Questions to ask property managers and contractors

[Jalen De Leon]

Currently under contract with potentially my first rental property and just wanted to gather all my eggs on a basket.

I wanted to ask what questions should I ask before hiring a property manager and a contractor?

What determines a good property manager/contractor and what are some red flags I should keep an eye out for?

[Richard F.]

Aloha,

For PM's, it is critical to first determine if they are required to have a Real Estate license in your locale. Experience is also crucial...how many units have they managed on average, and for how many years? Are they primarily a PM company, or are RE Sales their main focus. If Sales is their primary, you need to find out of they have a separate PM staff, and in particular the actual person that would be handling your account should be a full time PM. Do they have in-house Maintenance staff, or is most/all work performed by contractors? If contractors, are they all properly licensed and insured? Does the PM mark-up contractor invoices, and if so, by how much? What do they perform to justify that mark-up? What is a typical cost to replace a water heater? toilet? Can you select your own contractor(s) for some/all work?

Are they providing monthly financial reports that would include all income and expenses, with copies of all invoices paid, and a clear delinquency report? When is current month net rent NORMALLY deposited to your account/check mailed out to you? What is their "late rent" process and documentation? What is the range of costs to complete an eviction? How many evictions per year do they process? What is their Rental application approval process and criteria? Is there a cost to you for showing/processing/moving in new Tenants? Renewals? What is their average tenancy period length? Do they perform at least annual inspections of unit interiors? What does that inspection entail?

What is their Rental Prep process on acquisition of your account, and at Tenant turnovers? Do they provide documentation of repairs needed or recommended, and photos before and after repairs? Can you set a spending limit which they will not exceed without approval?

The PM should have clear procedures for all major processes, and be able to communicate them easily. Their vendors of choice should also be well organized and generally professional, or at least neat, in their appearances and work site conditions. The PM should return voicemails or emails within no more than two business days, and typically the same or next day, however they should be proactively informing you, rather than you making multiple contacts to get updates.