In my post titled “The Tech Employee’s Ultimate Guide to Getting Started in Real Estate Investing,” I talked about how to use a property manager to help you take care of your investments while continuing to work a full-time job. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free The property manager (PM) is arguably the most important person on your investment team. Without him or her, it’s incredibly difficult to scale your real estate investing business. That being said, when hiring your property manager, referrals aren’t good enough. You need to properly interview potential PMs to make sure he or she is a good fit for your operations. Below is a list of 45 questions that have been divided into seven major categories: Property Manager Background Fee Structure and Contract Property Manager’s Legal History Property Manager and Home Owner Communication Leases and Tenant Screening Property Maintenance and Tenant Relations Property Marketing I’ve included an explanation for asking each question so you can understand the intent behind them. I suggest you read everything, and then determine which ones apply best for your situation. Odds are you will be interviewing at least two or three property managers, so I’ve also created a spreadsheet you can use to track their answers. You can find it here. Property Manager Background If required by your state, are you a licensed property manager? Most states require the PM to have a real estate brokers license or special PM license. Check with your local department of real estate to determine your local requirements. If this is required and the PM doesn’t have a license, you can move onto the next property manager. What certifications do you have? What’s the most recent continuing education course you have completed? You want to confirm that the PM is continuously educating himself or herself on industry standards, real estate laws, and miscellaneous subjects related to property management. You want a PM that’s on top of the latest changes in real estate law, because you don’t want to be held legally liable for mistakes made by them. Do you have insurance for your property management business? At a minimum, the PM should have errors and omissions insurance to protect themselves for wrongful evictions, hiring unlicensed contractors, and a multitude of issues that arise from running a property management business. If they don’t, beware—you could possibly be on the hook for their mistakes. Have you ever owned rental property? If the property manager has been a landlord, they’ve walked in your shoes and will be more likely to make decisions that are in your best interest. Quite a few property managers don’t own their own investments, which prevents them from fully understanding the landlord’s perspective. What relevant real estate-related experience did you possess prior to becoming a property manager? You want to determine if your property manager is cross-trained in other real estate-related fields. Some PMs are former real estate attorneys, which is extremely helpful if they are willing to bundle those services and/or include them in their standard property management fees. How long have you been in the property management business? Some may have just opened their businesses, and that’s perfectly fine. But you want to at least know how long they have been managing properties in some form. Maybe they started as an investor managing their own properties and decided to earn the proper licenses to open their own PM business. Which types of properties and neighborhoods do you specialize in? Each property manager has a specialty. You don’t want a property manager that specializes in single family homes to try to manage a large-scale multifamily complex. Alternatively, some PMs specialize in particular neighborhoods or classes of properties. You’ll want to know market information like this, including which areas the PM doesn’t cover and why. By asking these questions, you might learn that some rental markets are too much trouble for certain property managers. If your property falls within those markets, you’d obviously want to avoid hiring those PMs. Do you work alone or with a team of property managers? Who will be my primary contact? Every property management company is structured differently. Some are one-man or one-woman shops; others have numerous employees. You want to learn how the company is structured and who will be your primary point of contact. Nothing is worse than not knowing who’s responsible or who to contact when you have questions or concerns about your property. Are you purely a property manager? Or do you work as a property manager and real estate agent? Some real estate agents try to maintain their current responsibilities while acting as a property manager for supplemental income. There’s nothing wrong with that. However, trying to stay on top of both professions at once can be a challenge. If the property manager is also an agent, ask him or her how they balance the demands of both roles. What do you offer that sets you apart from other companies? Asking this question is a good way to see how plugged in the PM is to industry standards. If a PM is in touch with the industry, they will be able to demonstrate how they differ from their competitors. How many clients do you currently have? And how long have they been with you? With their permission, can I speak with one of them? These inquiries can offer insight about the quality and constraints of a property manager. Are landlords working with the PM seemingly satisfied and loyal? Could the PMs time be spread too thin by having too many other obligations? If allowed, speaking with one of the PM’s clients and asking them for a review could prove invaluable. Fee Structure and Contract What is your monthly management fee? The PM serves as a vital shield, protecting your time from being spent on the day-to-day operations of real estate. The whole point of hiring a PM is so you can focus on acquiring more properties, perform your day job undisturbed, or just enjoy life. In turn, you are paying a PM to do the rest of the work for you. Therefore, look at the monthly management fee as the price you’re paying for free time—which is essential in terms of growing your business. Depending on the property type, condition of the property, the property’s location, and time commitment involved, property managers typically charge anywhere from 4 to 10 percent of monthly rent or a flat fee. Typically the lower the rent, the higher the fee percentage, or the higher the rent, the lower the fee percentage. In other cases, the PM might ask for a flat fee. Some landlords think if the ongoing management fee is lower than usual, this means they’ve negotiated a great deal. However, some PMs charge a lower ongoing management fee because they only offer limited services. Be clear about what is included for their fees. What services are included in the monthly management fee? As mentioned above, you need to be clear on this. What’s included in the monthly management fee? Are there any other fees? Additional fees might be charged for: answering inbound requests from tenants checking in on the property to make sure it’s in proper order gaining access to the PMs extensive network of contractors and specialists coordinating repairs for the property when needed receiving payments from tenants and depositing them into your bank account updating lease agreements so they are compliant with state and local law handling evictions If the unit is vacant, will you continue to charge a monthly management fee? You want your property manager’s compensation structure to be aligned with your best interests. If the unit is vacant, you want the PM to feel the pain of not being able to collect fees. If your PM doesn’t agree to this, try to negotiate for a lower fee when the unit is vacant—or interview another PM. What’s your fee for finding a new tenant? Finding a new tenant takes time and effort, so PMs should be compensated for this. They might charge anywhere from 25 to 100 percent of one month’s rent to find a new tenant. If a tenant renews his lease, do you charge a renewal fee? Your PM should be anticipating when your tenant’s lease will expire in order to gauge their interest for renewal. This takes time, organization, and effort. They should evaluate rental comps in the area and adjust rents accordingly. For this effort, a case can be made that the property manager should receive a renewal fee. I’ve encountered it all—from PMs who do not charge a fee to those who charge $200, half rent, or full rent. Personally, I think a full month’s worth of rent is way too much, as some tenants are willing to renew with no questions asked. How do you collect rents from the tenants? When will I receive the rent payments from you? Typically PMs collect their rents between the first and third of the month, and then deposit the funds in the landlord’s bank account somewhere between the fifth and 10th of the month. You will want to know the PMs process for rent collection and disbursement so you have an idea of when you will receive your funds. Do you have a termination clause within our contract? There’s no standard length for a property management contract. The contract length varies by the size of the property and the nature of the work to be done. Look for a clause in your property management contract that explains under what circumstances either party can terminate it. Usually the landlord must provide the PM with advance notice of their intention to cancel the contract. Also, if the PM decides to cancel it, they should provide you with an advanced warning. Do you manage properties that will compete with my property? If so, how do you equitably treat me vs. another client with a competing property? If the property manager’s real estate portfolio grows large enough, eventually he or she will have properties that compete for the same kind of tenant profile. The PM should have a policy in place regarding how to handle a potential conflict of interest when two of their clients are trying to attract the same tenants. Related: How to Rent Your House: The Definitive Step by Step Guide Property Manager’s Legal History Have you ever been sued by a tenant or landlord? If so, what were the circumstances and what was the outcome? This is a good question to ask because you’ll obviously want to know if the property manager has a legal history. Alternatively, if you’d rather check (or double-check) using public records, you can go here. Have you ever been accused of discrimination in your screening process? If so, what were the circumstances and what was the outcome? You want to confirm your property manager understands fair housing laws. If the PM had a lawsuit against him or her, did he or she prevail or did the court rule in the plaintiff’s favor? Has the Department of Real Estate ever filed an accusation or a complaint against you or your company? If so, what were the circumstances and what was the outcome? Local real estate departments should have an online database of complaints made against property managers. Despite what the PM you’re interviewing says, you should check your state’s department of real estate to confirm the PM is in good standing (assuming your state requires a PM to be licensed). In California, for example, you can perform a digital background check with the California Department of Real Estate. Property Manager and Home Owner Communication How often will you send me updates about my property? It’s a good idea to know how frequently the PM communicates with landlords. Some PMs believe no news is good news; others feel better regularly updating clients. It’s also a sign they are paying attention to the property. What do you expect from me as the owner? You’ll want to know what is expected of you as the landlord. Each PM has different levels of engagement they require from their clients. What’s your turnaround time on phone calls, texts, and emails received from owners? Your PM should have an SLA (service level agreement) to set expectations about when to anticipate getting a response from them. Ideally, a PM should get back to you within 24 to 48 hours of receiving your phone call or email—with the exception of weekends—unless it’s an emergency. Do you have a policy regarding landlords directly contacting the tenants? Some PMs don’t want to confuse the chain of command by having landlords who directly interact with the tenants. And one main reason to hire a PM is so you don’t have to do that anyway! Get clarification about how potential PMs think it’s best to handle tenant relationships. Leases and Tenant Screening Please walk me through the rental criteria you use for screening tenants. Who decides to accept or deny a tenant? It’s required by law that all prospective tenants should be held to the same rental criteria. The PM should walk you through how they determine if someone is the right fit to live in your property. Typically these criteria are a mix of earnings power, reference checks (current/former landlord and current employer), and background and credit checks. Most often, the PM decides who to accept as a tenant. It can actually be dangerous in certain circumstances to involve yourself in the selection process. If you were to accidentally or purposely decline a tenant that indeed meets the rental criteria, you could open yourself up to potential legal liability. How long does it take you to approve tenants and have a lease signed? You’ll want an idea of the length of this process for many reasons, including knowing when to begin looking for new tenants, knowing how long to anticipate a property will be vacant if tenants leave unexpectedly, and so on. The quicker the process, the better. Can you provide me with a copy of your standard lease agreement? You should absolutely go over the lease the PM will be using. For one thing, you will be held liable if the lease agreement is legally invalid. Do you offer “sight unseen” leases? If yes, do you have a special addendum? Renting “sight unseen” means the tenant hasn’t physically viewed the property before renting it. I suggest all prospective tenants complete an in-person walkthrough of the premises so they aren’t surprised by anything. If you do decide to rent sight unseen, your property manager should have an addendum in the lease agreement stating the tenant is renting this property sight unseen and is aware of the risks involved. Are you familiar with federal fair housing laws? What common mistakes do you see landlords and PMs make regarding these laws? This is a critical question. If your PM doesn’t know what fair housing laws are, run! The answer to the second question illustrates whether the PM has reviewed federal fair housing laws and can spot violations. Can you walk me through the eviction process? How many tenants have you evicted in the last year? It’s a good idea to have your future PM walk you through the standard eviction process. More importantly, you’ll want to find out how many people the PM has evicted over the last year. Does the number raise any red flags? What is your personal definition of rent-ready? And how long does it take you to “turn” a vacant property so it’s rent-ready? A rent-ready property is suitable to be occupied immediately. However, all PMs may define this differently. Typically it can take a PM one to three days to get a property rent-ready. A shorter turnaround time is even better, as it allows you to rent the property faster, minimize vacancies, and maximize rent collections. Property Maintenance and Tenant Relations How often do you inspect the properties you manage? The PM should have a schedule for visiting your property. Knowing how frequently he or she checks your property will help you hold them accountable. What is your personal philosophy on deferred maintenance? It’s important that your property is well maintained and problems are resolved as soon as possible. If maintenance is deferred, a simple repair could turn into a complex and costly repair. How do you interview your contractors? Are they licensed and insured? The contractors your PM hires should be licensed, bonded, and insured. If they aren’t, you will be held liable for their shoddy work and won’t have recourse against them from the state. What’s your standard dollar amount threshold for owner involvement? And will you send me photos (before and after repairs) and invoices? You don’t want your property manager contacting you for every repair or issue. You should set a dollar limit to repairs that they can work on without your authorization. However, when repairs are made, the PM should send you an invoice and pictures to show the work involved. I knew someone who inherited a property manager that would always invoice for small maintenance issues just below the cost threshold that required landlord approval. After further inspection, it was determined the PM was submitting false invoices for work that was never completed! Requiring your PM to take before and after pictures of maintenance work protects you from being the victim of bad behavior. Do you charge a markup or coordination fee on the work your contractors complete? For routine fixes, there shouldn’t be a coordination fee. But if it’s a substantial job that requires the PM to coordinate a major remodel, expect fees. What is the best way for tenants to reach out to you regarding an issue? And what’s your timeframe for responding? Multiple communication methods should be allowed; however, most tenants prefer to text PMs and hope for a rapid response. Your PM should agree to get back to tenants within 24 to 48 hours of receiving a request. Do you troubleshoot with your tenants when they call for repairs? The best way to save on maintenance is to confirm the tenant's issue is a real problemânot user error. It's important to know if the PM will troubleshoot the issue with the tenant before directly connecting them with a contractor. Do you use any online programs or software to streamline your operations? Most property managers use online case management software, such as Buildium, Hemlane, or AppFolio to track maintenance requests and tenant issues. These programs maximize management efficiency. Plus, if your PM doesn’t use any software, it increases the odds of mistakes occurring. Related: Professional Property Management vs. Self-Management: A Look at the Pros & Cons Property Marketing How would you market my property? Can you show me an example of one of your property listings? Each PM has his or her own processes for marketing a property. You’ll want to understand this process and have an idea where the PM intends to list your property. Having a manager walk you through one of their current listings illustrates the level of detail he or she puts into property listings. How are market rents calculated? When do you decide to raise or lower rents? Typically your PM obtains a market sampling of competitive properties in your area, takes into consideration the special amenities your property offers, as well as the current climate of the rental market, and determines the rental price accordingly. If you want a detailed breakdown of this process, please review The Ultimate Guide on Raising Rent. When do you recommend lowering the rent to fill a vacancy? Each day a unit remains vacant is another dollar that slips out of your pocket. A savvy property manager will know when to reduce rents to maximize occupancy. Bonus Questions Assuming you have vetted a property manager properly and determined they are qualified, you might be able to have them help you in other areas of your business—say, reviewing a potential property before you buy it. The following would be an appropriate question to ask if this were the case. If I find a potential deal, are you willing to analyze the property to determine its curb appeal and potential rental price? This would help you figure out if your assumptions about a property you’re considering buying and renting are true or false. Would the property rent at the price you have calculated? Also, you should make it clear to the PM if this deal does close, you will use them as the PM for the property or you will compensate them for their time spent analyzing the property. And that’s a wrap! Let me know how these questions work for you and what I may have missed. Thank you to David Roberson and Darren Sager for helping me with this article. Do you have any property manager nightmare stories? Could the issue have been avoided by conducting more thorough interviews? Let’s discuss in the comment section!