How to Evaluate a Property Management Company [Full Vetting Process]

There are eight areas you should look at when selecting a property management company or a property manager for your real estate investment. You are likely unfamiliar with the internal workings of a property management company, which is why you are on this article in the first place. Some companies are good, some bad, and you need a couple of metrics and indicators you can use when making a decision.

As a property manager with Rob Brooks Realty Property Management, I’m going to share the following tips for finding a good company.

Experience

Experience provides a company with the knowledge to navigate the inevitable challenges of property management. There are two things to look for: how long they’ve been in the business AND how well they know their local market.

Deep local market knowledge

A management company’s value is directly tied to its local market knowledge. This means they understand:

• Pricing Dynamics: Knowing what comparable properties are selling and renting for.
• Tenant Behavior: Understanding the local tenant pool, what they look for, and the typical tenant turnover rate.
• Hyper-Local Legal Nuances: This is crucial, especially in markets with unique demographics. For example, in highly military areas, the management team must be intimately familiar with specific legal provisions that allow active-duty military members to terminate a lease early (e.g., due to military orders or eligibility for base housing). A seasoned company knows how to handle this unexpected turnover, minimizing the financial impact on the owner.

Experience allows a firm to anticipate challenges (like a tenant playing the eviction game) and have a tested playbook to manage them, saving you time and money as the owner.

What about a new franchise location from an established national company?

A new franchise, even if backed by a large national corporate entity, will lack the specific lessons learned that come from managing properties in your precise geographic area for many years. When interviewing companies, ask for specific examples of past challenges and how they were resolved. This ability to share experiences and provide context adds significant credibility to their expertise.

Licensing, Credentials & Insurance

Property management is a regulated business. You should check to see if the company and its employees are operating legally and are adequately protected. (Many have learned this the hard way!)

Brokerage affiliation and licensing

In many states, like Florida, providing real estate services for compensation requires a real estate license. Property managers must typically be affiliated with or work for a licensed real estate brokerage.

• Licensed Professionals: A licensed property manager is legally permitted to discuss market analysis, set pricing strategy, and recommend investments. Unlicensed staff, such as a leasing coordinator, are usually limited to administrative tasks.
• Protection: Using a licensed brokerage is vital because they often contribute to a state-mandated fund to cover victims of unlicensed real estate activity. I think using a licensed brokerage offers protection for owners in that brokerages are knowledgeable about local rules, practices, and experience more so than the existence of a fund to assist victims of unlicensed real estate practices.

Professional affiliations

Look for membership in professional associations like the National Association of Residential Property Managers (NARPM). Membership in these groups gives the manager a network of resources, educational programs, and real-time updates on industry laws. This ensures they stay ahead of changes that could impact your investment legally and financially. As a property manager myself, having membership in NARPM has been a huge help.

Insurance coverage

Ensure the brokerage has essential insurance, including:

• Errors and Omissions (E&O) Insurance: Protects against mistakes in service.
• General Liability Insurance: Covers property damage and injuries.

This can protect you against expensive problems in the future.

Team Structure and Portfolio Size

The company’s size and internal structure will directly impact the level of service you receive as an owner. Most companies don’t want to admit this, but it’s 100% true.

Portfolio vs. Staff ratio

A larger portfolio (e.g., over a thousand properties) doesn’t always mean better service. A high volume may lead to generalized, less-personal management. It’s important to ask about the ratio of properties to property managers.

A well-structured team will have specialized roles. At Rob Brooks Realty Property Management, this is what our team structure looks like:

• Property Manager: Your main point of contact for strategy, consultation, and all day-to-day issues.
• Leasing Coordinator: Handles showings, applicant vetting, and lease drafting.
• Maintenance Coordinator: Manages all repair requests and vendor communication.

This team dynamic ensures the primary property manager isn’t bogged down by administrative tasks, allowing them to focus on high-value strategy and communication with you.

Property type specialization

Check if the company specializes in your specific property type (e.g., single-family homes, condos, commercial). Specialization means they have developed highly efficient, consistent checklists and processes for turnover, maintenance, and marketing that apply specifically to your asset.

Tenant Screening and Showings

The quality of your tenant determines the success of your investment. You need a rigorous and proactive screening process.

The “Big Three” screening checks

A strong screening process will focus on the “Big Three”:

1. Credit History: Look beyond just the score (though a high threshold, like 700 or above, is a strong indicator). They should analyze payment patterns, late payments, and the circumstances surrounding any derogatory marks.
2. Criminal History: A thorough criminal background check is a non-negotiable.
3. Rental History: Contacting previous landlords to confirm reliability and tenancy behavior.

Avoiding corner-cutting

A company might be tempted to lower its screening standards (e.g., accepting a 620 credit score) to fill a vacancy quickly, especially when a property has been on the market for an extended period. Our philosophy has always been: Sometimes, no tenant is better than a bad tenant. Cutting corners can lead to non-payment, costly evictions, and property damage.

Just don’t do it.

In-Person showings

Ask about how properties are shown.

Good ✓ – The manager/coordinator personally meets every prospective tenant at the home. This gives the property management company the ability to meet the prospect and make sure your property is secure when they leave.

Not great ✕ – Electronic lockboxes that issue temporary codes to prospective tenants for unsupervised, self-serve showings. This dramatically increases the risk of damage, vandalism, and squatting. Be wary!

Financial Transparency & Fees

You need clarity on what you’re paying for and assurance that your money is handled securely and reported accurately.

Fee structure

Demand a clear breakdown of all fees. A transparent company will typically charge only two main fees:

Hidden costs

There are some common hidden fees that property management companies may try to sneak in.

• Vacancy Fees: Charging a management fee even when the property is vacant.
• Renewal Fees: Charging a fee every time a tenant renews their lease.
• Admin Fees: General blanket charges for administrative tasks that should be covered by the management fee.
• Maintenance Markups: Charging a percentage on top of the vendor’s invoice.

As a principle: If you’re not making money, they shouldn’t be making money.

Financial reporting

Ask about the types of financial reporting the property management company provides.

Monthly and Annual Statements: You should receive a detailed monthly income and expense statement, as well as an annual statement (and tax form like a 1099) for your CPA.

Trust Accounts: Property funds (rent, deposits) must be held in dedicated, legally-mandated Trust or Escrow accounts. This legally isolates your money from the brokerage’s operating funds and from other owners’ legal issues.

Owner Portal: Look for an online portal that provides real-time access to financial activity, lease documents, and maintenance history.

Maintenance

A property manager’s maintenance strength is based on their network of licensed and trusted vendors.

• Licensing and Liability: All tradesmen (HVAC, plumbing, electrical, roofing) must be properly licensed. This ensures their work is competent and that they are liable for any issues.
• Communication: Look for a process where the vendor quickly acknowledges a work order, contacts the tenant, and communicates the estimate and timeline back to the manager and you.
• Prioritization: Ask about the use of preventative maintenance plans. These plans often include priority service, which can be critical for urgent issues like an A/C outage in summer.

Pricing & Marketing Strategy

Market-Driven Pricing: The manager should use data from the Multiple Listing Service (MLS) and major real estate sites to recommend a competitive rental rate. The rent is driven by the market and the tenant, not your mortgage costs. This is very important to understand. A good manager has the intuition to recommend price adjustments to minimize costly vacancy time, even if it means sacrificing $50 in monthly rent.

High-Quality Marketing: Ask about the photos and visual assets. Listings should feature professional photography, video tours, and 3D tours. High-quality visuals are your property’s first impression and directly impact the rentability and caliber of tenant you attract.

▶ RELATED: How Rob Brooks Realty Property Management Does Property Marketing

Reputation

A company’s reputation online and offline can be a good indicator of its service quality.

• Online Reviews: Review Google and other third-party review sites. While you should read all reviews, focus on the overall trend and how the company responds to negative feedback.
• References: Ask for current or past client references. A management company should happily provide phone numbers for other property owners who can share their experiences.

Selecting a property management company is a matter of due diligence. The reason you hire a manager is to take the guesswork out of the process. Look for the team with the local knowledge to navigate issues like military lease notices, the transparent fee structure to protect your bottom line, and the rigorous screening process to avoid bad tenants. By using these eight indicators to guide your conversation, you will ensure your real estate investment is handled correctly