What questions do you ask Property Managers to vet them?

Question

Hi all, closing on my first rental property (single family home) this Monday and in need of a property manager. The home is in Scottsdale AZ and I'm in Seattle so I'll need someone reliable and well liked by investors/owners. And since I'm new at this I'm not entirely sure how to vet a PM. I know there are many not-so-hot PM companies out there, experienced a couple nightmare ones myself. I'm wondering what kinds of things to ask as I'm interviewing PM candidates, what things to avoid. Also looking for personal recommendations from other Phoenix owners who have properties being managed for them.

Jennifer Lyles · Answer

@Mike Korn

Here are some questions you should be asking when interviewing PM companies

1. How far are they located from your property?

2. Get specifics on their screening process

3. How do they handle maintenance? Is there an upcharge on maintenance?

4. Do you have a say in who they place in your property?

5. What is their fee structure?  Are their any hidden fees?

6. What are their late fees? Do they split them with you?

7. How do they handle evictions? How soon after a tenant is late do they file?

8. Do they do thorough move in inspections?

9. Do they perform routine inspections? If so, is there an additional cost to you?

10. Where do they hold the deposit?

11. How do they determine how much of a deposit to collect?

12. Who will be your point of contact?

13. Do they offer 24 hour maintenance?

14. Is there a maintenance limit that they will complete repairs without your knowledge/consent?

15. How do they determine the rental rate?

I hope this list helps, I could go on but if you want to DM me, I am happy to answer any PM questions you may have! Good Luck!

Nathan Gesner · Answer

Remember: cheaper doesn't mean you'll make more money.

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!

Mike Korn · Answer

Thank you all so much for your suggestions. I've got some research to do! And tons of criteria to evaluate PMs. Making some great connections too. Thanks so much for your posts.

Drew Sygit · Answer

You might want to read our series about “How to Screen a PMC Better than a Tenant”, since selecting the wrong PMC is usually more harmful than selecting a bad tenant:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

Debbie C. · Answer

@Mike Korn

I have SFH in Scottsdale managed by American Associates, they are based in Tempe. My property manager is Cindy J. I have been with her for about 9 years. Great service, good maintenance dept., fair pricing.

Right now I have great tenants in my properties for 3+ years.

Dick Rosen · Answer

I highly recommend that you do a search on NARPM.org NARPM stands for National Association of Residential Property Managers, they are held to a higher standard, better educated and in tune with their market. I know you'll find many choices in there for Scottsdale, ask about their services, are the full service and what do they do and how do they communicate this to you. How do they communicate and by what means do they communicate.

Paul Welden · Answer

@Mike Korn

Congrats on the purchase!

If you used a real estate agent, first place to look for referral would be him/her/them.

What questions do you ask Property Managers to vet them?

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