If you are looking considering hiring a property manager or property management company to handle your rentals here are 11 questions to ask when hiring a property manager from veteran Justin Becker.
By Justin Becker
If you’re the owner of residential real estate, one of your main aims is probably to earn the highest possible profits with the least possible hassle. After all, no landlord or owner can be there to supervise all their real estate all the time.
That’s where a reliable property-management company comes in. Of course, the most important word here is “reliable.” This is the company or property manager that will potentially be in charge of your investments and incomes. So, it’s important to have a vetting system in place.
Whether you have some mobile homes for sale or are part of a land-lease community, real estate investment isn’t cheap or easy to oversee. With an experienced company or manager by your side, the daily running of your property should become much easier.
When you hire an employee for any task, he or she must go through at least one interview. The same goes for a property management company; of course, the questions might be more detailed, since there’s so much at stake.
Not sure about what to ask your potential property managers? Let’s have a look at some of the top questions to keep in mind.
Questions to Ask When Hiring a Property-Management Company
Before you hire any property manager or property-management company, have these questions on your list:
No. 1: How Familiar is Your Team with Current Trends in Real Estate?
Real estate investment is a fickle game. So, you want to make sure to ask your potential property managers about the trends in place right now. This will show you how much market knowledge they have. That’s important for managing and maintaining your real estate in the best way.
Your potential property manager should be able to reach out and find reputable tenants to fill your property. This is an easier task than it was in the early 2000s, as the number of people renting property within the United States has gone up in various cities.
No. 2: How Do You Stand Apart from the Competition?
While it might be a bit awkward mentioning competitors to any potential property manager, this is a good way to filter out the really good companies. If you’re interviewing a genuine professional, he or she will mention the competition respectfully and display knowledge of the local market trends.
Asking about the competitors will also bring the conversation to how this potential property-management company is unique in its pricing and services. The company representative should be able to explain what makes the company different and better than the rest. Ideally, they should also provide some client references so you can be sure about going ahead.
No. 3: What’s Your Company’s Record with Rental Properties?
If you interview a relatively new company, chances are that they won’t have relevant experience in the real estate industry. Their prices might seem affordable, but it’s just not worth taking the risk.
The questions you ask will tell you if the company is efficient and reliable enough to run everything properly. Even an expert can find it difficult to maintain real estate these days. So, you should ask to get in touch with previous clients as well.
You can also ask why and after how long precious contracts ended, whether there’s a record of unethical practices, etc. Such details are critical. So, don’t feel strange about asking.
No. 4: What Kind of Technology Do You Use?
Keeping up with real estate trends also means that modern property managers should stay updated on the most important digital tools. Almost every industry has made changes to incorporate software and other forms of technology to make its process easier and smoother.
Ideally, your potential property-management company should have software solutions that make its system easy to work for you. You should also be comfortable with the setup the company has, since this is what will be used to maintain your real estate.
The communication software the company uses is also important. This is how the company will get in touch with you. So, make sure that it fits your requirements.
No. 5: What Will the Income Structure Be Like?
One of the most essential questions to ask a potential property manager is about the income from your real estate. This usually means determining what the rent will be from the tenants. The answer to this concern lies in knowing how real estate works within your state, city, and specific area.
Make sure you know about the details of the rent formula from the property manager. This is also the point where you give your own views about the rent and how it’s set. That way, both parties will remain on the same page and can move forward without much confusion or resentment.
No. 6: How Will Rent Collection Be Handled?
Rent collection is usually be the responsibility of property-management companies. This is why it’s best to hire one that has been working with the latest solutions. With automated payments and online systems, you can be sure of quick, convenient collection on all sides.
If your potential property manager has a quality software solution in place, you should consider hiring him or her. With updated decent software, you can also rely on the accuracy of your transactions.
There’s also the fact that some tenants might want to pay cash or make payment through some other method. Question the company about any alternative solutions for such cases.
No. 7: Do You Have Credible Licensing for this Service?
Whether you’re interviewing family-owned property management companies or those with a more corporate structure, make sure their license is up to speed. Keep in mind that the different states will have varying licensing rules and regulations.
In addition to simply asking this question, you’d also have to conduct research on your own. See what qualifications are required for your region and ask the potential manager if he or she has the needed licensing.
To be on the safe side, ask for licensing proof as well. Certain states might require a more direct link to a known real estate organization. Others might require a real estate broker license before one becomes a property manager.
No. 8: Who Will Handle Maintenance Issues, and How?
One of the main concerns related to residential property management is that of repairs and maintenance. When a tenant experiences leaks, breakages, infestations, or any other problem, the issue must get proper and prompt attention.
A homeowner in the United States can expect to spend one to four percent of their real estate’s value on its maintenance. Keep this in mind so that you’re not thrown off by sudden repairs.
Property management companies will usually be dealing with these issues. Be sure to ask about them during an interview. A manager’s way of dealing with work orders and experience will count for a lot.
No. 9: How Will Financial Responsibilities Be Divided?
Financial transactions are often a tricky business, but that’s why you have to be clear-cut in this area. Remember to inquire about the fees of the property managers or the property-management company. Both parties need to properly understand the financial section of the mutual agreement before moving forward.
One of the first details to sort out is the rent percentage that will go to the property manager or management company. If you do some research about the trends for paying such services, you can negotiate the fees in an informed manner.
It’s also logical to ask whether there are hidden fees anywhere. Make sure to read the fine print before signing anything!
No. 10: What Kind of Compensation Plans Does the Property Management Company Have?
Any potential property manager should know about repairs and maintenance issues. However, it’s also very important to clarify which party is going to be held responsible for handling costs associated with repairs or any damages. Make sure to have everything covered through a written policy.
When you ask a property manager about such a policy, you’re covering your own bases. No matter how careful a manager or managerial team is, damages to the property can still happen.
So, when you’re thinking about what questions to ask rental property management companies when hiring a property manager, make sure that the detailed compensation plan is near the top of the list.
No. 11: How Are You Going to Deal with Late Payments or Evictions?
The most difficult side of property management usually entails dealing with late payments by tenants or having to evict them for some reason. The property managers you end up hiring should be responsible and tactful enough to deal with such issues without incurring much damage. Such tasks can be complex, especially if the tenant is part of an HOA or some other influential group.
Nevertheless, you need to ensure that any manager under you should be getting those payments and evicting when necessary. In either case, they should also stay respectful and within legal limits.
If you’re hiring a property manager to handle your condo, apartment complex, or any other form of real estate, there are probably many choices out there. Several new property-management companies will be glad to get the chance of serving you in exchange for a reasonable fee.
Once you know what questions to ask the property manager, the way forward will be a bit clearer. There are still several steps to take. But you’ll be able to make the important decision of hiring a company without any worries. Start searching for a reputable potential property-management company now. You’ll hopefully have the best one for your needs soon.
About the author:
Justin Becker is a property owner in the state of Michigan and has a passion for managing communities. He owns apartment complexes and mobile home communities, and has been writing his own blogs for his properties for several years.