This blog post is part of our ongoing series on "The Essential Guide to Hiring Onsite Property Managers." Follow the links below to explore other parts in the series:
Hiring an onsite property manager is a key step in maintaining the success of your rental property, but the hiring process can be fraught with challenges. Making the wrong decision during the interview process or failing to comply with local laws and regulations can lead to costly mistakes that affect your property’s operations and tenant satisfaction.
In this post, we will discuss the most common mistakes property owners make when hiring an onsite property manager and provide tips on how to avoid them. By learning from these pitfalls, you can hire the right person, protect your property, and ensure compliance with local and state labor laws.
1. Failing to Conduct a Thorough Screening Process
One of the biggest mistakes property owners make during the hiring process is rushing to fill the job title without conducting a comprehensive screening. A solid tenant screening process is crucial for selecting the right tenants, and similarly, a careful screening process is equally important for hiring a property manager.
Tenant Screening vs. Hiring a Property Manager
Just as you conduct thorough background checks during tenant screening, you must do the same when hiring a property manager. This includes running a background check on candidates, checking references, and verifying previous work experience. Skipping these steps can lead to hiring someone who isn’t a good fit for your property, and it can increase your legal risks.
Common Mistake: Skipping Reference Checks
A common mistake many property owners make is skipping reference checks, assuming that the candidate’s resume and onsite interview are enough to make a decision. However, speaking with previous employers helps you get a fuller picture of the candidate’s experience and ability to handle day-to-day property management tasks like rent collection and tenant screening.
Solution: Implement a Comprehensive Hiring Process
To avoid this pitfall, establish a comprehensive screening and compliance program for the hiring process. This should include a background check, verifying their understanding of laws and regulations, and assessing their problem-solving skills during the interview process. Ensuring they can effectively communicate with tenants, vendors, and the property management company is key to their success.
2. Ignoring Legal and Compliance Requirements
Property management is subject to various laws and regulations that you, as the property owner, must follow when hiring an onsite manager. A common mistake is not understanding how these laws regulate working conditions, wages, and employee benefits.
Laws Regulate Compensation and Working Conditions
For example, state and local laws typically regulate working conditions, ensuring minimum wages are met, and that overtime pay is provided when necessary. If you don’t ensure compliance with these labor laws, you expose yourself to legal risks such as fines or lawsuits. Additionally, offering housing as part of a compensation package involves specific rules regarding rent credits, and this must be factored into your compensation plan.
Solution: Stay Informed on Laws and Regulations
To avoid these pitfalls, create a compliance program that ensures your hiring and compensation practices are aligned with laws and regulations in your area. Stay up to date on state and local labor laws, and work with a legal advisor if necessary to ensure compliance.
3. Poor Communication of Job Responsibilities
Another common mistake is not clearly defining the job title and responsibilities of your onsite property manager. Without a detailed understanding of what is expected, your property manager may struggle to meet your expectations, leading to mismanagement of the property.
Answering Questions During the Interview Process
A successful interview process involves more than just answering questions about the candidate's qualifications. You should also provide clear information about the specific tasks the onsite manager will handle, such as rent collection, tenant screening, and responding to maintenance requests. Ensure the candidate understands these responsibilities to avoid any confusion.
Solution: Create a Detailed Job Description
Avoid misunderstandings by creating a thorough job description that outlines day-to-day tasks, from rent collection to managing tenant relationships. Make sure to set boundaries about what the onsite property manager is and isn’t responsible for, especially when it comes to more technical repairs or legal matters.
4. Offering Non-Competitive Compensation
A common reason property owners struggle to retain good onsite property managers is offering non-competitive compensation. If your salary doesn’t meet state and local standards or isn’t competitive enough to attract top talent, you may experience high turnover or poor performance from your manager.
Meeting Legal Requirements and Industry Standards
Compensation should always meet or exceed the legal requirements for minimum wages and include any necessary benefits like health insurance or overtime pay. Failing to meet these standards not only reduces your chances of attracting skilled candidates but also increases your legal risks.
Solution: Offer Competitive Compensation and Incentives
To stay competitive, offer a compensation package that includes bonuses, housing allowances, or rent credits, and ensure it complies with laws and regulations. This not only helps you attract top talent but also ensures job satisfaction, which leads to better long-term management of your property.
5. Not Providing Proper Training and Support
Another common mistake is assuming that your onsite manager will be able to handle all the tasks without proper training or ongoing support. Even experienced managers need guidance on your property’s specific processes and how to navigate working conditions unique to your building.
Solution: Invest in Training and Regular Communication
Providing training on your property management company’s processes, how to handle tenant screening, and other important tasks will help set your manager up for success. Additionally, offer ongoing support by maintaining regular communication, checking in on their performance, and addressing any challenges they face.
6. Ignoring Red Flags During the Hiring Process
One major pitfall in the hiring process is ignoring potential red flags. If a candidate shows signs of poor communication or unwillingness to work flexible hours during the interview process, you might be setting yourself up for trouble down the line.
Red Flags to Watch For
- Poor Communication: An onsite property manager must be able to effectively communicate with tenants, vendors, and the property management company. If the candidate struggles to communicate clearly during the interview process, it’s a red flag.
- Inflexibility: Managers often need to respond to emergencies outside regular hours. If a candidate is inflexible or unwilling to adjust their schedule, they may not be the best fit.
- Lack of Attention to Detail: Disorganized answers or an inability to clearly outline past job responsibilities may indicate a candidate who will struggle with day-to-day management tasks.
7. Underestimating Risk Management
When hiring an onsite property manager, property owners should prioritize risk management strategies. This involves creating safeguards against legal and operational risks, such as ensuring the manager is aware of laws and regulations, is trained in proper tenant screening, and knows how to handle emergencies effectively.
Solution: Implement a Strong Risk Management Plan
By implementing a risk management plan, you protect yourself from potential legal disputes, tenant dissatisfaction, and poor property management. This can include setting clear expectations, providing ongoing training, and establishing a strong compliance program that ensures your manager follows laws regulate property management practices.
Hiring the right onsite property manager is a complex process that requires careful planning and attention to detail. By avoiding common mistakes such as rushing through the hiring process, ignoring legal requirements, or failing to provide training, you can set your property up for long-term success. From conducting thorough tenant screening and background checks to offering competitive compensation and ongoing support, these best practices will help you find a good fit for managing your property.
In the next part of this series, we’ll discuss whether hiring a property management company is the right choice for your property and how outsourcing these responsibilities can save you time and money.
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