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.
Here are the first 20 questions to ask yourself when you are vetting your property 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.
- Will I have one specific property manager? Who will be my property manager? You want to know who will be your specific property manager and know their name. I am all about accountability. You want to know and meet your property manager not just the marketing director or whoever is in charge of new business.
- Who is the head of the office? You want to know the broker in case something goes wrong. Brokers have property managers who work under his or her license, so ultimately it is the head broker who runs the show.
- How long have you been a property manager? The length of time is important to know. That being said, a hungry newbie who wants to learn, in my experience, is often times better than the most advanced person because they care.
- How many units do you manage? For me, this is more food for thought. There are benefits to a large office and also to a small office, the key is to know which one you are getting into and to make sure you are comfortable with the pros and cons.
- What is the average length that clients stay with you? You want a property manager who is in it for the long haul. While you might not always get a truthful answer that can be substantiated, it is good food for thought.
- Do you just manage or do you sell too? Most places do both. That being said it is good to know to assess people’s motivations and goals. You want a company that still prioritizes property management even if it doesn’t make as much income as selling.
- What do you offer that sets you apart from other companies? You want them to sell themselves, to tell you how they are different than other companies. Remember, this is an interview for both parties.
- What do you expect from me as the owner? What is their expectation about your involvement? Some people want to be very micromanaged and others do not. It is important to know the exact expectations that the property manager will have of you.
- How often do you communicate with the home owners?This is very important, since communication is key. It is really important to know for what issues you will be notified, how quickly you will be notified, and in what way you will be notified.
- Do you provide the owner’s information to the tenant? Some people hire property managers so they do not have to give their information to tenants. If you’re one of these people, be sure to communicate this early on.
- Do you have a policy about landlords contacting the tenants? Some management companies will not allow landlords to contact the tenants in the house.
- Do you have a requirement for your property management clients to use you? Do you charge if the tenant decides to buy the house? Many property contracts require the landlord to pay fees if the tenant decides to buy or they sell. Make sure you check this clause closely.
- How often do you reach out to the owners? Can you give me examples of how and when you would communicate various problems? Communication is a very big concern and complaint. The last thing you want is to be learning everything on your monthly statement. The best way to have clear expectations is to understand when a property manager will notify you and when they will not.
- What is your turnaround time on phone calls and emails from owners? Some of the biggest complaints I see from property owners is that they do not hear back or receive phone calls from property managers quickly enough. This is why you want to know what to expect and how long it will take to hear back from your property manager.
- What is your monthly charge? Every management company calculates their fees differently. Some charge 10% and that includes everything. Others charge 6% and add extra fees, so make sure you read the fine print.
- Who is the lease between? In some cases the owner is on the lease. In other cases it is the management company that will be on the lease.
- Do you provide a copy of the lease to the owner and when?One of the biggest issues I see is the owners not receiving a copy of the lease, so they are not able to verify when questions and issues arise with their property manager.
- How long is the lease? Some property managers only do a month-to-month lease, others do a one year, and some do multiple years. Personally, I do a month-to-month lease. Here is an article I wrote about month-to-month leases versus a one year lease.
- Do you charge extra for month-to-month leases? I charge $300 more per month for my month-to-month lease. It is important to know what their policy is and who gets the fees.
- Do you include a break-out clause in the lease? I have a lot of tenants try to break their lease. For me, this clause has been a lifesaver. Here is my policy for my break lease clause.
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. Be sure to read Part 2 next week for 20 additional questions you should be asking your property manager.