Questions to Ask When Interviewing a Property Manager
Are you new to rental investing? Are you a do-it-yourselfer ready to pass the torch, or are you just not satisfied with your current rental management? Whatever the reason, considering having your property professionally managed is a wise choice. Being prepared to ask some questions of a potential property manager or management company and interviewing them before hiring one, is a great way to get to know who you will be doing business with.
Unfortunately for the consumer, not all property management companies are created equal. Levels of experience can vary widely, as can the rates that property managers charge. Both of these factors ultimately make a huge difference in time and money. Furthermore, differences in values can spell dissatisfaction in service and relationships.
Just as you’d do your due diligence on an investment property or any other major decision, you should do your due diligence on prospective property management companies as they’re the one that will be caring for your investment on a daily basis. Doing so can set you up for satisfaction.
Below are some questions to ask a property manager before hiring one. These questions should be a good starting point in your conversation to evaluating whether or not the property management company and manager would be a good fit to your needs.
How long have you been doing property management? It can’t be stated enough. Experience matters. It saves time, money and reduces stress. A less experienced company will be learning a lot along the way. Property management can be challenging. It is diverse with complex relationships and extensive laws. A company that has been in business successfully for at least seven years should have some viability and credibility. This also allows a long enough track record to call references prior to hiring.
How many rentals do you currently manage? This will help you to gauge the company’s size and expertise. While the size of the company is a personal preference, expertise should not be overlooked. One factor to consider is that many real estate agents that sell often provide rental management on the side, but not in volume. Rental management may not be their area of expertise. While managing on the side can be a helpful transition service, often times the agent is not necessarily prepared to offer the same value of full services for a long-term rental investment that a company specializing in property management can offer.
What property management services do you offer? Not all property management companies offer the same services. Be sure that this company offers a full suite of services that meet your needs and goes above and beyond just simple rent collection. Look for those that leverage technology, include regular property documentation, provide frequent financial reporting and offer a live owner account login. It is important that they provide a plan for when something goes wrong, such as eviction if necessary. Ask for clarification regarding what is included in the management fee and what is an additional service.
How do you set your rental rates? Any credible company should be able to run a market analysis that informs rental rates based on a number of variables, including your local market, the unit size, the amenities you offer, etc. It is important to price a rental based on the current market rate, being careful not to overprice or underprice, as this will reduce vacancies and optimize rent. A skilled property manager should be able to accurately provide this number with relative ease and comparable properties.
What is your process like and how will the property be marketed? A good property manager should be able to clearly outline the rental cycle, what service is provided at each step and what you can expect along the way. They should be able to communicate a well-defined process from start to finish. The marketing plan should be comprehensive including multiple advertising channels and showing the property. The marketing component is critical to getting your property rented right away. Be sure they can explain this process in detail. An added bonus is if they can tell you how their services will attract and retain tenants.
What are your monthly management fees? While some companies have different pricing structures, many management fees generally run fixed anywhere between 8-12% of total monthly rent collected. This can vary however depending on the services offered and the number of properties you need managed. Be sure to also ask if they charge a fee if a property is vacant. Some companies will charge even if the property is not occupied. Property managers should be incentivized to lease units quickly. Forfeiting a portion of their fee while the property is vacant is generally the industry standard. Who wants to pay a management fee while there is no rent coming in?
Are there miscellaneous fees above and beyond what’s included? This is important to ask for transparency. Some companies charge extra for marketing units, inspections, evicting tenants, turning over units, etc. Again, this goes back to being clear on what you can expect to pay. You will not want to be surprised. The eviction process is an expensive process and this typically costs extra as it goes above and beyond the typical scope of duties.
What is the screening process and how do you qualify prospective tenants? It can not be emphasized enough: screening matters and is extremely important. A process beyond a simple application is necessary for long-term success. Learn whether the company uses background, employment, credit, and landlord reference checks as part of their screening procedures. A thorough screening process is critical for a successful rental experience and should be provided at no additional cost to you.
Can you explain Fair Housing laws? While you may not necessarily want to learn about Fair Housing Laws, a professional property manager needs be fluent in all local, state, and fair housing laws. If they are not aware of them, take your business elsewhere. Being familiar with the law is their job. Preventing lawsuits for you is a compelling benefit and a difference between a professional property management company and one that isn’t.
What’s your process for handling service requests? You’ll want to know what the process is for tenants to communicate service requests to the property manager, as well as your role in the process. Will you be making final decisions about repairs and maintenance? Can you require authorization for any expenses above a certain amount? Is there good communication or flexibility surrounding this? Look for a company with a well-thought-out process and one that keeps you in the know, if that is important to you.
How do I cancel my contract if I’m unhappy and what are the consequences? Like any other service provider, you will want to know what your choices are if things are not going well. Avoid companies that try to lock you into a contract. Minimally, you should expect that the company will need to at least recoup their initial cost invested in your property. However, you should be able to switch management companies if the service is not satisfactory to you.
Do you own your own rental properties? Other investors understand the ins and outs of rental properties. Aside from understanding the nuances and potential challenges, it also can indicate that the property manager has an investor’s mindset. Hopefully this translates to caring for your property the way that they care for their own, complete with the highest fiduciary responsibility to you.
Basically these questions to ask a prospective property manager are just suggestions to help you begin to navigate an interview as you consider hiring a professional management company. Above all, you will want to determine if they can meet your management needs, whether or not you like and trust this person as well as have the ability to openly communicate back and forth. This makes for the best owner-management relationship and a good foundation for a successful rental investment experience.
Ready to start interviewing? Give Tri Home Life a call today for a free, no obligation consult at 303-390-1665.
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