How to Separate the Great Property-Management Companies From the Good

Making the wrong hiring decision as an owner can be disastrous, but there are ironclad methods of finding perfect candidates.

learn more about Ari Chazanas

By Ari Chazanas • Mar 3, 2022 Originally published Apr 4, 2022

Opinions expressed by Entrepreneur contributors are their own.

Property owners with many properties but little time to manage them will often hire a company to take on that workload. Maybe you're an owner with assets in California, but live in New York (or even China) — own a large building with dozens of units and find yourself overwhelmed by the sheer number of management tasks.

There are many reasons for hiring a property management company, but there's no reason to be saddled with one that fails to live up to your standards. And believe me, they're out there, and if you're not staying frosty — mindful of the difference between the good and the bad — it's going to get ugly for you and your business quickly. It matters who you hire, because there is more to managing a property than identifying good tenants and collecting rent.

You will come across many good candidates, but only a few will be great. How to find them in order to protect and nurture your investment.

Research like a tenant

Put yourself in the shoes of the people who will be paying money to live in your property. Are you persuaded by the marketing methods and content that a potential property management company is employing for the properties they handle? Do these places look appealing and well maintained? Does the marketing speak to you in any meaningful way?

The bottom line is: Would you consider renting one of their properties? If not, what's turning you off about their strategies? These are the first questions you need to answer, because future tenants will be doing the same when deciding whether to rent from you or the guy next door.

Related: Third-Party Property Management Isn't as Simple as It Seems

Experience counts

Like any industry, real estate rental and leasing comes with a full range of laws, restrictions and protocols that can derail your business in the event of non-compliance. The right management company will have knowledge of and expertise in all laws and other aspects governing the housing industry.

Also keep in mind that residential and commercial properties are very different; some companies specialize in one over the other, and you need to choose one that has experience managing the types you own. Additionally, inquire as to each candidate's track record. Does it only manage certain types of properties or many types? (A specialty approach is often better than a jack of all trades.)

Good tenant relations

Empty rental properties don't generate revenue: tenants do, and you want to make sure they stick around for the long term. You'd be surprised how easily an inexperienced property management company can stand in the way of that goal.

A healthy working relationship between management company and tenants is a great way of producing maximum and steady revenue. Therefore, it's mandatory that you speak to some of the tenants who live/work in properties that your prospective company manages. You want honest and complete answers as to the level of the work being performed, and tenants will usually give them to you in no uncertain terms (especially the unhappy ones). If you like what you're hearing, you can be confident that the candidate will bring a similar level of care and expertise to your property.

Related: Getting Your Feet Wet in the Rental Property Business

An eye on tomorrow

The companies you consider may all have excellent backgrounds, great reviews and enthusiastic tenants and owners extolling their virtues, but which ones remain stuck in the past, versus welcoming the efficiencies of 21st-century technology? The simplest of these innovations, of course, is the ability to pay rent online. Gone are the days of checks (or cashier's checks) when collecting at the first of the month.

There are many good property management software options on the market, so make a point of asking which ones candidates prefer. Their answers may go a long way towards assuring a healthy and lucrative working relationship.

That something special

At the end of the day, most candidates will provide a similar menu of services. If you've done your due diligence, the finalists will be dependable, dedicated and experienced, so how do you elevate one over the others? The answer is simple: what else can one candidate offer? Does one company offer a service or manage a task that the others do not, or cannot — is able to take over as many duties as possible while providing a higher level of service?

Related: The Real-Estate Game Is Changing Fast. Are You Ready to Win?

One last thought

Once you've decided on the company you want to hire, take a careful look at the agreement they present. Make sure it covers every critical point in full, with a detailed description outlining services provides, fees and costs associated with those services, the duration of the contract and your responsibilities.

It's that last factor that trips up a lot of owners, particularly first-timers. This is where the gap lies between manager and owner, and more often than not important things fall through it — details that get missed and ultimately hurt you and your business. So, delineate in full which tasks and responsibilities the management company is expected to handle and those that fall to you as the owner of the property. Double check these clauses to make sure you are not expected to take on any unwanted tasks. Essentially, apply the same level of due diligence on the agreement that you did finding the management candidate.

Ari Chazanas

Entrepreneur Leadership Network Contributor

President of Lotus West Properties

Ari Chazanas is the founder and CEO of Lotus West Properties, a property-management, development and investment firm established in 1999. Chazanas has a bachelor's degree in finance from UCLA and holds a real-estate license in the state of California.

Related Topics

Editor's Pick

This Co-Founder Was Kicked Out of Retailers for Pitching a 'Taboo' Beauty Product. Now, Her Multi-Million-Dollar Company Sells It for More Than $20 an Ounce.
Have You Ever Obsessed Over 'What If'? According to Scientists, You Don't Actually Know What Would Have Fixed Everything.
Most People Don't Know These 2 Things Are Resume Red Flags. A Career Expert Reveals How to Work Around Them.
Business News

Survey: A Majority of Americans Are Living Paycheck to Paycheck

Sixty-four percent of U.S. consumers live paycheck to paycheck — even those who earn more than $100,000 a year.

Business News

Massive Fire At Top Egg Farm Leaves Estimated 100,000 Hens Dead. What Does This Mean For Egg Prices?

Hillandale Farms in Bozrah, Connecticut went up in flames on Saturday in an incident that is still under investigation.

Business Solutions

5 Procurement Trends To Keep on Your Radar for 2023

Procurement professionals must adapt to inflation and a shortage of skilled labor in the face of an economic recession. Investing in a workforce paired with retraining and development strategies will put your company on top amid economic uncertainty.

Business News

'This Just Can't Be for Real': Fyre Festival Fraudster Billy McFarland is Now Hiring For His New Tech Company -- And He's Already Selling Merch

McFarland was released from house arrest last September and is currently being ordered to pay $26 million in restitution to fraud victims.

Business News

Out With the Kibble and In With the Steak. The World's Richest Dog Has a Net Worth of $400 Million – And a New Netflix Docuseries Too

'Gunther's Millions' is set to unpack the pooch's mysterious fortune and what those around him have done with his inheritance.