I wondered, “What am I getting myself into buying an apartment building?” My two years of training at the University of Chicago in business administration didn't include one minute of instruction in setting rents, showing apartments, or evicting non-paying tenants.
What was I going to do?
Many in my peer group have moved into investing in office buildings, retail, warehouse, and industrial real estate ownership. I often hear relief in their voices when they express how easy management of a warehouse or industrial property with just one tenant is.
When you acquire a property you plan to hold, you can pay a management company to do it for you.
How to Hire a Property Manager
Of the seven management companies I used, some were better than others. In general, all the companies did the best they could, but none of them cared about my properties as much as I did.
If you decide to use a management company, I recommend that you talk to several before selecting one. Ask for referrals from people in the business. When you meet them, they will want to walk through your property with you and give you recommendations on how they can bring your property to its highest and best use.
Check the references they give you, or better yet, contact the owners of other properties the company manages. Pick the firm you feel will best serve your interests. When you sign a management contract, be sure to insert a provision that allows you to terminate the agreement within thirty days.
If you use a management company, you need to monitor how well it manages your property.
- Keep track of the occupancy and of the company's response to maintenance requests.
- Check whether the rents they set are in keeping with the area.
- Review their monthly status reports.
You are paying that company to manage your property, so follow up to make sure you are getting good value for your money.
Remember always factor the “expense” of a management company into all of your future purchases to make sure you are getting the best value and price for your investment.