As a self-managing landlord I pride myself on being able to manage my properties myself. Unfortunately, self-managing is not for everyone for various reasons whether it’s not your thing OR you are not in a position to do so, or anything in between. Even myself, the self-proclaimed self-manager will someday use a property manager.
Over the years I have learned that not every property manager is made equal. Therefore your job as the owner, is to find a property manager to find that amazing property manager who will make your house into an amazing asset not a financial liability.
As a self-managing property manager my lease is my bible that has 38 addendums and is 16 plus pages long (http://www.reluctantlandlord.net/create-a-rock-solid-lease/). Your property manager should be treated the same way. You, the owner, are ultimately the one who has to answer for all that happens with your investment, so you need to make sure you are hiring right manager. You can do this by properly vetting your manager.
Author’s Note: Many of these questions can be solved by examining the lease/property management contract first. Personally, I would want a copy of the property management contract before my first interview so I could put together all my questions from that BEFORE I talk to the property management. This way, you are not asking questions that are answered in the contract AND you can follow up directly from the contract. Remember: it doesn’t matter what they say, it comes down to what is in writing, i.e your contract.
- What do you charge for your application process? Some companies charge a high amount to applicants, others charge the owners, and some may include it in your monthly fee.
- What form do you use for the move in/move out inspection? Personally, I would want to see the forms as this is what you can use to prove the tenant did damage.
- Do you take video or pictures? What is your criteria for what you put down on the forms? The more detailed the company is, the easier it will be if you ever need to go to court.
- How often do you do inspections during a tenant’s term? Many property management companies do yearly or quarterly inspections.
- How do you document the inspection and do you send it to the landlord? If they are supposed to do inspections you want to make sure you receive a copy. You also want to make sure the inspections are documented.
- How do you handle the security deposit? You want to know where the security deposit will go and who holds on to it. Will it be given to you or will they be holding on to it?
- How do you charge for tenant’s damage during their lease term? You do not want everything to wait until the security deposit is due at the end of the leasing term. You want it to be taken out as the damage is done because the security deposit is their incentive to not cause an issue.
- If there are damages upon move out who does the accounting (you or the owner)? If the tenant does a ton of damage you want a property manager who is going to pursue the tenant for you. First, by taking it out of the deposit and then by sending them a bill for the rest.
- If the tenant has damages that exceed the security deposit do you come up with the documents and pursue the tenant? Every company does this differently, so it is important to know who is responsible for what.
- When do you return the security deposit? Do you get approval from the landlord first? There has been a lot of issues with property managers returning the money too soon and missing deductions for tenant damage. Personally, I use almost the entire time provided by law so I can make sure there is nothing missing before I return the deposit. I do not return the deposit at the move out or even during the first week.
- Do you do a pre-inspection prior to the tenant move out? I only do one in California as required by law, but requirements and standards may differ among companies and states.
- What is your maintenance minimum/policy? A lot of companies have a number, say $200, in which they will approve any repair under that amount. It is important to take note of this as these can really eat your profit.
- Do you charge for an additional fee for maintenance? Some companies charge 2% or more on the repair costs or maintenance.
- Do you get multiple bids from vendors? I personally like multiple bids, especially when the scope of the work is large.
- Is your maintenance in-house or from a vendor? This could determine cost of maintenance and also could indicate how well they are able to handle spur of the moment emergencies.
- How do you handle off hour emergencies? Does the company’s staff receive the calls 24/7 or do the calls go to an answering service? Also check if there is a surcharge if there is a night or weekend emergency.
- What do you consider emergencies? What is their definition of an emergency? This will tell how quickly a tenant’s problem will linger or if they will get service right away.
- Do you ask permission or just fix and bill? Some emergency repairs can cost a small fortune. If you want to decide what gets fixed and know how much it will cost you, you should make sure that communication will be present.
- How much time do you leave between tenants? I try to schedule things as quickly as possible so my downtime and therefore vacancy is as close to zero as possible. The key to this is being on top of things. Some people schedule weeks in between tenants, so you’ll make sure this amount of time is at a minimum.
- Do you show the house while the current tenant is in the home? One of my ways to keep costs down is to show the house while the tenant is still in the unit, instead of waiting for them to move out. Although scheduling may be more difficult, it helps fill a vacancy quicker.
While this list seems very long and complex, many of these things will be answered in the lease and property management document/contract. This is not supposed to be a complete list, but rather a starting point to begin your interview and selection of the best property management.
Happy Property Manager Hunt!