We are happy that you’ve finally decided to hire a property manager this year. It's good to note that property management companies differ both in level of experience and in the fee charged. While some companies use modern technology, others hang on to the same old pattern of operation.
You should use the same level of diligence employed in building your investment property to choose a property management company because, as the saying goes “anything worth doing is worth doing well” and also, the daily care of your investment lies on the shoulders of this company.
Below are 25 questions to ask before choosing a property management company.
- What is the number of rentals you manage currently? This helps you run a full assessment of the size and expertise of the company. Ensure the company is not under-staffed.
- Is there any other rental property in my area that you are managing? This will help you determine the level of understanding of your property management company on the slight differences that exist in your local rental market.
- Do you invest in real estate personally? It's always better if the property manager invests personally in real estate because they will likely manage your property like they do theirs.
- Do you have pre-existing relationships with local vendors? Find out if the property manager is a subcontractor to other companies and if those relationships would provide you with some discounts.
- Will you be able to give me advice on investments or assist me in increasing my portfolio? Well-sophisticated property management companies will be able to lend you assistance in finding available markets, either through the sale or purchase of assets and also assist you in managing your assets to maximize profit.
- What method of communication do you prefer? It is best to go for a property management company that employs various methods of communication with vendors and other residents apart from you.
- What method do you use in handling service request? Be aware of the method to be used by tenants in channeling service requests to the PM and the role you play. Also, find out if the final decisions on maintenance and repairs will be made by you and if you'll be the one to authorize some expenses that are above a certain amount. A company with a well-planned process should be your best bet.
- Do you collect fees for management when there's a vacant unit? Avoid PMs that do. The standard in the industry is that the PMs give up part of their fee pending when they lease a vacant unit.
- What is the time duration for units remaining vacant after turnover? The best companies are those that will ensure units are ready to be rented within a space of 1 month so they have ample time to make the necessary repairs.
- Are the team members' generalists or do they have specialized roles? Find out whether your rental property will be managed by just one person or the company assigns different people to handle different aspects of the management.
- Among all the properties they manage, what is the vacancy rate like on average? Check if the vacancy rate is higher than the average in the area or below.
- What procedures do you use in accepting tenants? Find out if the screening procedures of the company include a check on landlord reference, background, employment and credit.
- Am I to expect any miscellaneous fees? It is common to see companies collecting extra charges to turn over units, market units, evict tenants, etc.
- Which types of insurance do you carry? The best companies for these jobs are those having
- omissions and errors policy in addition to carrying a general liability policy of at least $1 million.
- How much do you charge as a management fee per month? The management fees depend on the services offered but it is usually 8-12% of the total revenue generated monthly.
- 16. Can I terminate my contract without penalty if am not happy with things? Beware of companies that want you to sign a contract with them.
- How often will I get updates on my property? There should be no restriction in getting information on your property at any time. Advanced property management companies will use technology like online dashboards in updating you on your property.
- Can you explain fair house laws? State fair housing and local laws should be at the fingertip of every good property manager.
- How long have you been in the business? Go for a company with at least 5 years of experience. This is enough time to evaluate their past record.
- How do you set your rental rates? A property management company with high credibility status should be able to use the amenities you offer, your local market, the size of the unit etc. to do a market analysis and decide on rental rates.
- In what ways have your business model changed over time? This will give you an insight on how the company has been able to adapt to changes in the industry and technological advancements.
- Which areas does your company service? Choose a company that covers a wide area if you own or are interested in owning properties in different cities and towns.
- Which property management service do you offer currently? Different management companies offer different services. Ensure that your needs can be catered for by the services rendered by the company.
- What plans do you use in filling vacant units quickly without compromising tenant quality? This tells you the plans they use in leasing out units when given a deadline to meet.
- Which types of property do you manage? The approach employed by a PM who manages commercial properties is different from that of another that manages single family rentals. Always choose someone that suits your market.
This list gives you a head start in interviewing a property manager though you might still have other questions depending on your circumstances. Before you hire any PM, meet with the person one-on-one so as to get a better impression of the person. You would be able to determine if they are organized, keeps to time, transparent with information sharing, etc.
Reedy and Company is a property management company located in Memphis TN. We manage rental properties owned by local and foreign investors, and offer more services to property investors than most; everything from private financing, property management, and sales.