Not everyone is cut out to be a property manager. It takes a unique set of skills to be one. Generally speaking, successful property managers are:
- Passionate about helping clients achieve their financial goals
- Focused on details
- Excellent in communication
- Pleasant but firm
- Calm but not apathetic
- Understanding of how the local market works
- Willing to learn
With such skills, a property manager is worth his weight in gold. But how exactly do you find one with such skills? Simple, by asking the right questions. The right kind of questions will help you differentiate between an amateur and a professional.
Below is a list of the top 29 questions to ask before hiring a property manager.
General Questions to Ask Property Managers
1. How long have you been in the property management business?
This gauges the property manager’s experience level. The more experienced, the better. Ideally, look for a person who has been in the business for a minimum of three years. With such experience under their belt, the property manager knows the ins and outs of the property business.
2. What geographical area does your property management company cover?
This answers two questions: One, you get to know whether the management company is managing other properties in the area where your property is located. Two, you get to identify the diversity of their portfolio.
The first question is important because you want a property manager who understands the locality where your property is situated. The second question is equally important as you may want to expand your portfolio in the future. Having a single company manage your properties is better than having several.
3. How many rental units do you manage?
Too many rental units and you risk getting lost in the shuffle. Too few rental units and they either have lost clients or poor service. It could also mean they are inexperienced. Look for a property manager with preferably 200 to 600 rental units.
4. How do you decide the amount of rent to charge?
To maximize cash flow and reduce vacancy, you need a property manager who can properly determine rent prices. In order to determine optimal rent prices, the property manager needs to do a market analysis. Use this as a guide to ask more questions in this regard.
5. Are you associated with any professional organization?
Membership in a professional organization is a sign of competence. Examples of reputable professional organizations include the Institute of Real Estate Managers (IREM) and National Association of Residential Property Managers (NARP).
Select property managers with an active membership in any of these professional organizations. This means they are up-to-date with the latest trends in the property market and are therefore better equipped to perform their job.
6. What kinds of rental properties are under your management?
Only engage with a property manager who manages the type of property you have. Otherwise, it may be a disaster waiting to happen. You shouldn’t let them, for example, manage your condo or apartment if they focus only on single-family houses.
7. Do you have investments in the local property market yourself?
Look for a property manager who is also an investor in the local property market.
8. If dissatisfied with your services, can I terminate the agreement without a fee?
Obviously, no one wants to be held hostage. If the contract the property manager is offering seems inescapable, look elsewhere.
9. Can you describe Fair Housing Rules?
Every property manager should have an easy time answering this question. If they have a hard time explaining the rules, it means they aren’t experienced enough to manage clients’ properties.
10. What references can you provide?
A credible property manager will have a list of references. These references will also confirm whether they have experience managing your specific property type.
Questions About Management Fees and Costs
1. What are your monthly management fees?
You need to pay fees for property management services. The fees may include handling maintenance, emergencies, dealing with an eviction process, or hunting down rent payments.
Typically, property management fees are set up as a percentage-based fee or a flat fee. If it is percentage-based, it should ideally be six to ten percent of the monthly rent. If it is a flat fee, you’re better off looking elsewhere.
2. If the property is unoccupied, do I incur any fees?
Look for a company that charges a percentage of collected rent as opposed to a “flat rate.” The one that charges a percentage of collected rent only collects their fee if the rental unit is occupied.
But with a “flat rate” model, it means they get paid whether the unit is occupied or not.
3. What are your leasing fees?
Leasing fees for a tenant signing their lease for the second time and those for a tenant signing their first lease should obviously be different. Avoid a lease that has fixed fees.
4. Are there any charges if I wish to change to another property management company?
Many property management companies will try to lock you in with contracts. Some may be good while others may not. Preferably, look for short-term contracts. This way, if they’re unable to serve you, you can walk away without incurring heavy penalties.
5. What other fees do you charge beside management fees?
Before you sign on the dotted line, make sure you understand all fees. At the end of the day, the management company is there to make money. If it’s too good to be true, think twice. It probably is. They will likely compensate the low management fees elsewhere.
Other fees include:
- Vacancy fee
- Eviction fee
- Maintenance fee
- Late fee
- On-boarding fee
- Lease renewal fee
- Bill payment fees
- Returned check fees
Questions About Success Metrics
1. What’s your average occupancy length for tenants?
You need to know whether the property manager is keeping long term tenants in the properties. A long average occupancy length is a good sign. A short one is a red flag.
2. What’s your eviction rate?
An eviction rate that’s low is ideal. Otherwise, it’s evident they’re not doing something right. You should however, be wary of ones that say they’ve never had tenants evicted.
3. How long do your vacancy rates typically last?
Generally speaking, two to four weeks is considered normal. Any shorter than that may imply that the asking rent is too low. Any longer than that may indicate that the property manager is having a hard time finding tenants.
4. What’s your client retention rate?
Look for a manager who has a low client turnover. A high client turnover means something is likely amiss with their service.
5. What’s your monthly percentage of collected rent?
A good figure is always one hundred percent. If not, it means there is an unusually large number of tenants not paying their rent on time.
6. What is your lease renewal rate?
A lease renewal rate of eighty percent and above is suitable.
7. What percentage of your rentals are usually vacant?
A good vacancy rate should never be above four or five percent.
8. What percentage of the security deposit do you typically refund to tenants?
If this is close to a hundred percent, it means the manager is not making tenants accountable. If it’s too little, it means the tenant screening process is poor.
Questions About Property Management Services
1. What methods do you use to market properties?
Your property manager should be using a variety of channels to advertise your property. For example, using social media, rental websites and through realtors. You should steer clear of managers who only use traditional methods of property advertising. For example, erecting “for sale” signs.
2. Do you offer an eviction warranty?
Look for companies that offer an eviction warranty. An eviction warranty will give you peace of mind should there be unexpected events at your property.
3. How is your rent collection?
Do tenants have to write a check and deliver it to the office? This might have been fine some decades ago, but times have certainly changed. It’s 2018 now, and tenants should be making their rent payments online.
4. What various services do you offer to your clients?
Look for a property management company that handles multiple services. For example, leasing, administering in-depth background checks, conducting inspections and maintenance. It helps save money.
Questions About Communication
1. What’s your average reaction time to tenants and owner’s queries?
It goes without saying that owners and tenants deserve a “lightning quick” response. If not, continue your search.
2. How do you get contacted?
The channel of communication should be effective. Move on if they don’t have one.
Armed with these questions, you should be confident in finding the right property manager for your property.