Questions for Potential Property Managers

[Brandon Kiel]

I am a newbie investor from Grand Rapids, Michigan and I am looking to get into long-term rentals in West Michigan (Grand Rapids, Grand Haven, Holland Muskegon, etc.) I have gone around and around but decided that when I find a property, I want to have it professionally managed. While I don’t have a property yet, I am getting to the point where I want to start networking and interviewing property management companies for two reasons:

• To help determine the best fit for me once I do complete a purchase on a property
• Help better understand the market that I am targeting (what tenants are looking for, rental rates, etc.)

Does anyone have any advice on questions I should be asking in these initial networking interviews?

[Nathan Gesner]

Remember: cheaper doesn't mean you'll make more money. Which also means that do-it-yourself Landlords are more likely to lose more money doing it themselves than they would have spent on letting a professional handle it. Over half of my owners are "rescues" that thought they could save money managing on their own.

You can 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. 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 different 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 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. 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!

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 it is 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 they are 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!