Questions before hiring a property management company include their policies.
Many real estate investors find out the hard way how much time and energy it takes to self-manage their rentals.
With so many property management companies to choose from, it’s best to interview them before hiring.
The following list of questions should help you make a better decision.
Ask these Questions before Hiring a Property Management Company
You should ask the following questions:
1. Will one specific property manager handle my properties?
Knowing the name of who manages your rentals creates accountability. Meeting the specific property manager allows you to explain your expectations to avoid misunderstandings.
2. Who heads the office?
Most property management companies are owned by a real estate broker. If anything goes wrong, it’s good to know who to contact to quickly resolve problems.
3. Is this company experienced?
Don’t expect much from a brand new company.
4. How many units do the company manage?
Know the benefits of small and large property management companies. Decide which type fits best with your expectations.
5. Do you only manage or do you sell too?
Many companies do both. Look for a company that prioritizes property management.
6. How long does the average client stay with you?
Is this property management company in it for the long haul? Clients staying for long periods of time show positive management.
7. What sets you apart from other companies?
Let them sell themselves. Are they just average or do they do things differently?
8. How often do you communicate with your clients?
Does this company send clients regular status reports? What means of communication do they use (email, text, phone, letters, etc.)?
9. What do you expect from your clients?
Do they take control or do their clients only want micromanagement? Do they expect their clients to be completely passive or proactive? Which fits with your expectations?
10. Are tenants informed about who owns the unit?
Some owners prefer to remain anonymous and hire property managers to take complete control.
11. What is your policy about owners contacting tenants?
Some management companies do not allow owners to contact tenants.
12. Do you have a standard contract with owners?
Surprisingly, some management companies do not use standard contracts. This is the right time to ask to see their contract for you to review.
13. What is your monthly fee and what’s included?
Management companies charge different fees. For example, some charge 6% and charge for extra services. Others charge a flat percentage which includes everything.
Every owner should know what specific services included for the monthly fee.
14. Do you contact owners regarding all problems?
Small problems handled by the management company preferred by most owners. On the other hand, major problems require contacting the owner.
15. Who is on the lease with tenants?
Some companies include the owner’s name on the lease with the authority to sign for the owner. Others only put the management company’s name on the lease.
16. Are owners provided with copies of all leases?
Some companies do and others don’t.
17. Does your company handle all types of leases?
Some companies only do one-year leases. Others only do month-to-month leases. While others handle multiple types of leases.
18. Is there an additional fee for handling month-to-month leases?
Some charge extra due to the additional time involved when tenants move out sooner than a one year lease.
19. Do your leases include a break-out clause?
Many tenants break their leases. A break-out clause penalizes early vacancies.
20. Do your leases cover damages caused by tenants?
Damages beyond normal wear and tear must be included in the damage deposit clause of every lease.
21. How much move-out notice do you require?
Many companies set different times.
22. Who pays for pest control?
A necessary expense as pests presents problems nationwide. Good to know from the onset who pays for it.
23. Do you charge for renewals?
Some companies charge a renewal fee if a tenant decides to stay longer.
24. Do you raise rents for every renewal?
This question raises the issue of market evaluations and recommendations to raise rents when appropriate.
25. What is your pets’ policy?
Does the company charge extra fees for pets? Are pets allowed? If yes, what types as some people consider snakes and alligators as pets.
26. Who keeps the extra fees tenants pay?
Does the late fee or pet fee go to the management company or split with the owner?
27. How and when is money dispersed?
Some companies only mail checks while others do it all online.
Many owners pay their mortgage by the 15th so when the money disbursement occurs matters.
28. How do you advertise for new tenants?
Every property management company advertises differently. Some take professional photos while others don’t. Knowing where they advertise matters.
29. What do you recommend as the rental price for my unit?
Probably every company sets a different rental price. Some underprice and others overprice while others do market research to set the right price.
30. Any recommendations for touch-ups to get higher value?
A good opportunity to see if the company makes good suggestions to increase value.
31. How long does a typical tenant approval process take?
Learn how the company qualifies potential tenants and how long it takes.
32. What is your late policy?
What consequences occur when tenants fail to pay on time? Learn their late payment policy.
33. What is the late payment penalty?
How much must a late-paying tenant pay as a penalty? Good to know if the company enforces a strong late payment penalty.
34. How many evictions do you perform in an average year?
Knowing their experience with evictions helps.
35. Who handles the eviction process?
Do they process evictions in-house or hire a law firm?
36. What application and screening process do you use?
Do they perform background and credit checks?
37. What screening requirements do you use?
New tenants with bankruptcy or low credit scores and past evictions accepted or rejected?
38. Do owners give the final approval of new tenants?
Companies differ on this. Some ask for final approval from owners while others handle the entire process themselves.
39. Do you use a standard move in/out inspection form?
Seeing the forms the company uses helps to know how thorough they are.
40. Do you conduct inspections during a tenant’s term?
Some companies don’t do any inspections while others do quarterly or yearly inspections.
Conclusion
Ask these questions before hiring a Property Management Company covers many topics. However, while these 40 questions do not involve every topic, they include some of the most important points.
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Steven Rich, MBA – Guest Blogger
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