Posted almost 2 years ago

Why You Should Screen a PM Company Like You Screen for Tenants

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Hiring a PM company to manage your properties is a good way to shift your attention towards growing your rental portfolio and maximizing your investments, rather than focusing on the day-to-day responsibilities of self-managing.

Good property management is, alongside tenant quality, one of the biggest factors in determining how successful your rental business will be overall. Just like many DIY landlords make terrible tenant screening decisions by falling for a prospect’s slick demeanor and stories, while neglecting proper due diligence, many property owners hire a PMC based upon price alone and fail to do any due diligence beyond a few questions. So it only makes sense that you should screen a potential PMC just as thoroughly as you’d screen an applicant.

There’s a large number of factors which go into vetting a PMC, but we’ve boiled it down to 6 key areas which are crucial for assessing how “good” a property management company is:

1. How Do They Consistently Communicate?

Problems with communication are amongst the most common complaints which landlords have when it comes to working with a PMC.

It’s important to establish good communication from the start of your relationship, so be upfront about your expectations. Don't just ask what medium they use, but how do they make this interaction consistent. What specific processes do they have in place to consistently communicate both with tenant and landlord?

A good tip is to take note of how long it takes for them to respond to your preliminary questions during the screening process, and how thorough they are in responding to these. This should give you some idea of what to expect from them down the line.

2. Are they organized and systematic?

A reliable PM should have established systems in place, experienced and adequate manpower, and should be efficient when it comes to deploying resources. What's the size of their team? How many departments do they have? What areas do they cover? How many properties do they currently have under management? These are just some of the questions you can ask to gauge their level of organization and experience in handling common issues.

They should be organized enough to deliver a consistent experience for both owners and tenants. This includes thorough tenant screening, rent collection, handling non-paying tenants, inspections, and maintenance/repairs), so find out as much as you can about the systems which they have in place for each stage of the property management journey.

3. What Info Do They Give You Easy Access To?

Just because you're letting someone do the daily lifting, doesn't mean that you shouldn't be on top of everything that's happening in your properties. When screening a PM, ask them about how they intend to keep you informed and what kinds of information they give you access to.

Monthly reports on how your listings are doing, rent ledgers, tenants' proof of payments, invoices, and receipts for repair/maintenance work - finding out how often and where you can get all this information is really important for consistently monitoring the performance of your rental portfolio. Some innovative PMCs are even now offering a platform that can allow you to access these documents 24/7, so don’t settle for inconsistent or incomplete reporting practices.

4. How Do They Document What They're Doing for You?

Finding a collaborative and transparent PMC is important to establish a good working relationship. Documentation is an essential part of how a PMC communicates to you regarding your properties, so ask them about how they document the work that they do.

Do they send you pictures or videos of your property inspections? Do they record contractor bids and send supporting documentation to go along with the bills they send you for repairs? How do they break down and display costs on their invoices? The more transparent their documenting procedures are, the less likely it is that you’ll have complaints or questions when looking at the charges they send you.

5. How Thorough is Their Management Agreement?

Most PMCs have a standardized lease contract which they use across all the properties they manage, so always ask for a copy of this before committing to working with one. Keep an eye out for any vague clauses, as anything not covered in the lease could end up being decided in favor of the tenant, should any disputes arise.

If you have any specific requests for changes or additions to their lease contract, note that some PMCs will be more flexible than others when it comes to individual landlord’s requests.

6. What are their Processes Like?

If you couldn’t already tell from our previous points, we’re big believers in processes and SOPs (standard operating procedures) when it comes to effective property management. A sign of a good PMC is one who can clearly articulate their specific processes for evictions, screening, turnover, maintenance, security deposits, valuations and rent increases, etc., and tell you exactly how they will include you in the decision making process at each of these stages.

When you ask them to take you through their processes, have them email you a written sample of one or two of their SOPs, also. Having these kinds of documents readily available is another good sign that you’re dealing with an organized property management company, and not one that’s making it up as they go along.

Just like a landlord has no one to blame but themselves if they screen a prospect who turns into the worst tenant ever, you have no one to blame but yourself if you hire a PMC, focusing only on price and neglecting due-diligence, and it turns into a nightmare relationship.

If you’ve thought of something we missed that landlords should consider when screening PMCs, let us know in the comments below.

Image Courtesy of Edward Jenner