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 next 20 questions to ask yourself when you are vetting your property manager. To view the first 20 questions covered in Part 1, click here.
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.
- Do you offer a reverse military clause? As an empire builder who buys homes that my family will live in too, I find it is important that we always have the option to move back into our home. Therefore, we include a reverse military clause in our lease. However, some companies will not allow this clause so it is important to know the property management company’s policy.
- Do you have a rental deductible? I am a huge believer in tenants having skin in the game so that they do not call over senseless items and repairs that cost money and cause headaches. These repairs can eat you alive and do some serious damage to your bottom line.
- Do you have lease language that requires the tenant to pay for any damage they cause that is not wear and tear? If you break it you buy it. I charge my tenants for anything they break. I would ask my management company if they do the same thing.
- Do you troubleshoot with your tenants when they call for repairs? One of the things I have done to help reduce service calls is to troubleshoot with my tenants. I ask them if they tried the breaker, put a new light bulb in the socket, etc., so I would want to know if the property management company will try to troubleshoot or if it will end up being something silly if the tenants are required to pay the service call.
- Do you do site unseen leases? If yes, do you have a special addendum? I know some places won’t rent sight unseen which is a huge disadvantage in military areas. This has caused problems for me and others in the past so I have fixed this issue by having a provision in the lease.
- Who pays for pest control? As discussed here I don’t include pest control. So make sure to go over who is responsible.
- Do they do as/is appliances? I put any appliances I don’t want to replace as “as is” in the lease.
- How much notice do you require at the end? I require my tenants to provide 60 days’ notice but other companies and areas have different rules.
- Is the lease automatically renewable? I personally don’t like automatically renewable leases, as you could forget and end up in trouble. That being said, I know some places do, so make sure you follow up on this to see if you property management company offers this service.
- What is your renewal policy? You want to know if they renew everyone or if people with specific dings against them are not renewed.
- Do you charge for renewals? Some companies charge a renewal fee to the owners if the tenant stays.
- Do you do a market evaluation at every renewal? I am a believer in raising the rent every time a renewal comes up. So I would want a market evaluation and recommendation to raise rates if needed.
- How do you determine to raise the rent or keep it the same? Will you raise rates on good tenants? Is there a reason you wouldn’t raise the rent even if the market called for it? This is important since some people do not believe in raising the rates.
- What does the monthly fee include? Make sure you know exactly what you are paying for. Some places are more full service than others. Every agency has different standards and goals. I know some agency who do professional photos and others charge for it, so get them to go through what it includes.
- Do you have any additional charges or fees (pet, placement, maintenance, etc.)? What does my monthly charge not cover? You want to look at a contract closely and ask specifically. Some companies charge a flat price that includes everything. At other companies the monthly price is lower, but they nickel and dime you on additional fees.
- Who keeps the fees that the tenants pay? You want to know who keeps the late fees, pet fees, etc. This can cause a LOT of issues so review the answer to this question closely. If your tenant pays you late and the management company retains the fees and you were expecting to be compensated this can cause a lot of financial frustration.
- How is the money dispersed? Many property management firms only send checks, so this is a very important question.
- When is the money dispersed? Most mortgages are due the 15th. Make sure you receive your checks in time to pay your mortgage.
- What is your advertising strategy? (Places advertised, professional photos, etc.)? Every company has a different marketing plan. Some companies take professional photos and others do not.
- What rental price do you recommend? You want to know what they think it will rent for and why. Some companies will overprice the rent because charging higher monthly rent will mean the company gets paid more if they charge a percentage of monthly rent. Others will underprice the rental so that it is get rented out faster. Make sure it is priced right.
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 3 and Part 4 additional questions you should be asking your property manager.
Happy Property Manager Hunt!