Delegating property management is a great idea because it frees you up for work that only you can do. The problem is that it's incredibly hard to find a property manager that you can trust to do an amazing job. What should you do if you own or aspire to own real estate but you can't find a trustworthy property manager?
"What should you do if you own or aspire to own real estate but can't find a trustworthy property manager?"
For the rest of this post, we'll assume that you're investing or considering investing in a market where you don't have a relationship with someone you already trust. You have two options:
Option 1: Choose a local firm that comes recommended by other investors. If you don't know any, ask around in forums like the local forums on BiggerPockets. Create a shortlist of firms that have at least one (preferably more) recommendation and interview them thoroughly.
Option 2: Automating property management with Caretaker. With this option, you don't have to do as much upfront vetting because you're still the one in charge. You don't have to do most of the day-to-day work, either, because it's either automated or handled by our staff.
While we're clearly biased, we also know that Caretaker isn't the right fit for everyone. It depends on your preferences, your geographic market, and your investing strategy.
- Pros and cons of automation
- Tenant placement comparison
- Lease enforcement comparison
- Maintenance comparison
Pros and cons of automation
- More visibility into how your property is running: This is one of the things that can be frustrating about a property manager that you don't already trust: you're going to want updates a lot more often than the standard (once a month) and they might not be open to that. With automation, on the other hand, every event that happens in a single unit is part of a larger system that's going to get recorded no matter what. You can log in 24-7 to see recent tenant requests, rent collected, and everything else.
- More control over how your property is running: You might feel like your property manager isn't aggressive enough with rent prices, or that they're not creating the best experience for tenants and your turnover could be lower. This can be awkward to bring that up and/or convince them to adjust. With Caretaker, you have full agency to optimize the way your systems run. And the best part is you don't have to talk to us to make changes - just adjust your settings.
- Requires more of your attention: More agency means more responsibility. You can't go off the grid for months on end. If a repair needs to get done and there's a cheap and an expensive way of doing it, we're going to ask you which you think is best. If a tenant stops paying rent and goes radio silent for over a month, we'll suggest you connect with your lawyer or consider offering them a "cash for keys" deal.
- Relies more on your personal networks: From licensed electricians to landscapers, your local property manager will be responsible for deciding who gets hired to make repairs. With automation the difference is stark: you select your local team of pros. We'll let you know if the evidence is piling up that they aren't doing very good work and allow you to make a switch.
Now let's walk through the lifecycle of a rental property so you can get a better sense of what your life would be like depending on which option you choose. We'll start with getting a great tenant, then discuss the work that goes into keeping them compliant with your lease agreement and/or making changes to the lease you signed with them. Lastly, we'll discuss all of the work required to handle maintenance, repairs, and property inspections.
Tenant placement comparison
A traditional manager assumes full responsibility for placing a tenant. They won't involve you in any way after you get set up with them. They decide how, where, and when to advertise and show units. They select the new tenant and sign the lease with them on your behalf.
With Caretaker, you decide how your properties get advertised, where, and how aggressively. We're responsible for the execution. Take a look at the below chart, which has a list of the minute tasks that go into marketing a unit of housing, to see if there are any extra tasks you'd be responsible for with automation that are dealbreakers for you.
|Decide where to advertise||You||Property Manager|
|Decide how much to spend||You||Property Manager|
|Choose which photos to use||You||Property Manager|
|Post/update ads||Caretaker||Property Manager|
|Adjust marketing mix||Caretaker||Property Manager|
|Respond to leads||Caretaker||Property Manager|
|Follow up with leads||Caretaker||Property Manager|
Caretaker replaces traditional showings with self-tour showings. We believe that this provides renters with a better experience and leases up properties faster. You don't have to take our word for it: the country's biggest property managers adopted self-tours within the last few years for the same reasons.
Your local property manager might have also adopted self-tours, but it's more likely that they're doing things the old-fashioned way:
|Schedule showing appointments||Caretaker||Property Manager|
|Meet prospects at the unit||Caretaker||Property Manager|
|Show the unit to prospects||Caretaker||Property Manager|
Qualification is hands-down the most important part of tenant placement. The traditional process is quite different from the way that qualification works with automation.
A traditional property manager starts by deciding what the minimum criteria for a qualified tenant should be. Ideally (to comply with fair housing laws) they post these criteria on their website so that all prospects can easily see them. When a renter expresses interest, they will send them a list of the documents and information that they need to qualify them. Your property manager then reviews the submitted documents (usually some combination of bank statements, pay stubs, and tax returns), calls references to further verify and decides if the renter is qualified.
Automation is different because software, not humans, is responsible for collecting and verifying the required qualification documents. Renters submit proof of qualification using an online form that was designed to prevent them from moving forward until they've submitted everything that's required. These submissions are then verified using a combination of software and our support specialists, who are trained in leasing best practices.
|Collect proof of qualification documents||Caretaker||Property Manager|
|Verify qualification documents||Caretaker||Property Manager|
|Help renters with application issues||Caretaker||Property Manager|
A traditional property manager will either have their own team of in-house providers or relationships with independent providers in your area. All communications with tenants about maintenance issues and coordination of both repairs and inspections to track the maintenance status of your unit are their responsibility.
The Caretaker experience is different in that there is more room for you to exercise control over which providers should get hired and when. Since the best way to find a local provider is via word of mouth we suggest that you ask fellow investors in that market for referrals and add them to your Caretaker maintenance system as your local team. If we have providers in your market already for relevant trades then we will suggest them to you so that you can choose to add them to your local team or not. You'll be hands-off after this: we take care of coordination, quality control, and payments.
When a major capital improvement needs to be made we will let you know and the decisions about how and when to make it will be on your plate. This is usually also the case with a traditional manager.
|Select service provider team||You||Property Manager|
|Receive and verify tenant issue reports||Caretaker||Property Manager|
|Order maintenance contractors||Caretaker||Property Manager|
|Collect and store proof of work from contractors||Automated||Property Manager|
|Send payment to contractors||Caretaker||Property Manager|
Lease enforcement comparison
A property manager will have his or her own system for rent collection and will likely charge tenants different fees like application fees, lease change fees, and late rent fees. It's their job to detect lease breaches, notify tenants and try to resolve the situation. You will be 100% uninvolved. Should a nonpaying tenant turn into an eviction case your degree of involvement will vary. Some managers hire a lawyer for you and charge you an extra eviction fee. Some let you do this.
Automated enforcement can take care of everything up until the point where a legal eviction process needs to start. Detection of late or missing rent is automated as are the notices and reminders that go out to try and resolve the situation. Handling complaints from neighbors or working with tenants who have questions about paying rent is taken care of by our support team. If none of these things work, then the final stage of the legal eviction process starts: serving notice formally and scheduling a court date. If this happens you will be notified and you can decide to either negotiate with the tenant or have a lawyer of your choosing serve notice.
|Process and transfer rent payments||Caretaker||Property Manager|
|Detect late or missing rent||Caretaker||Property Manager|
|Inform tenants of unfulfilled obligations (email, mail)||Automated||Property Manager|
|Process complaints from and about tenants||Caretaker||Property Manager|
|Inform tenants of unfulfilled obligations (process server)||Your lawyer||Property Manager|
|Attend housing court||Your lawyer||Property Manager|
Head over to our interactive demo to see what your dashboard would look like if you already had a portfolio up and running.