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63 Questions to Ask a Potential Property Manager

63 Questions to Ask a Potential Property Manager

63 Questions to Ask a Potential Property Manager

Real estate investors building their team need a property manager, but with so many property management companies out there, how can you find the best one that works for you? If you are an investor holding only a few properties, you may want to manage them yourself. At least for a little while, for one to save money, and two it's a great way to learn what potential problems might come up. This will show you how they can be fixed as you grow your portfolio.

Once you start buying properties outside of your area you will want to hire a great property manager/company. One that you can rely on and that has your best interest in mind. Be careful, many people claim that they can be a property manager, and most investors spend more time managing their property managers than they would if they had just managed the property themselves. This role is one of the most important players in your power team. You cannot scale your real estate business without them. During the interview process for this position in your real estate business, make sure to ask detailed questions. Below is a list of questions you can ask, and you’ll come up with questions of your own as it relates to your business and properties. Use this as a guide to find out how qualified they are to help get you started.

  1. Find out if they are a licensed property manager. Most states require this, but you can check it out with the local Department of real estate to determine what your local requirements are.
  2. What qualifications do they have? What is the last continued education they have completed. Please, this is important as property owners do not want to be held legally liable for a mistake that the property manager might make
  3. Are they insured? They must be insured to protect themselves from hiring unlicensed contractors or from wrongful addictions and many other things.
  4. Have they ever owned a rental property themselves? This is beneficial as once they have been in your shoes; they know exactly how you feel about having tenants of their own.
  5. What real estate experience did they have prior to becoming a property manager? This can be extremely beneficial if they are experienced in other areas, perhaps a former real estate attorney.
  6. How long have they been in business? This will show how established and experienced they are.
  7. What neighborhoods or properties do they specialize in? Each property manager can specialize in different areas, some single-family property managers may not want to manage a multi-family complex or commercial. It's important to ask which areas of the neighborhood they cover and why to see how they know their market.
  8. How many properties are they currently managing, and if they manage long term or short-term rentals. It's important to ask this question as some property managers only manage short-term rentals, this means they may not be interested or have the time to manage a long-term tenant.
  9. Ask them if they work alone or if they have a team. It is important to ask who the primary point of contact is, as well as team support.
  10. Are they strictly a property manager or are they a realtor/property manager? There's nothing wrong with that, however trying to juggle two professions at once might be a challenge for them.
  11. What makes them different than everyone else out there? If they have additional support that can help your business, then take that into consideration with the potential cost difference.
  12. Ask how many clients they currently have, and if they would feel comfortable if you spoke with one or more of them. This can offer a lot of insight into how they manage properties by speaking with other landlords.
  13. Do they charge a monthly management fee, or do they charge a percentage of whatever is collected of the rent?  Any fee you pay will need to be worked into your budget and ROI.
  14. Ask them what their policy is if the property is vacant. They should not be collecting a fee for vacant property. They might be able to let you know vacancy rates in that area.
  15. Find out what their fee is for finding new tenants. Every property management company is different, some charge a percentage or the first month's rent for finding a tenant.
  16. Find out what their policy is for collecting monthly rent and what days typically rent is collected on. Typically, the first and third of every month and then usually the property manager deposits the funds into the owners' account between the fifth and the 10th of the month.
  17. Ask them if they do a trial. That way you can see if they are a good fit for your business.
  18. Find out if they have a termination clause in their agreement note. There's not a standard length for rental property management contracts, however the contract can vary in size of the rental property and the nature of the work that needs to be done. Find out if there is a clause in the contract and in what circumstance either party could terminate the contract.
  19. Find out what other properties they currently manage and if it competes with what you're currently doing. The property manager should have a policy regarding how to handle potential conflicts of interest when they have two clients that are trying to attract the same kind of tenant.
  20. Find out if they have a late fee policy and the amount they charge. This is key to keeping tenants on time with her rent. Usually, a late fee is 10% but it can be based on the state and the property management company. This is very important as a late fee is the biggest incentive for tenants to pay on time.
  21. Ask if the property management company has a clause in who keeps the late fees this can cause a lot of financial frustration if the property manager is keeping late fees or pet deposit fees.
  22. Find out if the property manager has any legal history, have you ever been sued by a tenant or a previous landlord? And if so, under what circumstances and what was the outcome? This is important as hiring a property manager with a legal history may not be the best course of action.
  23. Find out if he's ever been accused of discrimination in their screening process for potential tenants. Make sure they understand the fair housing law and find out if they ever were accused of discrimination under what circumstances and what their outcome was.
  24. Find out if the department of real estate ever filed an accusation or a complaint against them or their company. And if so, what the circumstances were and what was the outcome?
  25. How often will the property manager reach out to you and communicate about the properties? What is their procedure? Via email, text message or phone calls? Some property managers believe that no news is good news and others like to be informed regularly about what's going on in their properties. Usually, a monthly report and rental income in the monthly report it will typically outline any maintenance issues that might've come up communication is key and is a common complaint about landlords and property managers as a landlord you can determine when and how often you want to be contacted.
  26. Find out what the property manager expects out of you as the landlord. Having an understanding of the relationships should be upfront and agreeable.
  27. Find out what their turnaround rate is if a property manager reaches out to them what is the expected timeline for the property manager to get back with the landlord.
  28. Find out if they have any clauses in their contract regarding the landlord contacting tenants.
  29. Make sure you find out what their rental criteria is for screening a tenant and make sure that it's clear who decides to except a possible tenant or deny the property manager or the landlord.
  30. Make sure to find out what the timeline is for approving tenants and getting a lease signed this is important for landlord to choose at the right expectation on vacancy rate.
  31. Always make sure as a landlord you go over your property managers lease agreement you want to make sure that you're not liable for anything in the agreement that you did not agree to.
  32. Find out how they handle the security deposits and who holds on to it, the landlord or the property manager?
  33. Find out if they do lease agreements sight unseen and if they do they have a special addendum in their lease agreement. This is important as site unseen means the tenant is not doing a walk-through of the property before they move in.
  34. I know we mentioned this before, but it is hugely important to make sure your property manager understands the fair housing laws. Ask them what common mistakes they see landlords and property managers make regarding these laws asking these questions will make the property manager show you whether they've reviewed the federal fair housing law and if they know and can spot violations again. This is hugely important as violating any of these laws could result in court time and hefty lawyer fees. It's very important that you make sure that your property manager and you both understand and enforces these laws without exception.
  35. Ask your property manager to walk you through and eviction process ask them how many addictions they had last year. It's good to find out if the property management company does the eviction process in-house or if they hire someone else and what that procedure looks like.
  36. Find out if eviction process is included in their cost or if they charge an additional fee.
  37. Find out what their definition of rent ready is, and how long it takes them to turn a vacant property.
  38. Is the lease agreement they use automatically renewable, or what the renewal policy is? As an investor you need to know if the property manager renews everyone's or if people are specific issues against them are not renewable.
  39. Find out how much notice they give a tenant to move out. The standard is typically 30-to-60-day (about 2 months) notice.
  40. Make sure they always do a pre-inspection before a tenant moves out.
  41. Find out if they show the property while the current tenant is still in the home.
  42. Find out what their schedule payment is when a new tenant moves in. Some landlords do not want a tenant moved in until they have all of the deposit and the first month's rent. It's important to set the right expectations between you and your property manager so that there are no surprises down the road.
  43. Do they have a termination clause if a renter has not paid after several months?
  44. Find out if they have a breakout clause. A lot of tenants will say they are going to stay 12 months and then end up wanting to break their lease after three or six months
  45. Find out if they take pictures of the property before and after a tenant moves out. Documenting is key to the property condition and any disputes that may arise because that is likely and you should plan on it.
  46. Find out if the property manager does a property inspection annually. This is scheduling a visit to the property. It's important to know how frequently he or she will check the property out on site and hold your tenants accountable.
  47. Make sure there is a clause in the lease agreement for extra fees covered by the tenant for damages caused to your property that are not natural wear and tear.
  48. Make sure there is clear understanding with who keeps the damage deposit, the landlord or the property manager? Part of the security deposit may cover the damages but if the damages exceed the security deposit and a bill is sent to the tenant to cover the rest, make sure it's clear who keeps that money the property manager or the landlord?
  49. Make sure you understand as the landlord, who returns the security deposit and does your property manager need approval to return a security deposit? Most property management companies do not return the deposit at the move out day or even the first week after.
  50. Make sure to ask them who they use to do the repairs. The people that you have recommended, or do they have their own pool of people that they use? You’ll want to verify the rates and costs to make sure you’re being charged a fair rate.
  51. Make sure it is outlined in the lease agreement who covers pest control on the property, some landlords require the tenant to cover it but again this is a topic that should be covered with your property manager as well.
  52. Make sure if they are using a contractor that they recommend find out how they are vetting them and are they licensed and insured? Very important. The last thing you need as a landlord is a contractor that doesn't know what they're doing and comes in to repair a property and gets paid for it and doesn't do the job correctly.
  53. It's important to outline with the property manager what is the standard dollar amount threshold for the owner to be involved? If a refrigerator needs to be replaced and it cost $800, do they have to ask for permission from you as the landlord to replace it? It is also good to ask the property manager to send you the invoices with before and after pictures. This is an extra level of accountability to make sure that everyone is doing their job correctly and a reasonable request.
  54. Find out if the property manager charges a coordination fee. For example, a property that you own has been trashed and needs a ton of renovation, is it the property manager's job to be out there overseeing the contractor and if so, what fee do they charge for that?
  55. Make sure as a landlord you know what the property manager has set for an expectation from the tenants as when they can reach out to him or her regarding any issues. And if they have a timeframe for response. Multiple communication methods should be allowed, as text message is the fastest most property managers agree to 24 to 48 hours (about 2 days) response time.
  56. Ask the property manager what they consider emergencies and how they handle their emergencies and if they charge extra fees for this.
  57. It is important to know if your property manager knows how to communicate with the tenant and troubleshoot repairs. Some repairs or common mistakes can be mistaken for a major problem. It is important that your property management manager knows how to troubleshoot these issues before they contact a contractor directly.
  58. Find out if the property manager uses online programs or software to streamline their operations.
  59. Find out how they market a property asking to show you an example of a listing.
  60. It is important for all parties to make sure as a landlord you know, if they advertise the property, will they show it while tenant occupied or if you insist on the property being vacant before they will start advertising to rent. If you wait for the property to be vacant you can be 2 to 3 months with no rental income.
  61. Find out how they determine to raise the rent or if they will keep it the same. Would there be a reason they wouldn’t, even if the current market called for it? This is important since some people do not believe in raising rent. But remember, as a property owner you must factor in taxes, insurance and repairs.
  62. Find out if they perform a market evaluation for every renewal because it is standard practice to raise the rent every time a renewal comes up so the property manager should make a market evaluation and recommendations on raising rents if needed.
  63. Find out under what circumstances they would recommend lowering the rent to fill a vacancy. Remember each day that a property remains vacant is another dollar that is slipped out of your pocket! A good property manager will know when to reduce rents to maximize occupancy.
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As you can see; a good property manager is a key player to a landlord/investor. It can be a profitable long-term relationship with benefits in it for both parties. Again, make sure before you hire a property manager, as an investor you should always spend some time doing research. Of course, conduct a thorough interview and follow up with referrals before making your final decision. This powerful player on your power team not only your eyes and ears on the ground, but they also represent you so make sure you choose them wisely!

Areas of Review

Takeaway

Big picture takeaway points

  1. It is possible to manage your own properties, but not ideal once you’re portfolio grows and you are investing outside of your market.
  2. There are certain qualifications a property manager needs to have.
  3. Know what questions to ask, and don’t be afraid to ask them…this is your livelihood.

Reflection

Self-reflection questions to think more about the content

  1. Is my property manager licensed and insured?
  2. What kind of experience do they have? Are we on the same page when it comes to my investments?
  3. Have I checked with any former employers/referrals?

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