My husband and I are self proclaimed self-managing landlords. We’ve owned seven houses in three different states and self manage all of the homes ourselves. I have answered calls in Bahrain, signed a renewal on a 40-year-old ferry with ancient internet in the Baltic Sea between Finland and Russia and placed a tenant while in Abu Dabi.
While four years later this is where we are, it certainly wasn’t where we started or even our plan in the first place. When we got started four years ago, I had every intention of hiring a property manager. We both worked full time and honestly had no time or energy to manage a property six hours away that I had no ties to, and my husband’s college ties were fading fast. After that failed disastrously (let’s just say I wasn’t a fan of their contact!), I decided I was going to be the best property manager and have my tenant who liked me.
That too saw disastrous results. Once I learned that no one cared more about my house than myself and that someone else’s financial challenges couldn’t jeopardize my livelihood, suddenly things got a lot better. People realized that I would hold their feet to the fire.
The same pertains to a property manager. No one cares about your home more than you care about your home. No investment is truly passive, as no one cares about your financial net worth and therefore about your property like you do. It is very important when you are hiring a property manager that you put the time and energy into finding the right one. You need to take the time to interview them and make sure they are the right fit. You also need to continue to manage them and hold them to your expectation.
Over the years I have learned from watching others and through my own challenges that there are 80 things you should think about before picking your next property manager.
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80 Questions to Ask BEFORE Hiring Your Next Property Management Company
1. Will I have one specific property manager? Who will be my property manager?
You want to know who will be your specific property manager and know their name. I am all about accountability, and you want to know and meet with your property manager, not just the marketing director or whoever is in charge of new business.
2. Who is the head of the office?
You want to know the broker in case something goes wrong. Brokers have PMs who work under their license, so ultimately it is the head broker who runs the show.
3. How long have you been a property manager?
The length of time is important to know. That being said, a hungry newbie who wants to learn, in my experience, is often times better than the most advanced person, because they care.
4. How many units do you manage?
For me this is more so food for thought because large and small management companies both have their pros and cons. There are benefits to a large office and also to a small office; the key is to know which one you are getting and to make sure you are comfortable with the pros and cons.
5. What is the average length that clients stay with you?
You want a property manager who is in it for the long haul. While this might not be a truthful answer or able to be substantiated, it is still good to ask.
6. Do you just manage or do you sell, too?
Most places do both. That being said, it is good to know to assess people’s motivations and goals. You want a company that still prioritizes property management even if it doesn’t make as much income doing so as selling.
7. What do you offer that sets you apart from other companies?
You want them to sell themselves, to tell you what they do differently from other companies. Remember, this is an interview for both parties.
8. What do you expect from me as the owner?
What is their expectation about your involvement? Some people want to be very micromanaged, and others do not. It is important to know the exact expectations that the property manager will have of you.
9. How often do you communicate with the home owners?
This is very important, since communication is key. It is really important to know over what issues, with which methods, and how quickly you will be notified.
10. Do you provide the owner’s information to the tenant?
Some people hire property managers so they do not have to give their information to tenants. So this is important.
11. Do you have a policy about landlords contacting the tenants?
Some management companies will not allow the landlords to contact the tenants in the house.
12. Do you have a requirement for your property management clients to use you? Do you charge if the tenant decides to buy the house?
Many property contracts require the landlord to pay fees if the tenant decides to buy or they sell. Make sure you check this clause closely.
13. How often do you reach out to the owners? Can you give me examples of how and when you would communicate various problems?
Communication is a very big concern and a common complaint regarding property management companies. The last thing you want is to be learning everything on your monthly statement. The best way to have clear expectations is to understand when they will notify you and when they will not.
14. What is your turnaround time on phone calls and emails from owners?
Some of the biggest complaints I hear are people not hearing back or receiving return phone calls quickly enough. This is why you want to know what to expect and how long it takes to hear back from your property manager.
15. What is your monthly charge?
Every management company calculates their fees differently. Some charge 10%, and that includes everything. Others do 6% and charge extras everywhere, so make sure you are looking at everything.
16. Who is the lease between?
In some places the owner is on the lease. In other places it is the management company on the lease.
17. Do you provide a copy of the lease to the owner, and if so, when?
One of the biggest issues I see is the owners not receiving a copy of the lease, so they are not able to verify when questions and issues arise with their property manager.
18. What lengths of lease do you offer?
Some property managers only do a month-to-month lease, others do a one-year, some do multiple. Personally, I do a month-to-month lease.
19. Do you charge extra for month-to-month leases?
I charge $300 more per month for my month-to-month lease. It is important to know what their policy is and who gets the fees.
20. Do you do a break-out clause?
I have a lot of tenants who try to break their lease. For me, this clause has been a lifesaver.
21. Do you offer a reverse military clause?
As an empire builder who buys homes that her family will live in too, it is important to me that we can always move back into our home. Therefore, we will always have a reverse military clause in our lease. The last I heard, if you did not have a clause, you couldn’t use it. Some companies will not allow this in their policy, so it is important to know your company’s policy.
22. Do you have a rental deductible?
I am a huge believer in tenants having skin in the game and therefore not calling over senseless items and repairs that cost money and cause headaches. Repairs can eat you alive and do some serious damage to your bottom line.
23. Do you have lease language that requires the tenant to pay for any damage they cause that is not wear and tear?
I am a huge believer of “you break it, you buy it.” So I charge my tenants for anything they break. I would ask my management company if they do the same thing.
24. Do you troubleshoot with your tenants when they call for repairs?
One of the things I have done to help reduce service calls is to troubleshoot with my tenants. I ask them if they tried the breaker, put a new light bulb in the socket, etc. So I would want to know if the property management will try to troubleshoot, or if it ends up being something silly if the tenants are required to pay the service call.
25. Do you do “sight unseen” leases? If yes, do you have a special addendum?
I know some places won’t rent sight unseen, which is a huge disadvantage in military areas. This has caused problems for me and others in the past, so I have fixed this issue by having a provision in the lease.
26. Who pays for pest control?
I don’t include pest control. Make sure to go over who is responsible.
27. Do you do “as is” appliances?
I put any appliances I don’t want to replace as “as is” in the lease.
28. How much move-out notice do you require?
I require my tenants to provide 60 days’ notice, but other companies and areas have different rules.
29. Is the lease automatically renewable?
I personally don’t like automatically renewable leases since if you forget, you could be in trouble. That being said, I know some places do it. So make sure you follow up on this to see if you property management company offers this service.
30. What is your renewal policy?
You want to know if they renew everyone or if people with specific dings against them are not renewed.
31. Do you charge for renewals?
Some companies charge a renewal fee to the owners if the tenant stays.
32. Do you perform a market evaluation for every renewal?
I am a huge believer in raising the rent every time a renewal comes up. So I would want a market evaluation and recommendation to raise rates if needed.
33. How do you determine to raise the rent or keep it the same?
Will they raise rates on good tenants? Is there a reason they wouldn’t raise the rent even if the market called for it? This is important since some people do not believe in raising the rates.
34. What does the monthly fee include?
Make sure you know exactly what you are paying for. Some places are more full service than others. Every agency has different standards and goals. I know some agencies who do professional photos and others who charge for it. So get them to go through what it includes.
35. Do you have any additional charges or fees (pet, placement, maintenance, etc)? What does my monthly charge not cover?
You want to look at the contract closely and ask specifically. At some places the monthly price is higher and that’s it. At other places the price is lower, but they nickel and dime you on ALL the fees.
36. Who keeps the fees that the tenants pay?
You want to know who keeps the late fees, pet fees, etc. This can cause a LOT of issues, so review the answer to this question closely. If your tenant pays you late and the management company retains the fees and you were expecting to be compensated, this can cause a lot of financial frustration.
37. How is the money dispersed?
Many property management firms only send checks, so this is a very important question.
38. When is the money dispersed?
Most people’s mortgages are due the 15th. This is a very important thing to know, so you make sure you receive your checks in time to pay your mortgage.
39. What is your advertising strategy?
Every company has a different marketing plan. Some companies take professional photos and others do not. You’ll want to know whether they take professional photos, where they advertise, etc.
40. What rental price do you recommend?
You want to know what they think it will rent for and why. Some places will overprice the rent (higher monthly fee since it’s a percentage), while others will underprice the rental (quicker to rent). The best way is to make sure it is priced right.
41. Do you recommend any work be done to get top dollar?
You want to know if they have any recommendations to get the best rental price from the unit.
42. How long do you think it will take to rent out?
Vacancy is lost revenue. Often times it’s better to go cheaper than vacant.
43. How quickly do you schedule showing/return calls?
One of the things I’ve found is important is to get people into the home as quickly as possible. For property managers who are not quick, this can be as much the issue as the price.
44. How quickly does it take you to approve tenants and have a lease signed?
I have found that this is also very important because I have had many people find other units when I have not been quick enough to get them approved and qualified.
45. What is your schedule for payments when installing a tenant?
I personally do not accept a signed lease until I have all of the deposits. Then first month’s rent is due with keys. It is important to know the process so there are no surprises.
46. Do you have a termination clause if it is not rented after so many months?
A lot of questions I see are regarding how to terminate an agreement after a house sits empty. So this is an important question to ask.
47. Do you have a trial period?
It is important to know if you are unhappy with the company if there is any way to get out early. If yes, what are the rules to retain the company if you are happy?
48. Do I pay any fees when the place is empty?
It is important to know if a company is going to charge you while your unit is empty. Some areas charge seasonal fees (opening/closing pools, winterizing homes) even if the home is not occupied.
49. What is your termination policy?
While you might have no desire to self-manage or to have a different company in mind, know that things can change. You want to make sure you are covered and have a very clear out.
50. What is your late policy?
The key to keeping tenants on time with the rent is to have consequences. Therefore, it is very important to enforce the late policy. You want to know their exact process.
51. What is your late fee amount?
I personally charge a 10% late fee, but based on the state and the company, this can change. Since a late fee is one of the biggest incentives for the tenant to pay on time, this is very important.
52. Who keeps the late fees?
Many property management companies will keep the late fees themselves.
53. If fees are not collected from the tenant, will you still charge the owner for them?
I have seen a few comments where owners were upset that they were charged for fees (late, etc.) because the tenants didn’t pay it. This is crazy, I know, but it has happened.
54. How many “late” payments does it take to have a fee assessed?
I give my tenants one late payment, and then after that, I ALWAYS assess the fee. You want to have their policy so you are not surprised when the first one is waived, but can be upset when the fifth one has been.
55. How many evictions did you perform last month?
I would want to know the number of evictions, as it’s great food for thought.
56. How do you handle the eviction process?
You want to know when the company will start the eviction process. Do they do it in house or hire someone? What is their procedure and how do they proceed?
57. Is the eviction part of the cost or is it an additional cost?
When we were first looking, they charged beyond their monthly fee at $20/hour. This can really hurt when you are evicting for nonpayment of rent and therefore not receiving income.
58. What is your application and screening process?
I run a credit and background check.
59. What are your screening requirements?
Do they accept foreclosures, short sales, 400 credit scores, evictions, etc.? Remember, you are picking someone that you can trust so you can be hands off. This is why it is very important that you agree with who they are picking.
60. Do you run it by me before you approve them?
Some companies just place the tenant, and others get final approval.
61. What do you charge for your application process?
Some companies charge a high amount to applicants, others charge the owners, etc.
62. What form do you use for the move in/move out inspection?
Personally, I would want to see the forms, as this is a very important part. This is what you will use to prove the tenant did damage.
63. Do you take video or pictures? What is your criteria for what you put down on the forms?
The more detailed you are, the easier it will be if you go to court, so this is very important.
64. How often do you do inspections during a tenant’s term?
Many property management companies do yearly or quarterly inspections.
65. How do you document the inspection, and do you send it to the landlords?
If they are supposed to do inspections, you want to make sure you receive a copy. You also want to make sure the inspections are documented.
66. How do you handle the security deposit?
You want to know where the security deposit will go and who holds on to it (them or you).
67. How do you charge for tenant’s damage during their lease term?
You do not want everything to wait until the end of the term. You want it to be taken out as the damage is done because the security deposit is their skin in the game and incentivizes them to not have an issue.
68. If there are damages upon move out, who does the accounting (you or the owner)?
If the tenant does a ton of damage, you want a property manager who is going to pursue the tenant for you–first by taking it out of the deposit and then by sending them a bill for the rest.
69. If the tenant has damages that exceed the security deposit, do you come up with the documents and pursue the tenant?
This is important because every company is different. So it is important to know who is responsible for what.
70. When do you return the security deposit? Do you get approval from the landlord first?
There have been a lot of issues with property managers returning the money too soon and missing deductions for tenant damage. Personally I use almost the entire time provided by law so I can make sure there is nothing missing before I return the deposit. I do not return the deposit at the move out or even the first week.
71. Do you do a pre-inspection prior to the tenant move out?
I only do one in California as required by law, but this is an important question.
72. What is your maintenance minimum/policy?
A lot of companies have a number, say $200, where any repair under that they will approve. It is important to take note of this as these can really eat your profit.
73. Do you charge for an additional fee for maintenance?
Some companies charge 2% or more on the repair cost. So this is very important to know.
74. Do you get multiple bids? If so at what amount?
I personally like multiple bids.
75. Is your maintenance in-house or a vendor?
This is good to know and more for food for thought.
76. How do you handle off-hour emergencies?
You want to know if they receive the calls or if it goes to an answering service.
77. What do you consider emergencies?
What is their definition of an emergency? (Heater out, etc.)
78. Do you ask permission or just fix and bill?
This is very important, as some emergency repairs can cost a small fortune.
79. How much time between tenants do you leave?
I try to schedule things as quickly as possible so my down time and therefore vacancy is as close to zero as possible. The key to this is being on top of things. Some people schedule weeks in between tenants so this is an important question.
80. Do you show the house while the current tenant is in the home?
One of my ways to keep costs down is to show the house while the tenant is still in the unit.
The point of these 80 things is not to sit down and ask all 80 of these question in an interview format. I know if someone did that to me, I would probably run away. The point of these questions is to start you thinking about what you want. Do you want a large or small property management service? Did you read the entire lease and not only understand it but agree with it?
As someone who went through school to be a financial analyst and focuses on real estate. I find myself subconsciously analyzing every “horror” story I hear and identifying the problem. The biggest theme I have noticed with the horror stories or complaints about property management usually come from a lack of realistic expectations or from lack of interviewing and finding the right person.
Here are 4 take aways to think about, now that I have overwhelmed you with my list of 80 questions.
- Read these 80 questions. Think about these questions and your expectations from a property manager.
- Interview the property managers thoroughly. Spend the time to REALLY get to know them, their values, their styles, etc. Make sure you tell them everything you expect. Think of this like hiring a contractor, only you will have a contract and be “stuck” with them.
- Read the ENTIRE contract and lease. Make sure you are 100% comfortable and okay with everything they require.
- Think twice before hiring someone you gut is warning you against.
And lastly, remember that eventually you’ll just have to jump in. You will make mistakes, you will have regrets. If you don’t try, you won’t be successful. Before you know it, you will be me, dispensing thoughts, experience and other wisdoms (no legal advice!) to fellow landlords.
Did I miss anything? What questions do you ask? Is there something else I should add that you learned the hard way?
Let’s talk in the comments section!