Ready to hire a property manager? According to an infographic on MySmartMove, 44% own, but do not manage their rental property. You need to ask the right questions to hire the best property manager for your rental portfolio.
A property manager has experience in finding the right tenants and managing all those tedious tasks that you would as a landlord. So, what better way to talk about hiring a property manager than to hear from a real estate agent, property investor and manager himself than to chat with RentPrep team member, Andrew Schultz. Andrew currently manages 120+ doors in the Buffalo, NY area and was generous enough to help us put together this post. Let’s get started!
What Is A Property Manager?
Before you ask a property manager questions, it’s essential to understand what they can do for you in the first place. To make it short and straightforward, a property manager is a third party hired by folks like you to manage the everyday operations of a rental property. Depending on the rental and your agreement, they can manage various property types and tasks.
It’s feasible to find property managers that will manage the top-level things like finding you a tenant to collecting rent. Still, then it’s also feasible to find a manager that can handle pretty much all the work so that you don’t have to touch anything at all, it’s all in the negotiations.
Why Hire A Property Manager?
A good landlord and property manager relationship is essential to success. Aside from interviewing a property manager, you want to ensure that you’re going into things for the right reasons. So, let’s quickly review the benefits of why you should hire a property manager in the first place.
Benefits Of Hiring
So, you think about hiring a property manager and as you know, hiring comes with an expense. But, let’s think about the long run. Without going into too much detail, a manager can save you money on maintenance by having the right contractor relationships, they know how to set the right rental price, they’re aware of local, state and federal laws. At the end of the day, all of that can provide a landlord with more time to invest in additional properties or live everyday life and an overall sense of peace of mind.
Common Tasks Of A Property Manager
So, to reiterate the above, what your property manager does for you is between you and the property manager, it’s whatever it says in your contract. But to help simplify things, here’s what we typically see a property manager do:
- Market the rental property
- Handle the tenant screening process
- Execute a lease agreement
- Collect monthly rent
- Take care of property maintenance
- Handle tenants requests
A property manager again can help manage everything from the top-level tasks down to managing your rental property so really, you don’t even have to think about it.
Where To Hire A Property Manager
It’s possible you’re just starting and don’t even want to think about maybe because it overwhelms you or what not to hire a property manager; it’s just another task to add to your list of a thousand tasks, right? We get it. So, let’s start with the basics, you can find a property manager through referrals, which is our first pick, especially if you are starting out.
Most of the time when someone is referred, you’re likely to feel a bit more initial trust in the landlord-property manager relationship than someone to who you were just introduced to. Second, the internet, specifically, google search. Pay close attention to the reviews when you google “property management company.” Reviews can be very telling when starting a working relationship with an additional rental vendor such as a property manager.
10 Questions To Ask A Property Manager
Woohoo! You’ve learned about why you should hire a property manager and the benefits, but now let’s understand what to ask. Here are our top ten questions to ask a property manager before hiring. If you prefer to check out a video version of the below, take a look at this:
Are You A Licensed Property Manager? Do You Have Any Certifications?
In the state of New York, to legally manage a rental property for another person, and receive any compensation, you must be a licensed real estate agent in NY State! Simply put, beware of “property managers” who do not have any state license to practice real estate. In addition to a state license, many professional trade organizations will offer certification classes in property management.
How Many Properties Are You Currently Managing? What Types Of Properties Are They?
It is important that your future property manager gives you properties the attention they need and is familiar with handling tasks associated with the property. The management of a duplex is substantially different from that of a larger complex, or from a condo association. The laws vary depending on the number of units in a complex. For instance, escrow accounts must be maintained differently for a larger complex than for a duplex.
What Is Your Fee Structure?
Property management fees can make or break a situation when choosing a new manager! Remember that in most cases, management companies are paid based on the rental income from the property. However, there may be additional charges that should be clearly outlined by the property manager, and they should be put in writing in the management contract.
Examples Of Possible Fees
When you ask about a property management fee, it’s essential to know about the most common property management fees that you might see:
- Maintenance reserves
- Evictions & court costs
- Tenant finder’s fees
- Maintenance markups
- Emergency on-call services
- Early Cancellation Of Contract Fees
- Lease Renewal Fees
How Do You Send Reports? Can I See A Sample?
How a property manager reports financial data to you can affect your ability to understand what is going on with your property truly. A property manager should be able to explain everything on your reports to you clearly and concisely. Be sure to ask questions about anything that is not clear. Property managers should be able to provide you with a sample report to review before you begin an agreement so you will understand your reports once they are generated. Clarify when and how reports will be delivered to you.
What Does Your Tenant Screening Process Look Like?
At some point over the life of your rental, you’ll have a tenant move on and move out. Having a system for screening potential tenants should be a concern of yours. Does the manager run credit checks and background checks? Do potential tenants have to fill out a rental application? Does the manager verify employment history? What about speaking to previous landlords? You should understand who makes the final determination as to whether a tenant will be permitted to lease the apartment. Remember, it is your investment!
Who Handles The Maintenance Work?
Depending on the size of the property manager, your maintenance work may be completed by an in-house maintenance crew, a contractor, or even the manager themselves! Understanding who is doing the work is imperative to ensure that you can keep accurate records of what has been done and by whom.
Depending on your location, and the type of work that needs to be done, a certified, licensed, or accredited contractor may need to complete the work. Permits may need to be pulled, and inspections may need to take place. Your manager should have an understanding of when this needs to be done. This leads to your next question…
Do you manage contractors?
Even if you’re first starting with investing projects, you know you’ll need a repair person or a contractor to come in. Unless of course, you’re a contractor yourself. But, given that you’re reading this article on property management, we’re going to assume that you want a more hands-off approach subtly.
So, with that, come up with the basics on what you may need. Some good places to start are the need for a plumber, an electrician, or a general handy person. When interviewing a property manager, ask if they have contractors they work with when issues, specific to hiring a vendor, arise. At the end of the day, if they know the right people, it can save you time trying to find people to fix something.
How Is Rent Collected?
Property managers should have a policy on how rent collection is handled. Do they pick it up, or do tenants mail it? Perhaps the tenants can take it right to the bank? Every lease should outline precisely when the rent is due, the amount due, and any late fees associated with a late payment. It should also specify after what point the tenant is considered in default of their lease terms, and when the eviction process can begin for nonpayment.
Can I See Sample Documents That You Use?
Any property manager should be able to produce sample documents for your review. You may want to review documents such as:
- Property Management Agreements
- Move In / Move Out Condition Reports
- Property Owner Financial Reports
- Common Correspondence (letters to tenants)
- Rental Applications
How Long Is The Management Agreement For?
Entering a property management contract is not a commitment that should be taken lightly! Understand the terms of the agreement, including length of the term, renewal of the agreement, and the process for severing the agreement if either party is dissatisfied with the partnership. Your attorney should review any management agreement before you signing off on it.
How often do you review local, county and state laws?
Your property manager should know the law. Although you hope it’s a given, it’s good to ask this question. As a landlord, you want to ensure that the property manager has a standardized practice to comply with local, state and federal landlord-tenant laws. These laws could be knowledge of fair housing laws, etc.
Do You Have References?
Speak to other people who have worked with your property manager. These could be other clients, business professionals, real estate agents, mortgage brokers, attorneys, contractors, or any of a number of other parties the manager has built a relationship. Ask them to tell you the good things and the bad too. A property manager should have no issues in supplying references before an agreement is struck.
Simplify Hiring A Property Manager
Once you’ve interviewed potential property managers, it’s time to narrow down your search and get to hiring. The good news is that you’re taking the next step in your rental business by hiring a property manager. Although it can be “scary” or “overwhelming” at first to pass off your property’s responsibilities to someone else, it can also be a breath of fresh air.