Selecting A US Property Manager - US REAL ESTATE TV

Uploaded by USRealEstateTV on 21.02.2012

In terms of the spectrum of dealing with people in the US, it goes something like this, so,
if that’s your timeline, this is when you start looking for a property, this is when
you buy your property, now pretty much everyone else you deal with is in this component here.
Property managers are here. So, in relative terms, these people are absolutely crucial
to your investment decision. So, pretty much do not cut corners in terms of how you go
about screening your property managers. So, you need to understand and I’ve read so
much about bad experiences that people have had with property managers. Having a good
property manager can mean the difference between making a profit or losing your mind. They
are our watchdog for us while we sleep here in Australia. So, if there are any hassles
or problems that occur with your property, you want to know that they are dealt with
in a way that you would expect. So, the main game of property investing is to be able to
have as little input into the management in everyday working operations of your property
and still get a reasonably good return from it. So, the best way to do that is to make
sure that you’re very clear about your expectations and that you communicate those in such a way
that the property manager there understands them. So, what I would say to you guys is
that absolutely take your time when it comes to selecting a property manager. The clearer
your expectations the easier it is to screen. What I’ve actually included in the back
of your folders, I think there’s a print out, is some of the things that you would
consider asking a property manager before taking them on. I’d also be asking for recommendations.
In a number of US cities they have what’s called Landlord Associations, and these are
a really good resource for actually asking for who are the good property managers in
town. List out for your property manager what you expect them to do. One of the big hassles
in the US is that because of the cultural differences, property managers actually feel
that they’re there to look after the rights and interests of tenants, so, because it’s
a relatively, sounds odd, but it’s a relatively young industry in terms of its evolution,
it hasn’t become competitive enough for them to really have raised the standard in
terms of service. There’s a lot of people out there who just don’t understand what
we as Australian investors expect. Here in Australia, if we have property manager that
works for us and we’re not happy with, we can pretty much change it pretty easily, like
it’s not a big deal. But, over there it’s a bit more of a hassle, and it’s a bit more
time consuming. So, the things that you might want them to do are things like collect the
rent, find tenants, do all the repairs, handle disputes if there’s any kind of evictions
that needs to be taken care of, maintenance. So, what I’d be doing is making sure that
you do research on your perspective managers as well. So, look at their website, ask other
landlords, and look for local web resources so as independent comments and you know the
US is just such a prolific country in terms of use of the internet, so generally if you
Google a particular agency, you’ll tend to find some information as far as comments
or feedback. I’d also be interviewing the perspective manager, and I know that sounds
really odd, but in the same way as we screen other professionals, it’s probably most
important that we talk to our property managers as if they’re going to be a long term member
of our team. You want to make it official, so, there are a number of property managers
in the US who won’t even bother to ask you to sign a contract. You want to make sure
you sign a contract exactly detailing all the terms that you’ve agreed to, you also
want to include the length of time that you’re going to agree to work together, the date
for renewal, and any contingencies in case you want to decide you want to break that
contract. In term of other suggestions, I would be absolutely insistent on monthly statements,
I’d be asking for references, and I’d also possibly be even saying to them, look
can you provide me a template of your monthly statement just to prove that it actually exists,
you don’t want to get lip service from someone saying “yeah yeah yeah, you know, we report
monthly”, and then just receiving nothing or having to really hammer them for it. So,
when we’re screening, we need to ask them questions like how do they stay in touch with
people, how do they report, how do they screen their tenants, what other services do they
offer, do they have many overseas investors that they look after, you know, would they
mind if you spoke with other clients, how do they manage repairs and maintenance, how
and when are they going to remit money to you, what sort of staff turnover do they have,
how big is the team, what are their fees, what’s included in their fees, and that’s
really important, how familiar are they with landlord-tenant laws, what kind of accounting
do they use, do they have insurance, are they a member of any regulatory board and is the
fee negotiable, always ask that to everyone. So, you know you get a sense of quite a long
list there and really you want to add to that and adapt that depending on what your particular
concerns are. The number one reason for Australian investors exiting the US market is because
they haven’t been able to find a good US property manager. If you look at forums and
things, people talk about reports of dishonesty or thefts, double diffing, unauthorized expenditure,
failure to communicate, and communication problems, but all of those things can be avoided
if you just take that time to screen people properly. Now, I’ve already touched on this,
but in the US, property managers do culturally tend to favor the tenant, so what you want
to do is find yourself a property manager that is more aligned with the Australian mentally
that they’re here to work for us. Australian property managers are very clear that they’re
here working for us and that we’re the ones paying their fee, and they also get that when
we’re not happy with them that we can get rid of them pretty quickly. So, as you can
imagine, peace of mind actually rates extremely highly for Australian investors, particularly
because it’s not that easy for us to jump on a plane and be there within a really short
space of time. �