Must Ask Questions Before Hiring A Property Mgmt Company?

Question

Hey!

I hope this is the right forum to be posting this,

But what are some "must-ask" questions I should be asking a Property Management Company to tell if they really know their stuff or not before I hire them?

I appreciate the help & useful advice, thanks in advance.

Cheers!

Nathan Gesner · Answer

There are too many to list, but here's a good start. You wouldn't want to ask all of these, but pick and choose what you feel is most important or not answered through their marketing or a review of their management contract or lease.Remember: cheaper doesn't mean you'll make more money.Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Beau F Borinstein · Answer

I disagree, gotta work on your business not in your business. A good property management company will make up for the 10% you pay them! You also have to consider your time!

Theresa Harris · Answer

In addition to Nathan's questions about how many units they manage, ask what type of units and where. Some specialize in a certain market or certain area.Also ask when you get your money. I've seen some people on BP say it can take over a month to get the rent. It should take 2-3 weeks.For fees-how much they charge per month and what that includes, how much they charge to place a tenant and if there is a fee to renew a lease.

Drew Sygit · Answer

@Zackarias AitchisonIn our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING. It's often a case of not doing enough research, as they don't know what they don't know! Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator. So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed. EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do! This also leads owners to ASSUME simpler is better when it comes to management contracts. The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it! We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees. We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover. EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises! P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Zackarias Aitchison · Answer

@Nathan G.Thanks so much man! I've never heard of narpm.org but I will definitely check that out. Thank you for this wealth of information, it's appreciated!

Beau F Borinstein · Answer

They have it pretty much summed up here; I would say the biggest thing is if they answer their phone! Call them from the owners side, also call them and act like a tenant!

Manco Snead · Answer

Side note; if it is at all possible to manage the property yourself and stay away from property management you will be better off.

Jake Guthrie · Answer

Here is a list of things to ask/discuss with PM's How many properties do you manage?What type of units?When will you receive money?Ask what kind of fees?How much for leasing a vacant unitAsk how much for renewal contractsAsk how they handle maintenanceAsk if they have 24/7 maintenance and tenant complaint lines. Every company should be using some sort of 24/7 maintenance coordination or call centers by now. so on and so forth. As as many details as possible so that way you're not shocked by something at a later date.

Zackarias Aitchison · Answer

@Theresa HarrisThank you for your response! Asking about when I get paid was something else I never even thought of. It's definitely important to figure out when I can expect the income from my property. I will make sure to ask about this when I sit down with a few PMCs. Thanks again for the information, I really do appreciate it!

Zackarias Aitchison · Answer

@Drew SygitThank you for linking me to this blog post, there is a TON of useful info in this blog that more than answers my question. Especially with asking about If Event -> Then fees, I never even thought about asking that so I'm definitely going to keep that question in my pocket. I like your idea of not just comparing prices but going through the management agreements and comparing the do's and don'ts of what people offer.I've bookmarked this blog for future reference when I have some sit down meetings with a few different PMC's. Thank you again for taking the time to give me a well articulated and informative reply! Cheers Drew!