27 Questions You Should Ask Before Hiring A Property Manager
We are called and emailed each week by owners interested in finding the best property manager in one of the markets we service. They also interested in knowing more about our what gkhoues offers to owners. The typical questions we hear are things like:
What are your fees?
How long will it take you to rent my house?
How do you handle maintenance?
We believe these are good and valid questions.
However, in this post, we want to give you a comprehensive look at property management services and the 27 questions you should ask to determine if they’re a good fit for you.
So here we go….ready?
Questions For A Property Manager
When you set out to call/email and begin to ask questions to a property manager, it probably means that you’re well on your way and may have even decided to rent your house.
Most of the owners we speak with are ready for someone to come to their house, help them determine a rental rate, and sign paperwork. But for those of you who aren’t quite ready to pull the trigger, here are some things you should strongly consider before you decide which company you will use to manage your house.
Let’s look at the questions surrounding these different subjects – Strategies, Results, and Systems for a Property Manager.
Strategies Responsiveness – Who typically responds to questions and how quickly they will be answered? The speed the manager responds to your initial questions is a good indication of how responsive the manager will be once you are a client. Another good indicator of their responsiveness is if you reached out for more information on their services and it took them a day or two to get back with you…that’s not the best sign!
Professionalism – What do your managers typically wear on a normal day? Our industry is what we consider to be a ‘mom and pop’ industry. This means that most management companies are smaller (up to 300 houses under management) and continue to keep old practices even though their business continues to expand. A manager may feel completely comfortable showing their own house in shorts and a t-shirt but it’s not the best business practice. How the manager represents the management company is a good indication of how the manager will represent your home. Take a look at the manager’s website, current marketing materials and current listings. You may want to weed out certain managers before you give them a call.
Reputation – Where can read testimonials from your owners and tenants? There’s no need for you to work with a manager who has a bad reputation in the community. We have seen that end badly for owners for various reasons. You deserve to work with a reputable manager. Here’s a recent survey we conducted with our owners where we share the good, the bad, and the ugly! No manager is perfect but reputation is a big deal…especially when good tenants are looking to rent houses.
Satisfaction – Do you have any guarantees that are offered to owners? Sometimes things don’t work out the way we plan. Sometimes owners aren’t satisfied with a manager’s performance. It’s wise to discuss beforehand if the manager has any kind of performance guarantees. Those guarantees can be with management, tenant placement or maintenance. The point is that managers with solid guarantees are putting their money where their mouth is and they believe in their ability to deliver a great service to owners.
Management Strategies – This is extremely important because it relates to the systems and processes that a manager has set up to run their business. When you speak to a manager ask these questions regarding their management strategies:
How do you come up with market rent for your house?
What are your collections procedures and process if a tenant is late?
How do you underwrite prospective tenant applications?
These three strategies will give you a sense of whether or not a manager is on top of their business.
Management Results Vacancy Rate – What’s your vacancy rate? You should be curious about the manager’s vacancy rate for their portfolio. These should include houses that are rent ready and are being marketed. Obviously, a manager cannot control if an owner is trying to sell a house or refuses to do the needed work to get a house ready for the rental market. What you’re looking to do is gauge the manager’s ability to fill vacant houses. Also, understand that an owner’s ability to understand true ‘market rent’ is also important.
Eviction Rate – What’s your eviction rate on tenant’s you place? No one believes an eviction is fun…especially the owner who must suffer months of slow pay and no pay during the process. Every manager should know the percentage of tenants that make it through the underwriting process, are placed in a house, and eventually, get evicted. This gauges the quality of the manager’s application screening process. It’s doubtful that the percentage is 0%…but it shouldn’t be at 10% either. This number will not include tenants that were not placed by the management company. If an owner brings us a house with a tenant already in the home but we need to evict them, it will not be counted into our numbers….other managers will calculate it the same.
Collections Rate – What’s your collection rate on billed rent? It doesn’t help an owner if a lease is signed and then the manager can’t collect the rent! The key is asking what percentage of money that is billed to the tenants does the manager collect. It reminds me of a Seinfeld episode where a rental car company had taken a reservation but when Jerry went to pick up the car, they didn’t have it. He complains that anyone can take a reservation…but holding the reservation is the most important part of the deal! You want to deal with a property manager who not only charges rent…but collects the rent. That’s the most important part of the managing your property!
Average Length of Tenancy – What’s your average length of tenancy? This is just a fancy way of asking how long their tenants stay in their houses. The national average is three years and we’re proud to say that ours is six years. An owner doesn’t make near as much money if tenants continue to move in and move out. The longer a tenant stays in your home, the more money you should make. This is because:
Long-term tenants generally take better care of your home
Less Vacancy = More Money
Long-term tenants mean less repairing of the home to be “show quality”.
Systems and Reporting
Team Structure – What is the team structure in your office and who is responsible for owner communication? First, you should be able to understand who’s on the team through a property manager’s website or their marketing material. Also, it is helpful to know how the management team structured. In other words, who are you going to be interacting with on the team? Do they have a person (or people) dedicated to owner communication? Probably what you should know is if you will have a direct contact that is readily accessible. If they do have a dedicated person, how do they typically communicate with owners – email, phone, or some other means?
Available Information – What kind of information will be shared with you regarding your property? What you want to know is how readily accessible the accounting and property information is for you as the owner. Ask to see an example.
Marketing Your Home – How would you market my home to find a great tenant? This is a big one. You want to make sure the manager you choose understands how to drive traffic (prospective tenants) to your rental. We know that it’s a numbers game and so the more people see the house, the more people fill out an application. Eventually, a well-qualified tenant will be interested in your house. Solid marketing helps you find that qualified tenant faster. What unique strategies does the manager use to market your home? What are web-based marketing methods utilized? How many unique visitors does the manager’s website receive weekly? If nothing is being done that is unique, it’s likely the manager is not creating any additional value.
A few additional things to consider when talking to a prospective property manager:
Experience and Maintenance Team Experience
Size of Portfolio – How many single-family homes does your company manage? How many owners does this represent? You want someone with experience managing your home. If a manager has been around for 20 years and only manages 200 houses, it may be a sign that owners come and go but rarely stay long term.
Core Focus – Does your company do anything else besides full-time job property management? You should ensure that your manager is focused on managing your investment full-time. Over the years we’ve seen more and more Manager’s become Turnkey providers and that means they become more incentivized to place good tenants in homes that they’re going to sell (because they make more money) than those they manage. It’s clearly a conflict of interest that doesn’t benefit the long-term owner of rental property.
Size of Staff – How large is your management staff? This should not include agents focused on buying and selling homes.
Maintenance Crew – How long has your company been working with your current maintenance providers? Are they employees or third-party contractors? Can you provide me proof that all maintenance providers are licensed and insured? You don’t want to neglect this important question because it can come back on you if someone gets hurt on the job or the contractor does a bad job. This can also go back to any kind of guarantee the manager has for their work.
That may seem like a lot to cover but your rental property is a BIG investment and should be treated seriously.
We hope this helps!