If you are starting out as a rental property owner and are just looking into hiring a property manager, there are some questions you should ask and expectations you should have of the property management you hire. As an experienced owner, I have come up with eight questions you should ask, and keep asking, of your manager.
1. How many properties do they currently manage?
If the property manager manages a high number of properties, they should have a proportionate number of employees managing the units. A well-trained employee should be able to manage 30 to 40 units – not counting the accounting. If the prospective manager already handles over 30 units by themselves, you may not want to hand over more as their responsibilities will be spread thin.
2. Do they own their own rental properties?
You might think that a property manager who owns their own rental properties will be able to relate with your needs on a closer level, but the fact is, it is easy to become the competition. What might they do if they have vacancies on the property at the same time as you? Whose vacancy would they be more likely to fill first? If they own their own rental properties, yours will have to compete.
3. How often do they conduct inspections of the properties they manage?
Conducting regular inspections should be a given, but surprisingly enough, not all property management companies feel this way. Some managers will be ready to do the formal inspections on a routine basis while others may not wish to commit to it, or they could expect extra pay simply for doing routine inspections. A good property manager, like Red Hawk PM, understands that routine inspections should be the norm and should be part of their service package from the start.
4. Do they allow you time to talk and ask questions?
A property manager who tries to do all the talking and does not like to answer questions should be a red flag. As the owner, you have every right to make inquiries, and your input should not be pushed aside. If they are not willing to discuss matters with you on an equal level, one might wonder what it is they wish to hide. They should want to understand your concerns and keep you happy. Transparency is important.
5. What type of automated tenant management system do they use, and are they prepared to share samples of reports from the system?
There are numerous tenant management systems out there, but just a handful that is worth using. You need to know which tool they use and be able to see sample output from the automated tenant management tool during your initial interview. If they do not use management software or are not willing to share the output reports, you should look for property management that will.
6. What do they base their percentage of rent payments on?
The average rate property managers charge is between 7 and 10 percent of the rents from the properties they will manage. You need to know what it is they base their percentage on. Some property management companies base their percentage on the amounts that could be collected rather than the amounts that actually ARE collected. You should not agree to pay a property manager for rents they do not collect.
7. How do they address maintenance?
As the property owner, you will be paying for the maintenance of the properties, and understandably, they will expect a certain amount of money to be in their hands and at their disposal without having to discuss the issue with you. There should be a certain amount of money set for them to use without having to ask for your consent. A good amount to set is $250. Any issue that comes up costing more than that should be discussed with you. Some property managers like to add a fee of their own onto the invoice (usually 10 percent). You should know their expectations up front and try to get the fee waived.
8. Are they prepared to offer you monthly reports along with your portion of the rents at the same time every month?
Rents are normally paid by the 5th of every month, and the property manager should be prepared to give you monthly reports from the automated software along with your share of the rents they have collected. If your property manager does not provide the reports along with the payments, you should stay on their case until they do. Again, transparency is an integral part of good property management and the only way to be sure you are getting what you are paying for.
These are the factors I have found to be most important, but of course, there will be more questions and concerns involving property management. If you have some ideas for questions to ask or factors to look for, please feel free to add them in the comments.