Screen a PMC Better than a Tenant Part 2: Communication, Documentation

Previously in Part 1 we went over why evaluating a Property Management Company’s (PMC) procedures is important and some questions to ask to evaluate how robust those procedures are. In this Part 2, we’ll be covering why it’s so important not to assume a PMC’s communication and documentation procedures will meet your expectations.

When an owner has to contact a PMC, 80% of the time it’s because the PMC failed to consistently & proactively communicate with the owner or failed to communicate the right information.

If a PMC is properly doing their job, documenting everything, consistently reporting on all activities related to the property, and informing owners of any important issues, the only back-and-forth communications that should need to take place are questions relating to the out-of-ordinary or time sensitive.

To get a smooth working relationship like this, it’s essential to screen PMCs based on their systems for communication and documentation. How will they communicate? How often? How quickly will they respond? What documentation will they provide access to?

Communication
Transparency, consistency, and speed are what’s most important here. Different owners will have different expectations. Logical Property Management has actually lost clients who stated we communicated too much! So, understanding a PMC’s communication Standard Operating Procedures (SOPs) is critical to finding a PMC that’ll be a good match for your expectations.

So, let’s look at some communication concerns you may want to inquire about:

• - How does the PMC track phone calls, emails & texts to avoid misunderstandings?
• - Do they have an online system where owners can see this information?
• - Are phone calls recorded?
• - When & how will they update you about:
• • 
    
  • 1. Progress in finding a new tenant for a vacancy?
  • 2. Maintenance issues?
  • 3. Missed rent payments?
  • 4. Eviction updates?
  • 5. Serious tenant complaints & issues?

A PMC should be comfortable discussing all these and be able to provide specific, not general or vague answers.

Now you may be thinking, why are all of these important? Well, consider what may happen if you have a phone call with someone at the PMC and agree on a solution, but no one documents what was discussed and agreed upon. A week, month or even a year later, this issue may pop up again, and everyone involved may have fuzzy memories, or the person you spoke to may no longer work there. Then what? Regarding updates, you shouldn’t assume all PMC’s will communicate these the same. Some may have SOPs where they manage your property(s) autonomously and will rarely update you - which you may be fine with. Others may communicate everything, and then there’ll be others that fall somewhere in between. Consistency is the key though, so you know what to expect.

Documentation
When you hire a PMC, what documents do you expect them to provide you with? Don’t make the mistake of assuming you’ll get what you want and consistently when you expect it!

Here’s some documentation questions you may want to discuss when interviewing a PMC:

• - How do you store & organize documents regarding my property(s) & lease(s)?
• - What documents do you routinely provide to property owners?
• - How do you provide them - by mail, email, fax, online portal?
• - What format do you send them in, so they can be easily opened?
• - What documents do you automatically provide, and what do I have to specifically request?
• - What financial information do you provide for income tax purposes?

Some of this may seem inconsequential, but many paper-based PMCs had serious performance issues when their offices were forced to close during the COVID lockdown(s). How frustrated would you be if you hired one of these PMCs and you couldn’t get them on the phone, or (even if you did) they told you that because their office was closed, they couldn’t tell you what was going on with your property(s) or tenant(s)?

Also, don’t underestimate what documents you may want easy access to. Imagine needing property data for your insurance company and you don’t have access to it, so you contact your PMC and they can’t find it, because they aren’t organized! So, ask if they give you access to:

• - Rental applications
• - Leases
• - Copies of rent checks
• - Section 8 contracts, annual reviews, adjustment notices, etc.
• - City inspection reports
• - Maintenance invoices
• - Utility bills
• - Tax bills
• - Etc.

Lastly, what about monthly financial statements about your property(s)? Are they consistently and automatically provided or only upon request? Ask for a sample, so you can evaluate the format. Is it just a rudimentary spreadsheet with just totals, or does it provide more in-depth breakdowns for income and expenses? If all they provide is monthly statements, how will you be able to keep tabs on income and expenses between statements?

Here on Biggerpockets, there are hundreds, if not thousands, of DIY landlords sharing ideas on technology they use to make self-managing their rental properties easier. So, we recommend you be very cautious about hiring a PMC that is still stuck in the paper-age! What’s more, wouldn’t you expect a professional PMC to use more tech tools than your average DIY landlord? We’d also recommend caution hiring a PMC that doesn’t offer an online portal and can prove that they actually use it!

How comfortable would you be with a PMC that’s 100% paperless, which makes it easy for them to almost instantly provide you with every document regarding your properties and tenants?. You automatically receive monthly owner statements from them and have access to online live reports to track income & expense data between statements. What’s more, all this information is automatically available 24/7, 365 days a year, via an online portal. PMCs like this are out there, you just have to look and screen for them! By the way, how quickly do you think a PMC like this was able to adapt to their office being forced closed due to COVID and then continued to provide their clients with great service?

Once you’ve screened several PMCs to identify the ones that have the right communication and documentation processes in place to manage your properties in a consistent, organized manner, what else should you consider before hiring one of them? Stay tuned for the final part of this series to find out!

What are your experiences with screening PMCs? What advice can you share with other property owners?

Be sure to read the next part in our series:
https://www.biggerpockets.com/...

Image Courtesy of Oleg Mani