Once again, we are talking about the Seattle rental market and how to invest our money in real estate. The expert who is leading us through this series on Seattle property investment is Enrique Jevons, who manages the Pacific Northwest office for Mynd Property Management. He and his team are responsible for more than 850 properties, and we’re growing fast.
More important than Enrique’s professional experience is his personal experience. He is an investor himself, and he personally owns 73 properties. At one point, he owned more than 100 rental homes; he recently sold a percentage of them. He invests in both single-family homes and multifamily buildings, so he has a wide amount of experience that stretches over the last decade.
We’ve been asking him to weigh in on some of the questions that real estate investors ask us most frequently. These are questions that come from new investors, experienced investors, and people who are not renting out homes yet but are considering a real estate investment.
Today’s question is how investors should go about choosing a professional property management company.
You may be rolling your eyes because of course, we ARE a property management company. But, when it comes to helping investors choose the right property manager, we aren’t biased. Why? Because we care about the industry as a whole and we care about the Seattle community.
Mynd Property Management belongs to the National Association of Residential Property Managers or NARPM. This means that we are focused on servicing our clients with the highest possible standards. But, it also means we work hard to make sure the industry wins. We are interested in elevating the way property managers deliver their services.
When a bad property manager is out there (and believe us, they’re out there), they erode the trust between rental property investors and property managers. That hurts all of us. So, we don’t want you to feel locked into a position where you have to do everything yourself just to avoid a terrible property management experience.
So today, we are asking Enrique – as an investor – to tell us how he would go about choosing a property management company for his rental properties.
Think About the Long Term Relationship
First, look for a company that you can imagine working with for a long time. You want to establish and develop a long term relationship with this company. It’s similar to hiring an employee or a general contractor. When you hire an employee, you want to check a few things off your list. You want to make sure they are outstanding people. You want to make sure they have a relevant background and experience doing what you need them to do. And, you want to make sure that person is an overall good fit. You’ll ask some questions and do some checking to make sure you can work with that person for the long term.
Make sure you can get along with your property manager on a personal level. There are all sorts of management companies with all sorts of excellent property managers. You don’t have to feel a personal vibe with someone when they’re just collecting rent and responding to repairs. But, when it comes to long term planning and being on the same page in terms of processes and systems, you have to know that you’re going to be able to work well together.
Be Willing to Provide Direction
You also want to hire experts who are already willing to show you the processes they follow and the systems they have in place. You don’t want to tell a property manager how to screen a resident or where to find a vendor. You want to trust that your property management company already has that covered.
However, when we say it’s similar to hiring a general contractor, it’s because you want to be able to tell your property manager exactly what you need and expect. If you don’t, there’s no telling what you’ll end up with. For example, if you’re hiring a general contractor to do work on a property you buy because you want to flip it, don’t just hire the contractor and then wait for them to get to work. You have to show them the plans and you have to periodically check in to see how the work is coming and if they need anything to get the job done.
Otherwise, you can show up on the last day of the work, when you believe the project is completed, and when you walk in you’ll see that the wrong carpet is on the floor or a mystery paint color has been put on the walls. The general contractor is not completely to blame in this scenario; when there’s a lack of direction they’ll do what they think you wanted. Or, they’ll do what they have always done with other properties.
We’re using this example to demonstrate how important it is that you can work well together and communicate. When something goes wrong, it’s not always because you hired the wrong person. Sometimes, it’s because you didn’t provide enough direction. So you need to focus on the combination of hiring the right person and providing the right direction in which you want them to go.
For an employee to be successful, you have to check in once in a while. This is a partnership. You cannot be successful without your property management company, and they can’t be successful without you.
Considering Property Management Pricing
When you’re evaluating the people you may hire to service your properties, the price will eventually play an important role. Just make sure you know what you’re looking at, and when you compare different price structures, make sure you’re making valid comparisons.
No one wants to be gauged. But at the same time, you will get what you pay for. With property management, you’re hiring people in the service industry. You have to look for value rather than simply low prices because this isn’t a commodity. You aren’t buying a car or an appliance.
Because you’re hiring a set of professionals for an ongoing service, there are a lot of different components to property management, and all of them have their own value and pricing standards. You may think you are paying for a full set of services, and you may not realize until it’s too late that there is a whole list of essential services that are not included in your property management fee.
Make sure you know what’s included and what’s not included when you’re talking about property management prices. If you’re working with a property management company that has all-inclusive pricing, you might pay a lot more every month than you would with a property management company that allows you to pick and choose the services you want.
Transparency is critical. Find out if you can add items on that aren’t included and if you can, what that cost will be. Take eviction guarantees as an example. Many companies will have a full eviction guarantee that ensures you will not ever have to pay for an eviction, no matter what. Other companies will have a limit that they’re willing to meet. So, maybe they’ll pay up to $2,000 of your eviction costs. Both of these services are very different. So, ask your property manager if they guarantee against evictions and if they do, what that means exactly. Will you still have to pay for eviction or for the placement of another resident, even if you’re enrolled in a protection plan? Maybe eviction protection isn’t offered at the price range you’re looking for, but you might be able to get it for an additional price. Discuss it with your property manager. All potential management companies should be willing to have this discussion.
As you begin or finish your search for a Seattle property management company, remember these three tips that come straight from a professional investor:
Treat the process like you’re hiring an employee. You’re looking for someone you can work with for many years. Check in with how they’re working and whether they’re meeting your expectations, but then get out of the way and let them do their work.
Be mindful of pricing. There are bound to be deviations from company to company. A property manager might advertise one fee but in reality, other things that you need will end up costing you extra. Before you sign a management agreement, make sure you understand the full menu of services they provide and their associated costs.
One final tip we have is to look for pricing on the company’s website. If the pricing isn’t there and it’s not published and transparent, someone is hiding something or they don’t care enough to share the information with you.
Now you have an idea of how to pick a property management company.
We’d love to earn your business. So, if you have any questions or need any help, please contact us at Mynd Property Management.