finding good property managers in the memphis area

[Lutfi Kadd]

Hi

any recommendations on how to find good property managers in the Memphis area.

Thanks

Lutfi

[Chris Clothier]

I wrote a book called the Turnkey Revolution and based a lot of it on advise I've given here on BP. Here are some questions that I have posted many, many times here on BP that you should be asking any Turnkey company or outside property management company you are thinking of doing business with. I'm happy to give what I think are the best answers to these as well. Again, I made this list based on my own experiences.

Two important things to remember. One, if they don't have time to spend with you and answer your questions in detail and discuss them, in my opinion, move on. Two, a key about asking questions is to ask a mirror question. Many PM companies have learned how to sell and how to market and certainly how to answer questions like this. Often answers are scripted and your job as an investor is to ask the right questions in the right way to answer for yourself whether you can trust what you are hearing. It is also important to remember that investors like myself always advise meeting who you're going to do business with. That is important because it allows you to see for yourself if the answers you heard match what you see on the ground. Since that is not always possible mirror questions are important.  A mirror question is where you ask what is the average vacancy rate each month. Write down the answer. Sometime later in the conversation you ask the mirror question of what is your average occupancy each month. Write that answer down.

A high quality company will be on top of their KPI's and their numbers will match. A 3.5% vacancy number will match a 96.5% occupancy number.  You won't get a lot of "around this" or "approximately that".  Don't get discouraged if you get some of that as you may be talking to a team member that may to be as strong at answering questions.  Ask to talk to the owner before dismissing a company unless they clearly are not on top of their data.

Lastly, after you have their numbers research what you were told. I'll never forget a conversation with an investor who was amazed that a turnkey company had a 1.5% vacancy rate and a 98.5% occupancy. It sounded amazing. He asked how many properties they managed and the answer was around 1500. He then went onto their website online and researched their property management website and was shocked. Their website listed 198 properties for rent. They had an ad online for prospective tenants advertising 200+ vacant rentals. Their true vacancy rate was roughly 13% not 1.5%. But they felt like they had to market a low rate to "keep up with the Joneses". So ask your questions, get your data and do your research.

Are you an investor?

Do you own in the exact neighborhoods you are managing?

How many investors do you work with?

Do you own all aspects of the operation?  (or do they hire third party companies)

Do you offer rental or maintenance guarantees? If they answer yes, ask them why. Then ask them if they will put the guarantee on year three.

Do you defer maintenance?

How many properties do you manage?

Do you sell properties and if so, do you own the properties you sell?

How long have you been in the business?

What is your average vacancy rate?

What percentage of expiring leases will renew their lease each month?

What percentage of signed leases fulfill their full term?

What is the average number of days a property is vacant between residents, move-out to move-in?

What percentage of billed rent do you collect each month?

What is the cost of an average repair bill after move-out?

Do you mark up maintenance costs?

What are your management fees?

What percentage of collected rent goes to yearly maintenance on average?

What is your average number-of-months occupancy per property?

What is your average occupancy rate?

What programs do you have in place to keep residents happy?

What customer service programs do you have in place for owners?

Will you call me every month with an update on my portfolio?

How many team members are dedicated solely to providing service to your clients?

If you are an investor, What has been your biggest mistake as an investor? How do you protect your clients from making the same mistakes?

Again, these questions have a bit of turnkey flavor to them, but they work very well when interviewing management companies.  Make sure you take good notes and remember how you feel talking to the companies.  Do they give you a sense of comfort like they know what they are doing or are they selling you on low-cost and savings for you?  Companies that do not want to spend time answering your questions are most likely not going to have time to spend with you as an owner, in my opinion.  Be patient and best of luck -