How to interview property managers and determine the best one?

Question

I'm investing in a new area for me and I have several recommendations of property managers.  I'm wondering how I should judge which one to go with.  Are there any recommended questions or things I should look for when evaluating property management?

Nathan Gesner · Answer

You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Jared Wonders · Answer

@Andrew Smith the above is an absolutely terrific guide in vetting a property manager. I’d also add that from experience I will NEVER again hire a property manager contract in which I’m locked into for a year. This cost me a good chunk of change but I like to say it was educational costs 😊. Once on board we had pretty much instant red flags and issues but unfortunately since we were locked in there was no way to get out of the contract without surrendering early termination fees.

Another thing I would say is do research on your particular market and know very well what rent prices are and what the market dictates you can rent a property for. As a personal challenge I’d ask yourself “what are the reasons I do not wish to manage?” And “why should I not self-manage at this time?” In my personal opinion NO ONE will care more about than an investment property more than you so if you do hire someone to care for YOUR investment do your due diligence and be sure to manage your manager. Slow to hire, quick to fire. Good luck in your pursuit and feel free to reach out if you have further questions!

Jared Wonders