Questions to ask an out of state property management company

5 Replies

I'm trying to put together a list of questions to ask property managers in my initial search and would like to get some suggestions from others, in the attempt to make sure I cover as much as possible. 

My focus is out of state buy and hold investing, so it's crucial that I find a great PM...

Thanks,

Max Balesteri

What is your monthly mgnt fee and placement fee?

If my tenant moves out before their lease is up, when you go to re-rent my home out will the placement fee be pro-rated?

How much mark up do you put on top of maintenance fee's?

What areas of town do you have the best success with managing effectively? ( this could help you decide where to look for purchasing )

Do you charge a fee if my tenant renews their lease for another term?

Those are just a few to think about.

Originally posted by @Curt Davis :

Do you charge a fee if my tenant renews their lease for another term?

Thanks for the input Curt. I'd like to know your thoughts and/or experiences on the lease renewal fee. Of course I want to keep costs down and don't see much reason for paying someone this fee when the whole service isn't being provided. But I see the time and service of the PM being very important(especially to an out of area guy like myself) and there would be reason for them to receive some compensation for this. Is it common (from your experience/knowledge) to pay the full fee, no fee, or some other fee?

I guess I struck out with this post huh... I was really hoping to get a lot of peoples thoughts on this. 

Thanks,

Max

our mgnt company charges a $250 lease renewal fee.  I am fine with that personally. 

I would not say you struck out, give the thread time. 

@Max Balesteri  there are many, many questions, I'll try to name a few I would want to know. 

1. Ask if they do in-house maintenance or do they contract out all repairs. 

2. At what level do they need your approval to conduct repairs (i.e. if something is going to cost over $200.00 do they call you first).

3. What is their process for past due rent - collections - and lease violations. 

4. On top of what @Curt Davis  said, get a list of all fees they charge - lease up fee - marketing fee - anything you might be charged for, though all this should be in the management agreement. 

5. If they have an indemnity clause and how it is written (do you the investor shoulder all of the burden in a legal dispute). 

6. When is rent due, when is your distribution sent if the tenant pays on time/and when if the tenant is late? What is the late fee policy and who receives the money from late fees? Is is check or direct deposit?

7. Do they provide online statements or do they mail out a monthly statement? 

Some other tips - before deciding get a proposal from 3 different companies make sure they include their fees - along with a copy of their management agreement and lease so you can review and compare them. I am not saying paying higher fees is necessarily bad if it give you peace of mind and the company does a good job, just make sure you don't get any surprises - tenants can be surprising enough. 

More important is to get references from their current owners. Also decide how big a PM company you want. If you are going to just have one or two homes, you will not get priority from a larger company but maybe from someone smaller starting out you would get more attention. Actually the owner gets little benefit I think from larger operations. Its not like you get much of the cost benefits or scale. I like working with smaller one or two person PM companies that work hard to keep and grow your business. 

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