How To Find A Good Property Manager

Hiring a property manager for your investment property is an important decision.

A good property manager will attract better tenants, increase the property income, and overall increase the value of the property.

Hiring a bad property manager will do the opposite and cause you a lot of headaches.

Watch as Brian Alfaro talks about hiring a property manager for multifamily properties.

Transcript:

Chris Bounds  00:02

The management aspect is definitely and probably the number one. Once you get a deal or consider getting a deal, I have to say it’s not that difficult.

Brian Alfaro  00:12

Sure.

Chris Bounds  00:12

You can rely on boots on the ground, especially if you’re working with brokers and agents who knows what they’re doing, and they have experience in finding a good deal and analyzing a good one out of state. That part actually newest to me. It seems like it’s the easiest portion. It’s the management portion that can take your asset and make it worse, or make it really rewarding for you and lucrative over time. How are you solving that problem when you’re miles away from your market?

Brian Alfaro  00:41

Absolutely. Property management is so important and service is talking about it. But you know, we are not the ones to self manage, especially in the size of assets that we’re looking at typically 60 to 70 doors on the small side. But even if you’re looking at single family houses, or you’re looking at small multi families, I would encourage everybody who’s listening to find themselves a really good property manager. The term that we use in our industry in multifamily.

Specifically, if somebody that’s boots on the ground, whether that’s somebody who’s going to be a partner with you who can then network and find that local property manager, or you can just find that property manager who has an established footprint there. You know, you want to ask really smart questions, you want to make sure that you’re vetting them, “How long have they been there?” “How many units do they manage?”

You want to make sure that if you’re buying small multifamily that the operator and the property manager can actually handle those small multifamily because there’s a lot of single family property managers who does an awesome job in the single family space. And they think their model is scalable and transferable. “We’ll manage your eight unit”. “We’ll manage your 10 unit”. And what you’ll find out is that it’s very different. It sounds the same like, “Oh, what’s 125, 126?” “What’s the big deal?” It’s very different. It’s when you go above four units and you’re in that five space, now you’re in a commercial type transaction and everything is NOI based, right?

Valuing these assets based on capped rate that’s a different conversation or use that property managers aren’t used to having. Asking those types of questions depending on what you’re buying is really important. And you want to make sure you do your due diligence on these property managers because at the end of the day, you just hit the nail on the head, Chris. You can buy a great deal.

It can look great on paper, the numbers can work really well. But if you put a bad property manager on that property, it can kill the deal. And it’s kind of the other way around, too. You can buy a deal that’s maybe you know, looks a little thin. It’s still a good deal but if maybe it’s a little thin and they can exponentially grow that property and really make it a really attractive asset so that when you’re refinancing or if you’re finally- you’re exiting, and you can really capture that value on the back end.

Chris Bounds  02:38

Atleast from the multifamily commercial space, it seems like that’s the biggest game right now, not so much the huge uplifts, although those opportunities, they’re always going to be there. But as finding the property that it is a good asset. Well run, actually has good numbers. But there’s some opportunity there that the owner for whatever reason, maybe they’ve capped out.

They’re not going to put the extra capital expenditures in, that’s going to take it from or take it to the next level, merely meant opportunity for the next owner to bring their unique perspective, their plan of action is going to take it from- I don’t know-, you know, 500,000 NOI to 625 where exponentially grows the valuation, for sure if you do that over a three or five year period. That good deal today is an even better deal five years from now.

Brian Alfaro  03:32

Absolutely. And you want to find property managers that not only understand what you just said, but also  we try to find one who are very open to- but you could have a whole another panel on this leveraging technology, right? This industry is starting to change especially on the property management side. And I think tenants in particular are starting to look for what we call “resort style amenities”.

So, even if you have a duplex or fourplex or a 10 unit, do you have smart technology in the home? Are you offering Wi-Fi or their nest thermostats? What’s the quality of customer service that you’re really offering? And you want to make sure you align with a property manager that’s not just fixing toilets and collecting checks. A lot of people do that, right?