So, you've decided to pull the trigger: 2018 is the year that you're going to hire a property manager. Congrats--you've made a wise decision!
It's important to realize, though, that not all property management companies are created equally. Levels of experience can vary widely, as can the rates that property managers charge. Some may leverage new technology, while others may be operating the same way that they did decades ago.
Just as you'd do your due diligence on an investment property, you should do your due diligence on prospective property management companies--because after all, they're who will be caring for your investment on a daily basis. Here are 25 basic questions to ask in a property manager interview--at a minimum!
25 Questions to Ask in a Property Manager Interview
- How long have you been in business? We recommend hiring a company that has been in business for at least five years. This allows a long enough track record to call references prior to hiring.
- How has your business model changed during that time? This will tell you how responsive the company is to industry changes and the evolution of technology.
- Which property management services do you currently offer? Not all property management companies offer the same services. Be sure that this company offers a full suite of services that meets your needs.
- How many rentals do you currently manage? This will help you to gauge the company's size and expertise. Be sure that the company isn't stretched too thin given the size of their staff.
- Do you manage any other rental properties in my area? You want to be sure that your property management company understands the nuances of your local rental market.
- Which areas does your company service? If you own or are considering investing in properties in multiple cities or towns, having a large coverage area could be beneficial.
- Which types of properties do you manage? A property manager who manages single family rentals will have a different approach than someone who manages commercial or retail properties. Be sure to find someone within your market niche.
- How do you set your rental rates? Any credible company should be able to run a market analysis that informs rental rates based on a number of variables, including your local market, the unit size, the amenities you offer, etc.
- Which strategies do you use to fill vacant units quickly, without sacrificing tenant quality? This provides insight into their leasing strategies when pressed with a deadline.
- Can you explain Fair Housing laws? A good property manager should be fluent in all local, state, and fair housing laws.
- Do your team members have specialized roles, or are they generalists? You'll want to know whether one person is responsible for managing your rental, or whether the company takes an all-hands-on-deck approach to service delivery (one person who markets the units, another who's responsible for repairs and maintenance, another who's an accounting expert, etc.).
- Which types of insurance do you carry? Look for companies that carry at least a $1 million general liability policy, as well as an errors and omissions policy.
- What are your monthly management fees? Management fees generally run anywhere between 8-12% of total monthly revenues, but can vary depending on the services offered.
- Do you collect management fees when a unit is vacant? If so, run away. Property managers should be incentivized to lease units quickly--and forfeiting a portion of their fee in the meantime is generally the industry standard.
- Can I cancel my contract without penalty if I'm unhappy? Avoid companies that try to lock you into a contract. You should be able to switch management companies if the service is sub-par.
- Are there miscellaneous fees that I should expect to incur? Some companies charge extra for marketing units, evicting tenants, turning over units, etc.
- What's your procedure for qualifying tenants? Learn whether the company uses background, employment, credit, and landlord reference checks as part of their screening procedures.
- What is the average vacancy rate among the properties you manage? Consider whether this vacancy rate is above or below the area average.
- How long do units typically stay vacant after turnover? Look for companies that will have units rent-ready and leased up again within 30 days, which should give them plenty of time to refresh the unit and perform any repairs.
- What's your process for handling service requests? You'll want to know what the process is for tenants to communicate service requests to the PM, as well as your role in the process. Will you be making final decisions about repairs and maintenance? Can you require authorization for any expenses above a certain amount? Look for a company with a well-thought-out process.
- How often will you provide me with updates about my property? You should be able to obtain information about your property as often as you'd like. More sophisticated PM companies will leverage technology (e.g. online dashboards) to provide you with real-time information about your portfolio.
- What is your preferred method of communication? If you are someone who insists on speaking over the phone, but this property manager insists on communicating by text or email, this could be a mismatch. Look for companies that are willing to communicate through various media--not just with you, but with residents and vendors, too.
- Do you have pre-existing relationships with local vendors? Find out who the property manager subcontracts with, and whether any discounts are available through those relationships.
- Will you be able to provide me with investment advice or help me to grow my portfolio? More advanced property management companies will be able to help you to identify market opportunities--whether through the purchase or sale of assets--and help you to position your assets in a way that maximizes your return on investment.
- Do you personally invest in real estate? If so, that's a good sign--it indicates that the property manager has an investor's mindset and will hopefully care for your property the way that they care for their own.
Depending on your specific circumstances, you'll probably have other questions to ask potential property managers; but this list of 25 questions to ask in a property manager interview is a good starting point.
You likely already know this, but always be sure to meet with property managers in person before deciding to hire them. This will give you a better feel for the person. For instance, was he on time? Did he seem organized? Was he transparent in sharing information with you? It's easy to hide behind a guise online or over the phone; in-person conversations reveal so much more.
Ready to start interviewing? Let All Property Management help you to find property managers located in your area.
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