation. Of course many had as much idea of where to find a property manager as I did, but I played the odds. Now and then I’d get a hit and a recommendation.
Of course many had as much idea of where to find a property manager as I did, but I played the odds. Now and then I’d get a hit and a recommendation.
Doing this, I was able to identify ten possible property managers over the course of a couple months. Though some were of admittedly questionable ability, I left them all on my list unless I deemed them to be an absolute disaster.
My first contact was by email. This alone eliminated three of them. Two took too long to get back to me and one’s response was so bad that it turned me off from the get-go. Email was to be our main form of communication once I hired one of them, so they had to be prompt, responsive, and professional at this stage.
Email was to be our main form of communication once I hired one of them, so they had to be prompt, responsive, and professional at this stage.
Next was the phone interview. Here I was looking both for my criteria (as best I could over the phone) as well as also judging professionalism. Of the seven who remained, four were eliminated for one reason or another.
At this point, I could see that you have to weed through a ton of property managers to actually find a good one.
Finally, I met with the three remaining in person. Two were one-man businesses who managed several properties each.
Of the rest, one just didn’t seem trustworthy and another one was good — pretty much what I was looking for at this point. The third option was a very professional company with 1,500 units under management. They knew their stuff for sure, but would they give me the service I wanted?
This was a key consideration for me because I didn’t want to just be another number on their record books.
By the way, I asked a TON of questions during this phase. The list is almost endless. I learned a great deal as well, not only about property managers but the business itself. So the effort was very educational for me and it was well worth the time and effort I put in.
Once I had it down to two companies, I asked them each for five references. The big company had no problem giving me five and all of them rated the company highly (as you might expect).
The other guy gave me three (which was all he had) and his references were fine but did reveal a few concerns. You’d be surprised what even hand-picked references might tell you when asked nicely.
He wasn’t eliminated completely, but he certainly wasn’t as perfect as I originally estimated.
I was weighing the two options when fate intervened. I bought a second property and had a total of eight units (Rules to follow when buying rental property) and it just so happened to be managed by the large property management company I was considering.
At this point, they saw I was going to have more than a unit or two (plus they wanted to keep the units they had under management) so they invited me in again — this time to meet the president and his key executives.
I got the royal treatment and had access to everyone to ask all the questions I wanted. And they had good answers. Furthermore, the seller of the property spoke very highly of them — and he wasn’t even on their initial reference list.
In the end, I went with the larger company because:
In the end, a combination of a good process and luck helped me find a great manager.
Now that I’ve been with the company for four years, I can say it was absolutely the right decision.
I lived in that city a year before I moved and was able to work closely with them. All of my initial impressions were reinforced. They were and have been a vital part of my rental success.
Once I moved away their services and breadth of experience were even more important. I couldn’t have done it without them.
So, that’s my process. I’ll stop by this post several times over the next few days and answer any questions you may have. I’m happy to help however I can.
I started out as a full-time student, over $60,000 in debt, and didn't even have a full-time job (two part-time jobs).
Learn the system I used to create a 6-figure passive income.
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