13 Questions to Ask a Property Manager
I have received a lot of questions about property management, lately. Yesterday, we addressed what it is that a property management company does, along with a list of criteria to help you determine if you need a property manager at all.
For those of you who need or want a professional property manager, today we offer up some good interview questions designed to give you insight and help you identify what it is that you need to know before you sign a contract.
Questions to Ask When Interviewing a Property Manager:
- Monthly Cost: Most managers charge a monthly fee to maintain, watch and care for your property. Fee’s can vary widely, but generally you should expect to pay 5%-10% of the monthly rental for the management fee.
- Vacancies and Leasing Fee: Most managers charge a fee for procurring a tenant for a vacant property. This fee offsets the managers costs for advertising, showing the property and the time spent with paperwork. The leasing fee can vary, but generally agents charge 1/2 of the first months rent for a signed lease with an approved tenant.
- Contact Information: This is a big issue for me, as reaching my manager, if necessary, is essential. I require that my manager uses email (my preference for non-emergencies) and also has a cell and office phone with voice mail.
- Accounting: State laws dictate the rules of procedure for mailing checks to you and how security deposits are handled. Verify that the company is licensed and fully compliant with your state association of Realtors. Check with reporting bureau’s, such as the BBB, to see if any compliants have been filed against the management company and the status of resolution. Get a committment in writing about the mailing schedule for rent checks and monthly expense statements before you sign.
- Repairs and Maintenance: Determine who handles maintenance and repairs for your property. Does the management have in house service or do they subcontract the work? Ask what services they can provide and which do they need to hire out? You will also need to know the billing rate or how the repair charges will be based. I usually allow my managers to make repairs up to $100 without contacting me beforehand. This is up to you, but note that you can set a maximum with your manager.
- Reserves: What is the required cash reserve for anything that comes up? Most managers will charge a reserve that is refundable if unused.
- You’re Fired: What is the termination policy, in case you discover that the relationship isn’t working out? Find out what it will take to terminate, before the trouble starts. Many companies charge a fee for early termination of the management agreement.
- Statements: Does the company provide monthly or quarterly accounting statements? I personally don’t do business with companies that don’t provide a monthly accounting.
- Yard Work: Does the company have a lawn service that tenants can use? Do they handle leaf and snow removal? Landscaping or removing trash or debris? If so, how much do they charge and how is it billed? This type of service is a real plus for single family homes, especially those with treed lots, locations in storm areas or others with cold winters.
- Property Checks: Does the company have a drive by schedule for the property it manages? Do they verify that the property is in good condition and leasing terms are adhered to during the lease term?
- Advertising: You want your property advertised. Ask where they advertise the property? They should use yard signs with an InfoTube or InfoBox, have a good website with a lot of photo’s of the property, upload your listing to free rental websites and make use of local classifieds.
- Evictions: Sad, but something landlords have to address upfront. Does the company handle all evictions? They should. If so, what are the costs to evict a tenant?
- Section 8: Properties that qualify for affordable housing assistance should have a manager that is qualified to handle all the rules and regulations, so ask. You never know when you might buy a piece of property that requires knowledge of the laws.
When interviewing property managers, these are the questions you will want written answers to before you sign any agreement.
Tomorrow, we will look at little clauses and common sense items you can add to leases to protect yourself and your property. They are also tools that your property manager will appreciate, should you decide to hire one.