Eleven Questions to Ask When Looking for a
Property Manager
It is not easy finding someone to care for and watch over your investments. It’s often more difficult knowing what questions to ask to find the right person. These eleven inquiries will help you get started. We’ve broken the questions up into bite-size morsels so you can digest the information slowly and at-will. If you’ve got a voracious appetite, plate yourself a double serving of property management know-how!
1. Can you give me some background on your business?
While this seems obvious, it can be forgotten in the hurry to find out how much they charge and if they’ll stay on top of tenant maintenance requests. Ask them how long they’ve been a property manager or been in business. Time doesn’t necessarily equal good experience, but it is one indicator. Someone who has been a property manager for 5 years may not have had enough time to learn everything needed to effectively manage your property. How many people do they staff? Who will be the primary contact with the company? Will they provide references and client testimonials? How many properties do they already manage? These questions will help you get an overall feel for how the company or individual works, and if they’re a good fit for your needs.
2. How well do you know the area?
A good property manager will think like a tenant. They will know if your asking price on a year lease is competitive or overpriced for the location. The will also know the features of your property. “Keeping up with the Jones” may be a sad way to think about many things; however, with rental properties, it is a necessity. Keeping a unit rented with happy tenants will require a manager that knows about the median rental rates, what people will be looking for in a certain area and the amenities they’ll want for the price. If the property down the street is the same price with stainless steel appliances and a landscaped patio, your 10-year-old appliances and plain backyard will not seem worth the price to a tenant. Asking a property manager how well they know the area will reveal if they’ll have the competitive edge to get your property rented and keep it occupied.
3. What kind of experience do you have?
Get specific. Ask about types of properties managed, sizes of communities, if they specialize in individual investors with a handful of homes or huge corporations with apartment mega-plexes. Make sure that the properties they specialize in match the type of investment property you own since the priorities and how they’ll run their business will be different. It also helps to ask if they’ve had experience with Section 8 housing just to be on the safe side. Even if your property isn’t Section 8, a well-rounded property manager will not be blindsided by any situation that may present itself with a prospective or current tenant.
4. What are your accreditations, qualifications, and coverage for what I need you to do for me?
Official certification with a national association signifies a certain level of dedication, education and experience for property management. You wouldn’t let someone without the proper licenses manage your market investments and a property manager should be held to the same standards. Is their entire staff bonded? How much insurance do they carry? What does the insurance and bonding cover? If something goes seriously wrong with your rental property and the manager could have somehow prevented the damage incurred, their insurance coverage is going to be your saving grace.
5. How do you find and handle tenants?
Find out how the individual or company plans to advertise your property to attract tenants. Will they just put a “For Rent” sign out on the yard in front of the property? Do they advertise in the local paper? Flyers around the neighborhood? Are they Internet savvy and put ads online where prospective tenants are most likely to look? Do they have skills for putting together a professional looking ad with photos? There are so many ways to advertise properties free online and elsewhere that effective advertising of a vacant property doesn’t necessitate an additional fee.
Do they charge any fees to fill vacancies? Some companies may charge to get people into a property, upwards of 1/2 of the set rent rate to find tenants. This is not a necessary fee and should cause some hesitancy in retaining a company that charges it.
A good property management company has good relationships with their tenants. See if you can get references from tenants of clients as well as the clients themselves. Doing a good job managing your property includes retention of desirable tenants by prompt maintenance, considerate interactions with tenants and a level of customer service that sets your property apart and raises its value.
6. How do you and/or your staff handle the responsibilities of property management?
A property manager needs to care for your investment in addition to finding tenants. Maintenance, yard work and grounds care may be included in the monthly charges or tacked on as an additional cost. Find out how much they bill for all routine maintenance and who they contract to do the work. Will they maintain landscaping as well as mow the lawn? Is snow removal included? Ask to see properties already maintained and see if the work looks sloppy or professional.
The inside of the property is just important if not more important than the maintenance of the lawn. What kind of routine repairs are included in the maintenance fees? What triggers additional costs? Is maintenance available 24 hours a day for tenants? If a water leak gets out of control because a tenant can’t reach maintenance personnel at 2:00am, which can mean thousands of dollars of damage, which will either come out of your pocket or from the property management’s insurance. Be sure to specify the level of service you want and expect for your rental property.
7. How do you communicate with your clients?
It’s important to know how effective a company or individual is at communicating with their clients. How often do they check in voluntarily with their clients? Do they take initiative to tell clients about issues with the property or tenants, ask permission for large repairs and anything that’s going on in the area that may affect the property? How are finances and receipts accounted for? Are they available by phone and email and can they be reached before and after usual working hours for emergencies? Someone may say its fine to call anytime and send email inquiries and then fail to respond in a timely manner. A good property manager will have an office and cell phone number as well as a quick turnaround for emails.
8. If a problem crops up, how will you deal with it?
Even the best managers cannot prevent all problems. Occasionally a tenant needs to be evicted, legal problems appear or something breaks in the unit that triggers a large repair bill. What sets the best apart from the rest is how they handle an emergency or unpleasant situation.
Evictions are never fun for anyone involved. Emotional, ugly and often dangerous, it helps to have a manager with some experience in dismissing problem tenants. Have they dealt with an eviction before and if so, how did they handle it? Was the tenant given fair warning and all required legal documentation before the eviction? Listen carefully to see if this drastic measure was handled with attention to detail and with paperwork properly distributed and filed.
Do they retain an attorney or lawyer for legal advice? An unforeseen issue with the property may cause bodily harm to a tenant or damage their property. While most of this should be covered by the tenant’s insurance, some people don’t purchase renter’s insurance and may file suit. Find out who the company works with for legal proceedings and if they’ve ever had a client taken to court by a tenant. The situation might not have been the property manager’s fault but it never hurts to get all the details.
Emergency repairs can be pricey. Calling a plumber for a broken water heater and flooded basement at 2:00 am is never cheap but it’s necessary to act quickly in some situations to prevent even more damage to the property. Prompt communication with you and proper record keeping of receipts and finances should be mandatory when dealing with emergency maintenance. How soon would you be alerted in the case of an emergency? Will the manager wait for your go-ahead or use their own judgment in spending money on repairs? All of these details will help measure a manager’s competence.
9. What sets you apart from your competition?
Everyone thinks they are better than the next person. It’s more difficult to put specifics on why you’re better than the rest. Ask for success stories, special experience they got from an exceptional opportunity previously and why you should pick them instead of the management company down the street. Someone who is truly competent and confident in their skills and abilities to provide you top notch service will have no problem answering this question.
10. How do you handle all related finances?
Keeping accurate and detailed financial records are a difficult task. Attention to detail is extremely important and a property manager that has highly organized accounting skills is worth looking for. When tax time arrives, all of your income and cash flows should be at your fingertips to make your tax paying easy. Ask to see a generic example of how they’ll track your revenue and expenses related to the property. Do they do monthly statements? That prevents a shock of getting an account of three months worth of cash flow and finding your expenses are regularly exceeding your revenue.
Property management usually collect rent from tenants between the first and fourth of each month, allowing for a small cushion for tenants to get 1st of the month paychecks cashed and processed. It should take no longer than eight days to collect rents and prepare all monthly statements for each property. It’s your money and should be in your bank account as soon as possible. Any manager that fails to deposit funds in client accounts or mail checks by mid month should not be considered.
11. What are your fees?
Fees are an important factor in deciding on a property manager but should not be the primary reason in deciding in favor of one company over another. This question should be last so that you already have a good feel for the level of service that will be provided and can judge accurately if the cost matches the value of those services. Ask to see a detailed breakdown of all fees, monthly and otherwise, that you’d need to pay for your property. Expensive fees are well worth the cost if the service will be exceptional. Also, ask if there will be any additional costs if the relationship doesn’t work out. It would not be a good situation to be stuck in a contract with high severance fees because breaking the contract would cost more than it’s worth.
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