When you are deciding what property manager to hire, there are certain questions you should ask during the interview that can help you make an informed decision. Asking questions regarding their experience, their education, their knowledge of legal issues and their results as a property manager will help you determine if they will be the best fit for your investment property.
Questions About Experience:
How long have you been a property manager/management company?
What types of properties have you managed?
Have you had experience dealing with property?- If you own a 10 unit building and the manager has only had experience with single families, they may be too inexperienced for your specific needs.
How many properties are you currently managing?- You don’t want your property to get lost in the shuffle.
Do you have the time and resources to successfully add my property(ies) to your workload?
Questions About Education:
Do you have your real estate broker’s or property management license?– Most states require property managers to have a license so they can show apartments.
Do you have any type of certification?- Trade organizations such as IREM, NAA, NARPM and CAI offer education and training courses and provide certification after completion.
Questions About Knowledge of Landlord-Tenant Law:
Do you understand the city, state and federal laws for property management and dealing with tenants?
Federal fair housing laws?
How to properly evict a tenant?
The safety codes for my type of property(ies)?- How many smoke detectors are needed? Do they have to be hard wired? Do you need window guards on second floor windows?
The proper way to collect and store security deposits?
What to include in a pet policy and the list of dangerous dog breeds?
How to terminate a lease?
Questions About Filling Vacancies/Retaining Tenants:
How long does it take you to fill a vacancy?- If it takes them longer than a month, what are you paying them for? Are they available to show apartments seven days a week? At what times? Where do they advertise to find tenants?
What is the average length of tenancy?- If they get tenants to sign long leases and actually stay for the duration of the lease, this will cut down on costs to fill vacancies including advertising costs, apartment turnover costs, and lost rent.
How many tenants have you evicted over the past year?- This can help you determine if they are properly screening tenants. What is their process for screening tenants?
How do you set the right rent for the property?– How many comparable properties do they look at? How often do they adjust the rent?
How do you collect rent each month?- Do they allow tenants to use direct deposit? Do they only accept money orders or certified checks? Is there a set day each month? Is there a grace period? Do they enforce late fees?
Knowing what questions to ask is a large part of finding the best manager for your property. Here are the important questions you should ask about services provided, fees charged, money management and property maintenance.
Questions About Services Provided and Fees Charged:
What types of fees do you charge?- Most companies will charge a management fee.
Ask how much their fee is. It will typically be between 4 and 10% of the gross monthly income.
Make sure the fee is based on rent collected rather than rent due. This will protect you from having to pay the property manager in the event of a vacancy.
Do your homework and don’t be fooled by a low management fee. You want to know what services the property manager is including in the management fee. Are they just going to collect rent and call it a day or will they provide a full range of services from tenant placement to handling maintenance requests, or even assistance with taxes. If things like tenant placement, handling maintenance requests and assistance with taxes involve extra fees, the low management fee isn’t such a bargain.
Ask if there are additional fees for services such as tenant placement, maintenance, advertising, evictions or anything else they consider extra services.
For example: Tenant placement fee/Leasing fee:
-Some management companies will charge a fee for filling vacancies. This fee averages about 50% of the first month’s rent. You should make sure there are stipulations in the management contract that protect you, such as, the leasing fee will be given back if the tenant is evicted or breaks a lease or, if it takes the manager longer than x amount of days to find a tenant, the leasing fee is waived.
Questions About How Money Is Handled/Where Funds are Held:
Where will the buildings funds be held?- Will all income immediately be put into a separate account for your property?- Who will have access to this account?
When and how will you, the property manager, be paid?
When and how will I receive my money? Ask for a specific day of the month and if you will be paid by direct deposit or by check etc.
Where do you keep tenants’ security deposits? How much of a security deposit do you require?
-Laws will vary by state. Some states require that you keep a tenant’s security deposit in an interest bearing account, notify the tenant annually of how much interest has been earned, and pay the interest earned to the tenant. A property manager should know your state laws.
What are your practices for returning security deposits?
For example: if they keep part of the security deposit for damages to the property, what do they consider to be damages and what is the corresponding amount they would keep? Are they aware of your state’s law about how to properly withhold a portion of the tenant’s security deposit, for what legal reasons they are allowed to do so, and how to properly notify the tenant?
Will I receive monthly income and expense reports?
Do you perform preventative maintenance/property inspections?- What kind and how often?
What is your standard practice for dealing with maintenance issues?- Is there a certain amount of money I must provide up front to put into a maintenance/repair fund?- Will you call me for all maintenance requests?- Will you only call for maintenance requests over a certain amount, say $500?
Do you provide an itemized list of all expenses?
Do you have free range to make repairs in the event of an emergency?
-What constitutes an emergency?
How long does it take you to respond to tenant complaints/repair requests?
What type or resources do you have in terms of contractors or other repairmen?
-Are they on call to handle emergencies?
-Do you rely solely on this group or do you get other estimates as well?