Rental properties have long been a mainstay in the savvy investor’s portfolio.  And there’s plenty of good reason for it:

1. So long as history keeps repeating, land and the structures on the land always increase in value.
2. Many properties generate positive cash flow.
3. Rental properties offer you something that stocks, bonds, money markets and rrsp’s cannot.  The comfort of being able to see your investment. In simple terms properties are tangible assets not numbers on a spreadsheet.

That being said rental properties have issues spread sheets do not: namely tenants.

Believe it or not, most of the stories you’ve heard about bad tenants are blown out of proportion, but that doesn’t mean that tenants aren’t capable of causing significant frustration; which may even lead you to question whether the value of the property is worth the head ache.

Of course, one possible solution is to hire a property manager.

A good property manager will watch over your investment for a fee that is relatively nominal in contrast with the long term appreciation of your property.  Perhaps more importantly, good property managers are worth more than their weight in tylenol if they prevent the headaches often associated with the day-to-day affairs of a rental property.

If you’re considering hiring a property manager you may want to consider these rules of thumb before you make your selection:

Rule #1
Only work with licensed Property Management Companies. Licensed management companies are held to very strict rules concerning how cash flow from rentals is reported to their clients and to a professional organization.  This is extremely important to protect your money and eliminate fraudulent misappropriation of funds while providing the highest fiduciary standards to ensure your investment is protected.

Rule #2
Experience is still king.  Be sure your property manager has experience.  Since most property managers started out as property owners you may be wise to ask about their experience with property management for their own properties AND for properties they manager for clients.  This will help you flush out their skills in dealing with properties AS WELL AS their skills in helping you, their client.

Rule #3
Tenants can be a handful and a personable landlord can make all the difference, make sure your property manager is personable and easy to get along with. Bad tempers and explosive demands are met with hostility from most tenants. 

Rule #4
In addition to rule 2 “Experience is king” you should be sure to get references about the property management company you are considering. This should be from both tenants and landlords. Asking for references is generally a bad idea because the provider of the reference will hand pick those people whom he or she refers, but other options exist. The first suggestion I have is to check with your prospective property manager’s website, surely there will be a page with vacant rental listings; randomly pick one of these properties and ask your manager if you can speak with the owner of the property, at which time you can ask if the owner/client is happy with the level of communication and service provided. The other option is to ask to speak to a recent tenant and ask them the same question. The response for these references will speak volumes.

These rules are simple, but often overlooked.  You’ve already gone through the difficult process of securing one or more rental properties now it’s time to do your due diligence and find a good property manager so you can enjoy watching your investment grow.

Steve Bleile is a writer and real estate expert. He consults for Hope Street Real Estate Corp, a team of customer focused Calgary Real Estate Managers. The firm provides rental homes to thousands of individuals and families in a variety of sectors ranging from starter homes to executive mansions.