"To be, or not to be, that is the question." Who would have thought Shakespeare was talking about property management when he wrote those famous words. The answer to that question is nobody. But, just as Prince Hamlet was bemoaning the pains and unfairness of life, every active real estate investor struggles with whether to deal with the pains of self-management, or to consider the professional alternative. Then, once you've decided, how do you find the right one? As such, I get asked about property management all the time.

I bought my first duplex back in 2004, and I'll never forget the excitement of doing this first deal. I bought the property right, and the cash-on-cash return was 36% in the first year. With a return like that, I was hooked, and obviously feeling ambitious enough to self-manage the property. I figured it would be a good learning experience. Fortunately, I didn't waste any more than a year on it, and this was the first and last property I ever managed on my own.

The most common hesitancy I hear from other investors is the unwanted expense of hiring a property manager. After all, how hard could it be, right? You should just save yourself the money and do it yourself. Wrong!

A genuinely good property manager will not only save you money, but proactively push market rents as well. This is a tough pill for many DIY-type investors, and I can understand why. When I first engaged a property manager, I felt "nickel and dimed" when I would see pass-through fees and unexpected charges show up on my financial reports. In actuality, my property manager was running the property better than me. The lease was being enforced, and both preventative and corrective maintenance was getting done. After a short stabilization period, the financial performance of my portfolio was living proof I was better off being hands-off. Plus, it allows me to focus my energy on finding my next deal.

With that said, not all property managers are created equal. Regardless of how many properties you own, you need to be able to recognize the difference between the wimps and the winners when it comes to choosing a property manager.

So, if you've chosen the path of professional management, here are some screening questions to help you identify a capable manager who cares about your property as much as you do....

EXPERIENCE

How many owners do you currently work for?
How long have you been managing properties?
Are you an owner too?
TIP: I have personally found managers who also own rental properties to be the most effective, because they know what's its like to be in your shoes.

LOCAL MARKET KNOWLEDGE

What is the state of your current rental market?
- What are the demographics of the renters in the area?
- What are the vacancies rates in the area?
- Is there any seasonality to this area’s rental market?
What types of properties get the highest rents in your area?
What are the most marketable features (washer/dryer, a/c, fireplace, garage, covered parking, cable TV, etc.)?
- What are these features worth (rent premium, lower vacancy)?
  TIP: Once you've chosen a manager, run the numbers to determine the return you can get by improving your property and increasing rents with some of these suggested features.

MARKETING & TENANT SCREENING

How do you market properties?
What are the typical marketing costs? Who is responsible for these costs?
How long is your typical marketing time for a property?
Do you personally show properties?
How do you screen potential renters?
TIP: Pay very close attention to the answer to this question. You don't just want a manager who sticks a warm body into your property. A solid manager does credit and a criminal background check at a minimum. Some managers will also contact the current/prior landlord for a reference on their payment history.
May I see your standard lease agreement?
TIP: It's probably not a good sign if they are using a basic lease that they picked up at an office supply store. As a example, my property managers lease package is nearly 40-pages long. It not only includes the lease, but contact information, legal disclosures, rules and regulations, move-in inspections, move-out instructions, and more.

SERVICES & FEE STRUCTURE

What are your fees?
- Lease-up/place a tenant?
- Monthly management?
- Do you mark-up maintenance expenses, or do these pass-through?
- Other?
Do you bill the tenants for utilities (when applicable)? How are the charges determined?
Do you have a full-time maintenance staff? What is their experience?
What process do you follow when rent is late?
TIP: This is another extremely important question. You want a manager who knows the local laws and knows exactly what to do when rent is late and if eviction becomes necessary.
Are you willing to walk my property and give me your assessment (rent projections, marketing time, recommend some features to get me better rents)?
What do you offer that other property managers in the area do not?

The above list is certainly not all inclusive; however, it will get the conversation started and headed in the right direction. I highly recommend interviewing at least three different property managers and begin with them by asking the same set of questions. Being able to compare each one side-by-side provides the valuable context to make the right choice for your business.

ABOUT THE AUTHOR
Mark Walker has been an active real estate investor since 2004, so he brought a wealth of knowledge with him when he founded Luxmana Investments in 2011. Though he started out as a part-time investor—holding a full-time job in high tech—he fully transitioned into his passion of real estate investing in 2015.

Mark now dedicates most of his time helping new and experienced investors build wealth through residential, multifamily and commercial real estate.

Learn more about Mark and Luxmana Investments at www.luxmana.com.