Hiring A New Property Manager

I like to use the word "Interview" because that's what you're doing when you're looking for a new property manager. You're conducting an interview much the same as a job interview. Also remember the PM (Property Manager) is potentially interviewing you as well.

Important line – “Not all property managers are the same”. That being said, I have worked with the best and the worst of them. When I started focusing on out of state properties I had to call and interview PM's. When I started calling and talking to them, I realized I was less prepared than I thought, which caused me to create a list of questions to ask when interviewing a PM., which you'll find below.

When contacting a potential management company I like to call after hours so I can leave a message stating, “I’m interested in using your company to manage a property of mine.” I like this for two reasons; first I like to sound small, like I just have one property. I like companies that treat you the same whether you have one or fifty properties, Second, I like to see how long it takes them to return my call. If it takes them more than a day to return a call to a prospective client then how long do you think it will take them to return a call to an angry tenant or an unhappy client? ( Do keep in mind that PM's have busier days than normal and one reason they might be slow to call back is because they are taking care of the most important thing; which is an existing client or tenant and that is more important than adding new clients to the business).

If they pass the call back test, I then move onto what’s basically a phone interview. The reason it’s a phone interview for me is that I personally manage all of my local properties and use management companies for my out of state rentals. If at all possible I recommend you go to their office and have a face to face interview. I start with the phone interview, if they pass that, then I meet them in person during my next visit to that city.
If they have passed the phone interview, then I have pretty much already mentally approved them and typically just do a meet and greet so I can check out their office and their professionalism. I also like to see how hard of an office it is to find, how I’m greeted at the office and so on. So far I haven’t been horribly surprised when I’ve showed up at a PM’s office.

Here’s my list of questions:

1. What cities or areas do you manage in? (Asking this upfront can save a lot of time.)
2. How long have you been in the business? Then more specifically how long have you owned this business? (I like to speak to the owner, if the company is too big to allow for that, then I pass and go to the next company. If the owner doesn’t have time to talk to a prospective client then they definitely won’t have time to talk to a client that has a problem.)
3. What is your history in real estate and/or what is your background?
4. What is your current management portfolio size? Can you give me a quick break down of how many single family, multifamily (duplexes to fourplexes), apartment buildings and commercial buildings? (If they have a small portfolio that isn’t a bad thing.)
5. How much capacity for growth do you have? Are you looking to grow?
6. What kind of software are you using to account for rents, repairs and general reconciliation of the properties?
7. What is the minimum reserve amount your company likes to keep per property?
8. Do you have an in house repairman? If yes, what all can they do?
9. What types of subcontractors do you have?
10. Is there any type of repair that I would have to find someone to take care of on my own?
11. Is there any type of preventive maintenance program? Example: one of my management companies does an annual inspection for free and they change the furnace filter at that time and they also talk to the tenants about keeping it clean.
12. What resources do you use to lease up a property?
13. Do you have any type of a tenant guarantee? For example: if the tenant you placed moves out in the first 6 months, do you replace that tenant for free?
14. Fees? Ask about them all. Account set up fee, leasing fee, mark up on repairs (they all mark up the bids to account for managing that process), section 8 processing fees?
15. Do they provide any property inspections? If yes, how often and is there a fee?
16. Hours of operation?
17. How are emergency repairs handled? Do they need my approval? What if it’s after hours then what does a tenant do?
18. Please provide a quick summary of your staff and what each person’s role is?
19. Per your management/owner agreement, how long are we locked into each other?
20. What licenses or certifications do you or your office personnel have that are applicable?

At the end, I ask them to please send me a copy of their management contract, tenant lease, tenant application and any other documents or information that they think would be helpful with my decision to move forward with them.

These questions don’t cover everything but they should be a great list to start with. And remember your gut is right the majority of the time and it’s worthwhile to listen to it.

Also, I’d like to mention what a thankless job being a property manager is. Very rarely do property owners call and thank the PM. They usually only call when there’s a problem and the same goes with tenants. They almost never call unless there’s a problem too. A good property manager is priceless and can make or break your rental business. Treat them well. I hope this has been helpful and please remember you can always email specific questions. Thanks.