Are you thinking of hiring a property management company? Then you need to ask the right kind of questions. With the right questions, you stand a high chance of selecting an efficient, effective and reputable property management company.
Here are 32 general questions to ask before hiring a property manager.
- What services do you offer clients?
- What’s your level of experience?
- What criteria do you use in coming up with the rent amount?
- How many rental properties do you manage?
- Are you affiliated with any professional organizations?
- How many staff members do you have?
- What type of insurance do you carry?
- Are there any fees for pulling out of the contract?
- Is your company part of a franchise or privately owned?
- Can you give a few references?
- How well-versed are you with the Federal Fair Housing Rules?
- What types of properties do you manage?
- Do you mark-up on repairs and maintenance?
- Is there a maintenance reserve requirement?
- Do you require renters to have renter’s insurance?
- What control do I have over the tenant lease agreement?
- What is your timeline for evictions?
- What steps do you take to ensure that I’m getting quality tenants?
- What’s your average response time to owners and tenants?
- How do your tenants contact you?
- How often will I get updates on my portfolio?
- On average, what’s your occupancy length for renters?
- What’s your eviction rate?
- How long are your properties typically vacant?
- What percentage of rents do you collect per month?
- What’s your lease renewal rate?
- What methods do you use to market properties?
- How do you collect rent from tenants?
- What are your pricing options?
- What miscellaneous fees do you charge?
- Are there any fees when the property is vacant?
- What percentage of your rentals are usually vacant?
Managing a property comes with many responsibilities. From finding tenants and dealing with complaints, to initiating evictions. You want to hire a property management company that can handle multiple functions.
For instance, they should be able to administer in-depth background checks, conduct inspections, and provide top-notch maintenance.
Obviously, you’re looking for a property manager who’s well experienced. You wouldn’t want a property manager who’s been in the business for several months, would you? Preferably, look for someone who’s been in the business for not less than four years.
At this point, they aren’t struggling to figure out how to effectively run their business.
An experienced property manager should be able to determine the highest possible rent amount for your property. There are a number of factors that he or she should consider. For example, checking comparable rental listings, local amenities, the property’s amenities, and the property’s value.
You need to find your level of “just right.” A minimum of 80 units and a maximum of 600 rental units is ideal.
When there are too many units, you can get lost in the shuffle. Alternatively, too few units can signal their inexperience. These are simply guidelines we recommend you look out for but not definitive by any means.
Do they belong to their local association for Realtors? Do they belong to the National Association of Residential Property Managers? Affiliation with any of these professional organizations point to a professionally run property management company.
Too few staff members and there’s a high likelihood of poor service. Too many and you can get lost in their sea of clients. The size of the company can give you an idea of what to expect.
Property managers need some type of insurance coverage. In North Carolina, property managers require a real estate license. Check to see what your state requires and only interview property managers who bear such certifications.
Some contracts are inescapable. As such, you should first understand the terms before signing on the dotted line. Some companies will keep your business with great service while others will try to hold you captive with a contract.
Most franchises are less flexible and have different concerns as compared to companies that are privately owned. Additionally, they’re less concerned about service and more frequently concerned about their bottom line.
For example, think about the quality difference between McDonalds and your local burger joint… can you see the difference?
Past performance is often the best indicator of future performance. A good property management company will have a good number of references. You could also ask to see those for your exact type of property.
In addition, you should check their online reviews and look for any red flags.
The Federal Fair Housing Rules help protect a tenant from landlord discrimination. For instance, a landlord cannot discriminate a tenant based on the color of their skin, their national origin, sex, familial status, disability, and so on.
If the property manager is finding it difficult to explain these rules, look elsewhere.
You want a property manager who manages your type of property. Each type of property requires a specific set of skills. Managing a commercial property has different requirements than managing a single-family home. Don’t risk it. Make sure the company has experience managing your type of property.
Your profits could greatly diminish if your company makes a profit any time they do maintenance. Needless to say, look for ones that don’t.
Property management companies require the owner to come up with a budget for maintenance and repairs. Typically, older properties require higher maintenance reserves than newer ones.
Make sure the maintenance reserve they’re asking is reasonable.
Renter’s insurance provides protection for your tenants and your property. It usually covers against perils such as vandalism, theft, and fire. You’ll want to find out if the property management company requires renter’s insurance when a tenant moves in.
By asking this question, you’ll get to know whether the manager is confident in the leases they have written or not.
Look for a property manager who strictly adheres to the lease terms. The eviction process should start immediately in case of any serious violations.
Look for a property manager who has a properly laid out criteria when it comes to tenant screening.
You and your tenants deserve a reasonable response time. Period. If your tenants need to wait 3 weeks to get a reply from their property manager it’s highly unlikely they’ll stick around for a long time.
There should be an effective two-way communication process in place between property managers and their tenants.
Look for a property management company that regularly keeps owners updated on their portfolio. Your properties are, after all, your business.
The longer the average occupancy, the better. It signals that the property manager is doing a good job.
A low eviction rate is a good sign. On the other hand, a high eviction rate indicates the manager is doing a poor job regarding tenant selection.
Ideally, two to four weeks is the average vacancy time. Any shorter than this may mean that the manager is likely leaving money on the table by asking a rent amount that’s too low. Any longer than this and it may mean the manager is having a hard time finding tenants.
A near one hundred percent is okay. Anything less should raise red flags.
Anything above eighty percent is great. It shows that the property manager is doing a great job keeping tenants happy.
Does the property manager’s system include a proactive marketing strategy? At this day and age, marketing strategies should be more than a “for rent” sign on the street corner.
Your property manager should be advertising properties through a variety of channels. Steer clear of managers who still just place newspaper ads.
Any landlord’s worst nightmare is playing “catch me if you can” with their tenants’ rent. Preferably, look for a property management company that requires tenants to make their rent payments online.
An important aspect and consideration in having a property managed is cost. Every management company is different with their pricing structure but should be clearly outlined and never a random fee.
Specifically, you should ask to see if the company offers a flat rate or a percentage of the rent amount.
Property managers charge a variety of fees to compensate for work performed. Before signing on the dotted line, it’s important to understand these fees. The fees charged depend on what you want the property manager to do.
Besides the typical eight to twelve percent management fee, there can also be fees for maintenance, new tenant placement, tenant occupied placement, vacant unit, evictions, and so on. Be sure to find out all the details before hiring a property manager.
This is a very important question to ask. You’ll get to know whether you’re still charged when the property has no tenants or not. When you’re charged in terms of a percentage of rent collected, it means that you won’t be charged for a vacant unit.
On the other hand, if you’re charged based on a “flat rate,” it means that you’ll be charged regardless of whether the unit is vacant or not.
A vacancy rate of below five percent is ideal.
Knowing what questions to ask your property manager is a large part of finding the best specialist. Undoubtedly, these questions will help you screen the middle-of-the-pack managers from the top-performers.