1.) Do they answer the phones when you call? How do they sound when they answer. Happy or annoyed? Business is gained or list within the first couple exchanges on the telephone. It's important that your PM isn't turning off potential clients by being rude, or ignoring calls completely.
2.) Are they able to answer your basic questions? More sophisticated questions? If not, do they act willing to find out the answers for you? Will they actually call you back with the answer when requested?
3.) How many doors do they manage? How many clients? Are they willing to give you their e-mails/phone numbers so that you can speak with them? A bad PM wouldn't be confident in having their clients speak privately with you about their performance. This can give you a lot of information.
This is just a start of a long list of things you'll want to ask/think about. A bad PM can be devastating to your business. Choose slowly and carefully.
If you only have a one or a few properties, you might want to consider managing them yourself. At least in the beginning to get a feel for the job requirements, which would help you later when choosing and managing the PM. No PM will care half as much about your property as you do!
Nothing, because I self manage, but great tips up above. :)
Make sure they are responsive to calls and emails. Make sure they are pleasant to talk to on the phone, since they will be taking care of your tenants. Ask how they handle evictions and late payments. Ask what their lease up fees are. Ask what their vacancy rates are. How long is the average turn around when moving out a tenant and putting a new one in? And most of all, you have to trust them.
@Ray Martinez every single of my PMs in Indianapolis dallas Birmingham and Atlanta came from referrals and I checked it with people in that area.
@Ray Martinez - we hired our first property manager last week. Here's the process I followed:
1) Built an interview template - Read through this amazing BP.com article by @Elizabeth Colegrove and boiled it down to a 'top 10' questions I wanted to ask the prop mgr: 80 Smart Questions to Ask BEFORE Hiring Your Next Property Management Company
Time required: 1 hour
2) Built a list of 10 local property managers in our market who were well-reviewed. Using Google searches, Yelp reviews, BP.com (this was our "top of funnel")
Time required: 1-2 hours
3) Qualified the list, down to 3 to meet in person - Called 10 of them with a scripted voicemailand email template, including basic info about the property, info about us... and set up back-to-back onsite walkthroughs property, for one afternoon
Time required: 2 hours
4) Walked the property with the top 3 PM's, "interviewed" them - The term "interview" sounds more formal than this felt, in reality. I enjoyed meetings with all 3 of the PMs. The discussions provided great insight into their style and approach to managing. It was very interesting to hear the spread in answers on where they think rent should be priced.
Time required: 4 hours, including drive time to/from property
5) Reviewed interview notes with my partner and pulled the trigger - Ultimately, our decision was informed by pricing, rapport, experience with property type, tenant, market familiarity and a handful of other factors.
Hopefully you find this helpful in some way. Will let you know how it goes in the coming months. Best of luck!
Here are a few questions that you can choose from:
1. How long have you been a property manager?
◦Make sure they have a long proven track record of managing properties.
2. What types of properties do you manage?
◦Find a company that specializes in your type of property whether it's a single family home, du-plex, tri-plex, quad-plex, apartment or commercial.
3. What type of insurance do you carry?
◦Ensure they carry errors and omissions insurance and general liability at a minimum.
4. How many units are you currently managing?
◦Look for a company that manages more than 50 units.
5. How many property managers does your company have?
◦This will tell you how many properties per property manager they manage. Generally you want to see no more than 50-75 units per manager to provide effective, responsive service.
6. What associations do you belong to?
◦Check to see if they are a member of BBB with a good rating. NARPM and the local realtor associations are common for the property management industry.
7. How many vacancies do you have right now? Out of how many total units under management?
◦This will tell you their vacancy rate and if it's in line with the local market. Around 10% is standard in Bridgeport Connecticut.
8. What is the average length of time it takes to fill a vacancy?
◦Make sure this in line with the local market.
9. What does your lease look like?
◦Ensure you see a sample lease. Most companies will use the local association of realtors lease, which has been drafted by attorneys to comply with local laws, property codes and protect the landlords legal exposure.
10. What is your late rent policy?
◦Ask if they keep the late fee or pass it along to the owner.
11. Do you perform regular property inspections?
◦You want to ensure regular inspections are performed to catch issues before they get out of control. What do they check and how often are they performed?
12. What percentage of tenants do you have to evict?
◦Generally great property management companies will mostly evict tenants they have inherited, as they did not perform the screening.
13. How does the eviction process work here?
◦Some states simply request a 3-day notice before evictions are filed in which the tenant can be evicted in a few weeks. Other states it could take many months and require an attorney to process. When do they start the eviction process?
14. What are your management fees?
◦Most companies charge a percent of the rent and some will charge a flat fee. 5% to over 10% management fees are common in the industry.
15. Are there any other fees (cancelation, eviction, renewal, marketing, account setup)?
◦Make sure the company does not entice you with a low management fee then nickel and dime you with miscellaneous and hidden fees.
16. What do you charge for finding a new tenant and leasing the property?
â�¦You will see flat fees and from 50% to 100% of the first months rent for a leasing fee. Ask if the fee includes listing on the MLS and fee to the other broker is paid out of your leasing fee.
17. Do you charge a fee when my unit is vacant?
◦Confirm the company does not charge a fee when your property is vacant.
18. What are my guarantees?
◦Can you cancel your contract with no fees if you are unhappy? Are there any guarantees if my tenant breaks their lease?
19. If I decide to sell my property, do I have to list it with you?
◦Some contracts state you have to use your management company's broker to sell your property if you decide to sell while under contract.
20. How do you market your properties?
â�¦Make sure they list your property on the MLS, list on other real estate websites and put a sign in the yard at a minimum.
21. What is your repair process?
◦Is there a maintenance limit they are approved to make repairs without consulting you? Will you receive competitive rates due to volume discounts the company receives from vendors? Will you receive multiple bids if it's a large repair?
22. How do you screen prospects?
◦Ensure in-depth credit, criminal, employment and prior residency checks are performed. What are their screen requirements and approval process?
23. When will I receive my rents?
◦Generally management companies will send owner proceeds between the 10th and 15th of the month.
24. Do you do direct deposits?
◦This will save you time and hassle.
25. Can tenants pay rent electronically?
◦Ensure tenants have the latest online tools to keep them happy.
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- Do the owners of the PM Company own rental real estate? This is a critical question to get answered right away. If they don’t own their own rental real estate, or have never owned rental real estate, it’s a huge red flag.
Would you hire a stock broker that didn’t invest in the stock market? Would you hire a coach who had no experience playing the sport? Of course not.
Owners of PM Companies that own rental real estate have tremendous insight into the pain points, needs, and wants of fellow investors. They have walked in your shoes and generally know what’s important to you.
I do not buy the claim that these owners, generally, will fill their vacancies before yours. Well-run companies will use consistent marketing methods for all homes. You could use the same argument for management companies that could manage dozens or even hundreds of homes for a single organization… what’s to prevent them from pushing their larger client’s properties ahead of yours?
Bottom line: You have to trust the management company you choose. In order to gain that trust, call them, research them, and don’t move forward until you are comfortable.
- Understand ALL the fees. Unfortunately, management companies generally do a very poor job of listing their fees on their website. That’s why you’ll not only need to get a copy of a Property Management Agreement, but also ask the specific question, “Can you tell me allthe fees I will have to pay for your services?”
Price is important, but it shouldn't necessarily be the most important factor in your decision. Generally, well-run, experienced Property Management companies will charge higher than average fees. But, in return, they should provide a higher level of service, get your properties rented more quickly, and attend to maintenance more efficiently. This all translates into a higher return for you.
- Understand Communication Policies. Again, the number one complaint about Property Managers is the lack of communication. That’s likely because most management companies have not created a company culture that stresses communication, or they don’t have the property staffing in place to allow for prompt communication.
Ask what their corporate policy is regarding communication. What is the preferred method of communication? How fast will your inquiry be returned?
Few things will frustate you more than not getting your questions answered. Your investment is very important to you and when you need answers, you need a property management partner who will provide them... promptly.
- Ask about the Staff Size & Experience. If the management company doesn’t have a full staff listing on its website, you’ll need to uncover this information during the interview. It’s critical that whatever company you choose is fully staffed to meet your needs. There are not any perfect ratios out there, but if the solution you are considering has more than a 50:1 ratio (50 properties for every employee) you should probably continue your search.
Along with this, a woefully inexperienced staff can be just as dangerous. Not only should you ask how long the company has been in business (not just in real estate, but managing 3rd party properties) but also ask for the average experience of its employees. Experience matters greatly, so don’t discount or overlook it.
- Understand maintenance protocols. Every management company should document, exactly, how they will handle maintenance within their Property Management Agreement. If they don’t, you should be concerned. You’ll need to understand when the PM must get your approval for maintenance, or when/how you will be notified when maintenance occurs.
You should also understand how your Tenant - your customer - can expect maintenance to be handled. What's the best method for the Tenant to submit work orders? What response time should the Tenant expect? What emergency maintenance protocols are in place?
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