Long distance property - What do I ask my property manager to make sure they are doing a good job?

Question

Hello!  This is my first post, since I haven't posted an intro yet.

I have a property in a Phoenix suburb that is managed by property management.  I interviewed 6 management companies to choose the one I did.

Now, the property seems to be doing great.  I've had it fully occupied by one tenant for the full 3 years I've owned it.  The PM is doing a good job as far as I can tell, and we have a good, positive relationship (mostly via email).

I have been assuming that the PM is doing a great job.  I get the rental check each month and they are responsive when the HOA sends notices or other issues crop up.

What questions should I ask of the PM to make sure that the property is being managed well?

Thanks in advance for any advice!

Jasmine Bennett · Answer

Hey there Patrick!

It's great that your property management company is doing such a great job! Just to check in and ensure that they're doing what's needed for the home you can always request that they schedule an interior inspection of the home with your tenant. This will allow them to send you photos of the current condition of the home and they can also let you know if any major repairs need to be done or may need to be done in the future. Each state has different laws as to how often an inspection can be scheduled but that would certainly help to keep you in the loop!

Good luck!

Jasmine

Patrick Stevens · Answer

Wow!  Fantastic replies.  Excellent advice all around.

I'll try to address some of it.

First, @Joe Moore , I agree that doing the property management work is an option.  This property is held in my self-directed retirement account, though.  It is a bit risky to do much of my own work on the property, including typical PM work, due to the IRS implications.  I could do it, but for the peace of mind, I am trusting in my hired PM.  Also, I have to say it is kind of nice not to have to worry about taking calls, scheduling repairs, finding tenants and all of that other work.  Worth 8%?  I don't know, but definitely nice.

Thanks to @Jasmine Bennett , @Tyler Bedle , @Lee Smith , here are the questions I am going to pose:

• 1. Has the yearly inspection been happening?  How did it go?
• 2.  Can I get yearly pictures of the property, taken during the inspection?  
• 3.  Is there any maintenance work that you think is coming up, above and beyond the reserve amount?
• 4. Can I see a copy of the current lease? (Inspect it for hidden fees that could be gouging the tenant)
• 5. Can I get a list of requested and completed maintenance orders?
• Thanks to @Reuben  Stone   and @Bogdan Cirlig :

a. Who performed the work?  (Then, I should call the vendors to verify.)
• a. Who performed the work?  (Then, I should call the vendors to verify.)
• 6. Are there any updates to the property that I should be considering?
• 7. What are your thoughts on the property?  Can I get some current market rental rates?

• a. Who performed the work?  (Then, I should call the vendors to verify.)

Also, @Steve Rozenberg , that is a great list of questions for the next PM I hire.  Thanks!

Lee Smith · Answer

Sounds like you are happy with your management. Don't go switching it up unless you are sure it needs to be done.. The grass aint always greener.....I would ask her/him if there are any updates you need to be considering. If you aren't getting yearly rent increases, ask him to do one of those, and or what his/her thoughts are on it. Ask them their thoughts on the property and ask them to run some current market rates to see if you are under priced.

Joe Moore · Answer

@Patrick Steven - I also should have mention if you are concern about collecting rent, you can have your tenants use Paypal to pay the rent.  I gave all my tenants my BofA account in order to make their rent deposit.  Their deposit slip is their rent receipt.  Also any big bank of your choice or their local bank can be used to make rent deposit.  As far as using one their local bank, you can open an account online or call the local bank to open an account.

Jasmine Bennett · Answer

In reference to Joe's post: He is correct. You are more than capable of self managing. You can always outsource the administrative side of things to someone more knowledgeable if you don't completely understand things. This would also save you some time and money because property management fees can be high. Always be sure to do thorough research before making any decisions.

Bogdan Cirlig · Answer

Hi Patrick,

You're in luck. It seems the PM is doing a great job. I have a long distance love relationship with my PMs in few states. Funny one asked me when I was interviewing to hire some in Chicago:

"what do you expect from me to have a great relationship"

I told him:

- keep the property rented and rents flowing into my account

- ideally never call me to any problem (lol, not realistic but you understand)

- send me pics of the property every year, on the Yearly inspection which you should have in every lease, 30 days before renewal.

- don't scam me on service calls

The last one is quite annoying, as I have seen the rise of contractor scam and a lot of PMs who realize there's more money in repairs than the 8% they get per month. (bleah)

The last PM company I fired in Chicago used to charge me even for the stamps they put on 5 day letters lol and also for lawn care and at the same time I was getting fined by the city for tall weeds :D

Reuben Stone · Answer

Patrick,

I own a property management company myself. My company emails/mails (If the client is old school) a financial break down of all activity the property has experienced in a given month. Basically this break down lays out exactly who paid rent and how much, who was late on rent, what repairs were needed, how much were they, and who preformed the work. It then gives the NOI for that month which should be the same amount as the check you received. If you are not receiving a report like this then you should contact your property manager and request one to be sent every month. If they are unwilling or incapable of doing this you should be concerned. When you get the statement, make some calls to the vendors listed and make sure that your property manager actually spent the money he/she said they did. You dont want them telling you they are spending all this money on improvements/materials when in reality they havent spent a dime.

Joe Moore · Answer

Hello Patrick do you need a property manager for just one property?  There will be many months when you pay them for doing absolutely nothing.  In short, you are just wasting money. When you needs repairs done you can go online and find a repairman in the property's locale.  You can also use Angie's List, Networx, Redbeacon, and other similar site when repairs need to be made.

Tyler Bedle · Answer

One very important aspect of property management is treating tenants fairly and with respect. Some PMs charge tenants hidden fees for trivial things and look at them more like dollar signs than people. If your PM doesn't treat your tenants well, it could ending up driving them out of the unit and costing you big bucks for the vacancy.

I would ask for a copy of their lease and check it for overly-aggressive fees. I would also ask for a record of requested and completed maintenance orders. This along with inspection photos should give you an idea how well your property is being maintained.

Part of the reason people hire PMs is for privacy but if you don't mind speaking to a tenant, they could be a valuable source of information on the company you've hired. I would advise that you take what they say with a grain of salt, however.

Steve Rozenberg · Answer

Hi Patrick,

I would want to know what is their business model and mind set, I would also ask if they focus on specifically property management or try to be all over the map doing things like flip, rehabs, short sales etc... I have found that most people can not do all of these things great.

I can say from my experience that when we tried to do other things besides managing and protecting peoples investments, we noticed that our level of service was declining and we very quickly decided to not do anything but property management. 50-60% of our clients do not live locally or in the country so we are very familiar with what out of town clients want and need.

Below are a few questions I would ask if it were me, and if you like feel free to send me your email I can certainly help you anyway I can.

Questions to Ask prospective management companies

• What are your average days on market for vacant homes?
• What is your average rent amount for all properties managed?
• What is your average work order cost for the owner?
• What is your average make ready cost for the owner?
• Are all my invoices uploaded to my owner portal?
• How do you advertise your vacant units?
• Do I receive video of my pre and post make ready?
• Do you have a setup fee?
• Do you upcharge on maintenance?
• When do you make owner payments? How often?
• Are you a Certified Property Manager?
• Are you a member of NARPM?
• What is your Guarantee?

Long distance property - What do I ask my property manager to make sure they are doing a good job?

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