Here is the third and last installment of “Questions to Ask Your Property Manager.” I am providing answers to some of the questions. However, in some cases, there is no one “right” answer. Actually, this was illustrated by the last installment, published three weeks ago. I had suggested that it is better for property managers to have some of their own skin in the game, so to speak, by owning their own rental properties in the area. Josh Dorkin, the founder of BiggerPockets, disagreed.
My underlying point: Lots of property managers don’t really understand the business, and go into rental management because they think it will be easy. Managers who own their own properties are more likely to have a clue about property management.
Josh’s underlying point: Property managers who own their own rentals are more likely to take care of their own properties first and consider you a competitor, especially when it comes to finding tenants. For example, they’ve got a vacant two-bedroom unit and you’ve got a vacant two-bedroom unit. When a prospect comes in looking for a two-bedroom, the managers will push their unit first.
Who’s right? We both are on the underlying points. So do you want your property manager to have his own rentals? That, my friends, is a judgment call. But consider this – if you don’t ask the question, you’ll never know. You won’t really be able to make an informed decision.
The best time to ask these questions is, of course, before you hire a management company. But if you already employ a management company, and don’t know the answers, you can always go back and ask. Besides knowing what’s going on with your property manager, you’ll be reminding them that you are an involved customer. That might make them less likely to cut corners with your properties.
On to the Property Manager Questions (and, sometimes, Answers)
- Question: What do you consider the most promising towns and parts of the area for investment?
- Question: Where do you see rents going? What has been the development in rents over the last few years?
- Question: What towns and parts of the area have the best governmental climate?
- Question: What towns and parts of the area have the best business climate?
- Question: What kinds of people are attracted to this area? That one?
- Question: What kind of new inventory is coming on the market?
- Question: What’s going on with commercial development in the area?
- Question: Which towns have the best schools?
Answers: These are “no one right answer” questions. But that doesn’t mean the answers won’t be revealing! Consider all the different ways they can be used.
- The answers need to be thoughtful and detailed. Seriously, do you really want a property manager who doesn’t know which are the hottest parts of town?
- The answers can be very helpful in helping you decide where to invest. This is especially useful if you are not a resident of the area.
- If you do some research ahead of time, you’ll have your own ideas which you can compare to the answers you get from the prospective property manager. You might hear what he says and think “that’s completely wrong.” Or he might convince you, and now you’ve learned something new.
However, just like new business development, new residential development in your area is likely to raise property values in general.
Three more questions and we’re done.
There are many more questions you could ask, and I’d love to see comments and additions from readers.
Photo Credit: Payton Chung