Return to site

Choosing a 3rd Party Property Manager (video)

What You Should Look for Prior to Hiring your Next PM

· Property Management,Multifamily,Asset Management

What We’ll Go Over

  • What is a 3rd party property manager (PM)
  • Why you need a *good* one
  • First steps to finding PM
  • Vetting your potential PMs
  • Finally hiring your top choice

What is a 3rd Party Property Manager

  • A professional management company hired by the ownership entity that oversees day to day operations
  • Local to the property, functions as “the boots on the ground”
    • Could be in addition to your own teams boots on the ground
  • Have systems in place for managing a specific asset class
    • i.e. apartment complexes, office buildings, storage, retail, etc.
  • The main contact between the tenant and the asset manager and/or owner 

Why you NEED a Great Property Manager

  • As the ownership/asset management group you need someone nearby the property you can rely on and trust
  • They screen your tenants which are your best or worst partners, make sure they become your best!
  • They work with contractors to keep your property in good shape
  • They turn units in order to bring in awesome new and paying tenants
  • A great PM will save you TIME, MONEY & FRUSTRATION 

The Property Manager’s Top 5 Tasks

broken image

1. Rent

    1. Setting the rate
    2. Collecting it, pursuing late fees when required and adjusting rates to market


  1. Sourcing and screening tenants
  2. Move ins and move outs
  3. Evictions when necessary
  4. Handling work orders and emergency repairs

3. Property

  1. Handling all general maintenance, unit turns and capex projects
  2. Contract services such as trash collections and landscaping

4. Finances/Reporting

  1. Management of all funds into and out of the property
  2. Supplying reports to owners
  3. Keeping the asset management teams budget

5. Employees

  1. Management of any employees such as leasing agents and maintenance people

Steps to Finding a New Property Manager

This can be a long process, don’t cut corners as a great PM is critical. If you are replacing a PM you likely have a good reason, use this reason to drive future questions you have.

  • Speak with your network
    • Your network is one of your greatest assets. Learn from them, ask questions, find out who they like and dislike in the market. HINT – this goes for contractors, mortgage brokers, lawyers, etc.
      • Ask your networks network for referrals
    • Ask the broker or person/group you bought the property from
  • Look online
    • Basic searches
    • Read and ask in forums such as BiggerPockets

How to Vet Out Potential Property Managers

  • Set up a phone / video call with them and ask questions (see next slides)
  • Check out any reviews that might be online but take them with a grain of salt
  • Ask for references 
    • Call the references
    • Ask good questions
    • Understand that the reference given to you might be golf (maybe ski) friends with the PM
  • Review your findings with your entire team, everyone has a different perspective
broken image

Questions to Ask PMs

The Basics

Experience is key to being good at anything. There are a lot of moving parts that need to be accounted for, asking basic questions can weed out some of the competition

  • Do you have experience managing similar size and quality assets?
  • How many units in the area do you manage?
    • If they don’t manage in the area be very sure they have a solid plan to break into the area and are uber competent in their home markets
  • How many units do you own?
    • Will these be direct competition to your units?
  • Do you have any certifications or are you a member of any trade associations?
  • What software do you use?
  • Is there one or multiple points of contact?
  • How often can you have scheduled meetings?
  • How close is the main contact to the property?

Fees and Costs

The PM is the most important team member and can literally be the difference between a successful or unsuccessful property and they deserve to be compensated properly

  • What's your fee structure?
  • % of GSR or GCR
    • 4-10% is typical and based on property size and class
    • Additional fees
  • New leases
    • Varies from $0 – 1st months rent, on average
  • Renewals
    • Varies from $0 – half months rent, on average
  • Advertising
  • Mark-ups
    • This is common on maintenance and contractor work
    • Typically is based on cost of the job and is a sliding scale

Procedures and Playbook

  • When a company can show you a well documented playbook you can have more confidence in their ability to do what they say
  • Request information on their procedures and policies
  • These items should be documented clearly and concisely for repeatability
    • Should go into all details of the business
      • Communication with ownership
      • How maintenance is handled
      • All aspects of renting units

Turns / Vacancies 

Vacant units are your biggest expense, what does the PM do to minimize this?

  • On average how quickly does it take to make a unit rent ready?
    • How long from rent ready to rented?
  • Who takes care of the turn?
  • How are emergency repairs handled?
  • Where do you advertise vacant units?
  • How do you screen tenants?
  • Background check
    • Credit check
    • Call employer and previous landlords/PM company
    • Do you share this info with the owner if requested?
  • Do you keep a list of qualified tenants for future vacancies?

Software and Reporting

For asset managers data can drive decisions and allow us to make future calls to save money or drive revenue. Certain software and reports that the PM can provide makes a big difference when making decisions

  • What software is used?
  • PM software
    • Ex. AppFolio, Yardi, Buildium, RealPage
  • Rental software
    • Ex. Rently
  • How often will owners/asset managers be sent reports?
  • Do you have web access?
  • What reports can be shared?
    • Rent Roll
    • Owner Statement / P&L
    • Delinquency
    • Work Orders
  • Can tenants pay online?
  • Are work orders taken online?
  • Do you offer direct deposit of owner distributions?

Make the Final Decision

  • At this point you have do your research and feel confident that you have found out everything you need to know about multiple property managers
  • Compare all of the data you were able to collect
  • Speak with your team and come up with a decision 

If you've never had to hire a third party property manager before, hopefully this gives you a better idea of what they are, what they do and what kind of questions you need to ask. If we missed anything or if you have any questions, leave them in the comments section and let us know what else we can do to help.