Read This Before Hiring a Property Management Company

Rental Property

Everything You Need To Know Before Hiring A Rental Property Management Company

Amanda Stevens

Content Strategist

May 18, 2023 5 MIN READ

In this article:

  • You'll learn when it's in your best interest to hire a property manager, and when you can do it on your own
  • Must-ask questions before choosing a property management company
  • How to make your rental property more profitable through proper management
Reading Time: 5 minutes

Whether you’re an experienced real estate investor or you’re just breaking into the game, choosing your rental property management company is a critical decision. You’re not merely choosing someone to promote and show your listing.

You’re selecting a long-term partner who will be responsible for managing a high-ticket asset on your behalf. Working with an underperforming or unreliable provider could cost you thousands of dollars and weeks or months of lost income or damages and repairs.

Do You Need A Rental Property Management Company?

Depending on where you’re at in your investment journey and whether or not you’re local to the property in question, you may or may not need a rental property management company upfront. if you’re local, you could hire out some of the maintenance work and manage promotion and showings yourself.

If you’re not local or this is merely one of several properties in your portfolio, you could save valuable time and resources by recruiting professional providers to your team who know exactly what to do and exactly what to avoid.

Pros of Hiring A Rental Property Management Company

Understanding Rental Rates

In some markets, the standard 1% or 2% rule for rental rates may not apply, or it may be seasonally challenging depending on the location. You may need to rely on local professionals to determine a profitable rental rate that keeps the property occupied without sacrificing quality tenants.

Tenant Background Checks and Applications

Finding the right tenant to occupy each property can be a loan and tedious process. A professional rental property management company will have a list of potential candidates and an established process for recruiting well-qualified applicants.

Collecting Payment

This is one of the more tedious aspects of rental property management, and yet it’s the most crucial. Rental property managers will take care of this task for you, having their own systems already in place.

Managing Maintenance Requests and Tenant Communications

Let’s face it, the water heater never breaks at 12:00 in the afternoon on a Monday. It’s always at 10 pm on a Saturday. With a property manager on your team, this will never be your problem to oversee.

Marketing Your Listing

Getting the word out about your vacant property can be costly and ineffective if you don’t leverage high-performing channels. Local property managers will know the best places to list your property and will have the local connections to find creative promotion opportunities.

Truly Passive Income Generation

Last but not least, if you don’t use a rental property management company, is it truly passive income? If you’re chasing down leads to fill the listing, managing maintenance requests and emails, and collecting and logging payments, you’re essentially running your own rental property management company instead of enjoying the fruits of your investment.

When You Don’t Need A Rental Property Management Company

Localized, Small Portfolio

If this is your first income property in your own hometown or nearby, you may not need a rental property management company just yet.

Don’t Have The Margins For It

If there’s simply no room in the budget to pay the management fees from the property income, you’ll save yourself some money by managing it yourself.

Understand Landlord/Tenant Law

A basic understanding of landlord-tenant law is required to be successful as a DIY property manager, even if only for one listing. While many of the bigger issues can be avoided during the background and application process, not everything can be predicted in terms of tenant behavior. There could be damages, evictions, or neighborhood issues that lead to challenging legal matters that you must be prepared to handle.

Can Create A Consistent Lead Flow

Buying the property is only step one. Now it’s time to fill it through any of the many online channels and local avenues for filling vacancies. If you feel confident in your ability to do this on your own, you may not need a property management company just yet.

Questions To Ask Before Choosing A Rental Property Management Company

Questions To Ask Before Choosing A Rental Property Management Company

Before you hire someone to manage your investment properties, ask the following questions (at minimum!)

What Stack of Services Do They Offer?

Remember, this is a collaborative partnership. If they’re simply going to pick up the rent check, you could handle that on your own. You’re looking for a valuable team member who can offer multi-layered support services, including:

  • Vacancy promotion
  • Tenant recruiting
  • Backgrounds and application processing
  • Property maintenance and repairs
  • Rent collection and bookkeeping
  • Eviction and legal matters

How Experienced are They?

Learn more about the property manager as a professional team. How many years have they been in business? How many properties do they manage? You’ll want a reliable, veteran team in your corner, especially if you’re not local to the property.

What are the Fees?

As with any real estate contract, it’s only a good deal if it makes financial sense. Read all of the fine print in the property management agreement before you ever indicate you’ll be signing it.

What are the monthly fees? What is considered extra? What are the fees associated with pulling out early? How do they handle property expenses? Is there a markup on maintenance repairs? Lay these numbers out and do the math before signing a contract.

What is Their Average Vacancy Timeline?

The timeline for a vacant listing should be no more than 2 to 4 weeks on average. Anything more than that, and property owners start to lose money rapidly.

What is Their Tenant Application Process?

Once an interested tenant reaches out, what happens next? You want to entrust your property to a manager who is making sure it’s occupied by reliable and responsible tenants. There should be a background check, all references should be checked, and there should be a casual interview process.

What Does Their Communication Process Look Like?

There’s nothing worse than a property management company that is unreachable. Whether you’re a tenant or a property owner, getting answers right away is critical to profitability and trust. Do they make efforts to be available? Is there more than one person you can reach out to?

How Do They Recruit Potential Tenants?

It’s important to work with someone that does more than a local Facebook post to find potential tenants. They should have an established and high-performing tenant recruitment and application process. You want to have confidence in their ability to fill your listing.

What Do Their Clients Have to Say?

Dig into their online reviews and testimonials, if available. One of the trademarks of a terrible property manager partner is someone that treats property owners with concierge white glove service but treats their tenants like yesterday’s garbage. There are many ways to find out both sides of the story, and it’s important to do your research.

How Do They Handle Late Payments?

Even with the most rigorous tenant application and interview processes in place, financial hardship can still rear its ugly head. Find out how prospective rental property management companies handle late payments and processing fees.

Learn More About Rental Property Management Services and Real Estate Investing

At Teifke Real Estate, we offer a full stack of property management services and investment support. Whether you’re new to the investment world or you’re expanding your portfolio to the Central Texas market, we’re here to help you! Call our office today!



Frequently Asked Questions About Rental Property Management Companies

More questions before you hire a rental property manager? Answers to some of the most frequently asked questions below.

How much monthly profit should you make on a rental property

This number varies wildly depending on location, the purchase price of the property, any improvements that were made, property management fees, and the current state of the rental market. however, on average, investors should be getting between 7% and 8% for a monthly ROI and, in some cases, up to 15%.

What rental properties are most profitable?

Multi-family units such as apartments and townhouse complexes are the most profitable investments long-term. However, mobile homes and single-family rental homes are equally profitable with the right deal in place. Higher profitability investments often require more cash or capital upfront to get started, while mobile homes or single-family rental home is usually the lowest barrier to entry.


What percentage of rental income goes to expenses?

Again this number may vary from property to property. However, you should always aim for expenses to account for between 35 to 45% of the total revenue.

Does rental income count as earned income?

Yes, rental income is counted as earned income and must be filed as such on your tax returns.

What is considered a good cash flow on a rental property?

Let’s review the 1% rule. the one percent rule is a formula that we advise all of our investors to use in order to evaluate the profitability of a rental property. The rental income should be a minimum of 1% of the purchase price.

Some quick math tells us that a property purchased for $200,000 should be rented for $2,000 a month. While this may not hold true in every market, it’s a strong measuring stick for any deal.

Achieve Your Real Estate Goals

From helping first-time homebuyers purchase their first home to helping longtime investors manage multiple properties, Teifke Real Estate is Texas' most trusted name in the industry. Get in touch with us today and let us know how we can help.
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Content Strategist

Amanda Stevens

Amanda is a content strategist and writer for Teifke Real Estate. She graduated Magnum Cum Laude from Purdue University with a B.S. in Social Work. She writes for several different outlets across multiple verticals. In her spare time she loves learning about health, nutrition, meditation, spiritual practices, and enjoys being the a mother of a beautiful daughter.