Finding good property managers in a rural area

[Bryan Clement]

Hello everyone, 

New to BP, joined a few weeks ago and took a few weeks to learn the ropes, now here goes my first post! I'm almost completely done with my first BRRR, and I am struggling to find a good property manager. Any suggestions for essential qualities to look for? At this point, I'm thinking about just hiring my dad (accountant) as that is the best I'm able to find. I'm not in the area so that's not an option either. Thoughts?

[Josh Stack]

Hey @Bryan Clement

Here are my PM interview questions, some of them I came up with, some I found online.  In a rural area it may be tough to find a very professional one.  That said, it sounds like a business opportunity.  If there isn't a good service company, why not start your own and build that up?

1. How long have you been a property manager? What’s the tenure of the rest of the staff?
   • Make sure they have a long proven track record of managing properties.
2. What types of properties do you manage? What is your geographical coverage? What types of properties do you specialize in? Where are most of your properties located?
   • Find a company that specializes in your type of property whether it's a single family home, du-plex, tri-plex, quad-plex, apartment or commercial.
3. What type of insurance do you carry?
   • Ensure they carry errors and omissions insurance and general liability at a minimum.
4. How many units are you currently managing? Is this number stable or has it been growing?
   • Look for a company that manages more than 100 units.
5. How many property managers does your company have? How do you prefer to communicate and what is your response time to owners and to tenants?
   • This will tell you how many properties per property manager they manage. Generally you want to see no more than 50-75 units per manager to provide effective, responsive service.
6. What associations do you belong to?
   • Check to see if they are a member of BBB with a good rating. NARPM and the local realtor associations are common for the property management industry.
7. How many vacancies do you have right now? Out of how many total units under management? How many of your tenants renew their leases?
   • This will tell you their vacancy rate and if it's in line with the local market.
8. What is the average length of time it takes to fill a vacancy? How long does it generally take to turn a property around and make it rent ready? How long is your average tenancy? What is the key to attracting quality tenants who stay a long period? How much of the security deposit is normally refunded to tenants? Is there a maximum deposit you can take in NC?
   • Make sure this in line with the local market.
9. What does your lease look like? Do I have any control to modify it with specific clauses I want?
   • Ensure you see a sample lease. Most companies will use the local association of realtors lease, which has been drafted by attorneys to comply with local laws, property codes and protect the landlords legal exposure.
10. What is your late rent policy?
    • Ask if they keep the late fee or pass it along to the owner.
11. Do you perform regular property inspections? Is there a fee for these? Tell me about your move in/move our process and can you send the associated checklists you use?
    • You want to ensure regular inspections are performed to catch issues before they get out of control. What do they check and how often are they performed?
12. What percentage of tenants do you have to evict?
    • Generally great property management companies will mostly evict tenants they have inherited, as they did not perform the screening.
13. How does the eviction process work here?
    • Some states simply request a 3-day notice before evictions are filed in which the tenant can be evicted in a few weeks. Other states it could take many months and require an attorney to process. When do they start the eviction process?
14. What are your management fees? What kind of reserves do you/ does your company require?
    • Most companies charge a percent of the rent and some will charge a flat fee. 5% to over 10% management fees are common in the industry.
15. Are there any other fees (cancelation, eviction, renewal, marketing, account setup)?
    • Make sure the company does not entice you with a low management fee then nickel and dime you with miscellaneous and hidden fees.
16. What do you charge for finding a new tenant and leasing the property? If leases are renewed do I pay the fee again?
    • You will see flat fees and from 50% to 100% of the first months rent for a leasing fee. Ask if the fee includes listing on the MLS and fee to the other broker is paid out of your leasing fee.
17. Do you charge a fee when my unit is vacant?
    • Confirm the company does not charge a fee when your property is vacant.
18. What are my guarantees? Eviction warranty?
    • Can you cancel your contract with no fees if you are unhappy? Are there any guarantees if my tenant breaks their lease?
19. If I decide to sell my property, do I have to list it with you?
    • Some contracts state you have to use your management company's broker to sell your property if you decide to sell while under contract.
20. How do you market your properties? How do you determine current rents? Generally do you market at, below or above market rents?
    • Make sure they list your property on the MLS, list on other real estate websites and put a sign in the yard at a minimum.
21. What is your repair process? Is there a minimum charge for a maintenance visit? Do you mark up repair services? What level of repair can you make on your own and when must i authorize the expenditure?
    • Is there a maintenance limit they are approved to make repairs without consulting you? Will you receive competitive rates due to volume discounts the company receives from vendors? Will you receive multiple bids if it's a large repair?
22. How do you screen prospects, what are your minimum criteria? Do you accept people who have had an eviction on their record? Minimum income level? Is renter’s insurance a requirement?
    • Ensure in-depth credit, criminal, employment and prior residency checks are performed. What are their screen requirements and approval process?
23. When will I receive my rents? Is a monthly statement with itemizations for all expenses included?
    • Generally management companies will send owner proceeds between the 10th and 15th of the month.
24. Do you do direct deposits?
    • This will save you time and hassle.
25. Can tenants pay rent electronically?
    • Ensure tenants have the latest online tools to keep them happy
26. How do you insulate your owners from legal liability? Have any of your owners ever been sued or have you ever been sued by tenants?
27. Can you explain the federal fair housing laws to me?
    • Prevents discrimination against protected classes (race, family status, gender, etc)
28. How often will I get updates on my portfolio?
    • Monthly statement, summarizes all properties, breakdown per property
29. What is your differentiator? Why should we use you over other providers in the market? What is your owner retention rate?
30. Can you provide references for owners that you are already working with?