How important is it for a property manager to live/work near my rental property?
It depends on two things: The property itself, and the scope of engagement. Do you have a whole bunch of units co-located? Do you want an onsite property manager? And how responsive does this manager need to be?
However, all things being equal, there are powerful advantages to proximity. I would want a manager to have an established local presence of some sort, for a variety of reasons. That said, a bit of geographical distance doesn’t need to be a deal killer, either. It depends, as always, on the circumstances.
First, take a look at what this manager is being tasked to do, by the terms of the contract. Take a step back and disregard what the manager thinks he can do. Ask yourself is it reasonable, given the manager’s staffing and other properties, for the manager to do the job?
For a single residential property in good shape, such as a two- or three-bedroom home, it’s probably not that important that the manager lives and works nearby. Emergency repairs are few and far between in that case.
If your pipes or wiring are old and problem-prone, though, it may be more important for a manager to be able to run by on short notice and eyeball the problem himself.
Also, if you live or work nearby, you can keep an eye on things with the occasional drive-by. In that case, it’s not terribly important that your manager live nearby.
But your property shouldn’t be way outside of the manager’s zone of operations, either. If all the other properties he manages are on the North Side, and your property he’s managing is on the South Side, an hour away, and it’s the only property down there, well, your manager isn’t Superman. Some property is going to be left out in the cold, and chances are it’s going to be yours.
Even assuming the best of intentions on his part, you want your property to be well within your manager’s circle of competence. This is a term I’m borrowing from Warren Buffett to describe the kinds of activities that fit any business’s core model, and leverage the skills and competencies a business does best.
Your property manager should be well-versed in managing properties substantially like yours, in quality, kind and price point. Ideally, your manager will have a good handle on dynamics and pricing in your particular neighborhood.
The manager is much more likely to be successful and efficient at setting prices and marketing the property efficiently if the manager works regularly in the neighborhood itself.
It’s also helpful for a manager to have a strong presence in a given area because it means they may have an ongoing relationship with local contractors and vendors. They want to keep a good property manager’s business, and so will work hard to keep an established manager happy. If your property is the only one he manages for 30 miles, that manager just isn’t going to have the same pull as one who manages 50 units in town.
If you have not already entered into an agreement, and you need some hands-on TLC from your manager (and you are able to pay an appropriate fee for this level of care!) you may want to look at someone who is more local to you.
If you’re already using the manager and you have a contract in place that would be difficult or costly to cancel, then communication is key. Sit down with your manager, before there’s a problem, and go over your concerns.
Look at the section entitled “responsibilities of the property manager” or words to that effect. Ask the manager for his plan on accomplishing each of these. Find out what resources he has available to actually execute.
You may walk away with a nice warm fuzzy feeling. In which case, carry on!
You and your manager may find you have some adjustments to make in the scope of services. Maybe there are some things your manager just can’t do efficiently. Sometimes they do bite off more than they can chew. In which case it’s better to strike that task from their list of responsibilities, and reduce the fee accordingly.
You won’t have any problem making adjustments like that. The property manager doesn’t want to get stuck doing things they can’t do efficiently and profitably, anyway.
If the manager just can’t do the job as promised, then it’s probably time to unwind that contract and hand things over to a manager who’s in a better position to do a good job. No hard feelings required. No manager is the best fit for every property – and they know that.
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.