Your property manager has an important job to do: take good care of your investment. They do this by putting quality tenants in your property and keeping them there by taking care of them and the property. They have the challenge of taking care of both the tenant and the property owner, but they ultimately work for you. It is important that they have your back when it comes to issues with tenants, evictions, and maintenance requests.
There are a lot of questions you could ask a property manager, but these will get you started, and lead you to the follow-on questions that will help you determine whether they are the right fit for you, your property, and your long term goals.
- How long has your company been managing properties? This will tell you how established the company is and hopefully indicate their experience. You want your property manager to have great contractors because this means lower fees and rates for you plus quicker services. If they are just getting started, they may not have these contacts yet. Additionally, they may not have the experience or know local ordinances and market trends they need to know to be a great asset.
- How big is your company? And Who will be my go-to person when I have issues? It is important that the company have multiple people working in their office or on their staff. If you have a single contact and he happens to be on vacation when snow-pocalypse comes along and your roof caves in, you’re going to be in a lot of trouble, especially if you’re not living in that town and have no one to take care of the issue.
- What are your fees? How much to renew a lease? Find a new tenant? Monthly management fees? Service calls? Do I pay if the unit is unoccupied? Any other fees? These vary from market to market but should be pretty consistent (if not exact) from one company to the next in the same area. Expect to pay about one-half to one months rent to renew a lease, and 10% of monthly rent as a monthly management fee. Know that this is all negotiable, though, and the more doors you have, the better rates and the lower your fees should be.
- What are the terms of our contract? Ensure that you always have a way to get out of a contract if you are not happy with the way your property management company is managing your property.
- How many rentals do you currently manage? They should be able to provide an exact number very quickly. There is no real number that is good or bad, but it needs to be commensurate with the size of their staff. A couple, for example, should not be managing 600 properties on their own. And a staff of ten is not needed for only forty properties.
- What is your vacancy rate? Again, you want an exact number right away. “Low” or “we hardly ever have any vacancies” is not good enough. Your property manager should be regularly pulling metrics and data for this stat and others to prove their track record. Also, it is important to know what vacancy rate your market is accustomed to in order to know if they are competitive or not.
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- What types of properties do you manage? Retail, commercial and residential rentals are all different and need to be managed differently. I would not suggest you have a commercial management company manage your single family home because the type of tenant and application process is different and tenant issues will be different.
- What are your rental rates based on? Good managers know the market well and constantly keep tabs on the variables that affect the market. It is important that they know how to analyze a market to ensure they are getting their property owners market rents, at a minimum.
- How do you fill vacancies quickly? The key here is to ensure that they are not sacrificing quality of tenant to get someone in the property quickly. You will likely spend a lot more time and money evicting a bad tenant compared with waiting a few extra days or weeks finding a good tenant who will pay their rent and take care of your property.
- What are Fair Housing Laws? Here you just want to feel confident that your property manager understands both the local and state fair housing laws. Violating these laws could result in court time and hefty lawyer fees, so it is imperative that your property manager fully understand and enforce these laws, always.
- Are you insured? I like to keep this question open ended and vague. Hopefully they answer that they always carry errors and omissions insurance, as required, and also have a general liability policy at $1 Million or more. If they don’t give you these details, push for them until you get specifics, and then ask for proof.
- How long are units typically vacant after turnover? Two things are important here: time and turnover procedures. If your property manager claims they can turn over your unit in 3 days, I would say they probably aren’t doing a very good job of inspecting the unit and ensuring systems are maintained and the unit is kept at top condition for the next tenant. Look for a thorough plan to turnover and a timeline of around 30 days to get it ready for the next tenant and find a qualified tenant to rent.
- How do you handle tenant service requests? Ensure that your tenants can easily communicate issues with the property, and that the property manager is doing their part to inform you as appropriate, take care of your property, and work with the tenant in a timely manner.
- How and when will you provide me with updates about my property? Typically, a monthly report will accompany your rental income but you also want to know what type of maintenance issues require notification. You can specify when and how you want to be reached, and for what reason.
- Do you invest in real estate? While this isn’t necessary, an investor understands how important your asset is to you and will hopefully treat yours just and they wants theirs to be treated.
Written By: Erin Helle, Owner & Founder BC Global Investments, LLC