In order to hire the best property manager for your rental portfolio you need to ask the right questions. In this article we will discuss the 10 questions to ask a property manager before hiring them.
Our friend Andrew Schultz manages 120 doors here in the Buffalo,NY area and he’s helped us by putting together this list.
We did a separate podcast where we discuss the 10 questions below in further detail too. You can listen to that by watching the video below which will cover all 10 questions below in further detail.
Disclaimer: Andrew Schultz is a licensed real estate sales person and property manager in the state of New York. If you would like more information on our property management services, please visit OwnBuffalo.com or call (716) 608-3200.
10 Questions to Ask A Property Managers
#1: Are you a licensed property manager? Do you have any certifications?
In the state of New York, in order to legally manage a rental property for another person, and receive any compensation, you must be a licensed real estate agent in NY state! Beware of “property managers” who do not have any sort of state license to practice real estate. In addition to a state license, there are many professional trade organizations that will offer certification classes in property management.
#2: How many properties are you currently managing? What types of properties are they?
It is important to know that your future property manager will be able to give your properties the attention that they need, as well as being familiar with how to handle 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.
#3: What is your fee structure?
This can be a make or break situation when it comes to choosing a new manager! Keep in mind that in most cases, management companies are paid based on the amount of rental income coming in from the property. However, there may be additional charges such as tenant finder’s fees, maintenance markups, emergency on call services, maintenance reserves, evictions, court costs, and other charges. Your fee structure should be clearly outlined by the property manager, and it should be put IN WRITING in the management contract.
#4: How do you send reports? Can I see a sample?
The way a property manager reports financial data to you can affect your ability to truly understand what is going on with your property. A property manager should be able to explain everything on your reports to you in a clear and concise manner. Be sure to ask questions about anything that is not clear. Property managers should be able to provide you a sample report to review before you begin an agreement so you will understand your own reports once they are generated. Clarify when and how reports will be delivered to you.
#5: How are potential tenants screened?
At some point over the life of your rental, you’ll have a tenant move on. 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!
#6: 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 making sure 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.
#7: How is rent collected?
Property managers should have a policy in place 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 exactly 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.
#8: 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
#9: How long is the management agreement for?
Entering into 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 what the process is for severing the agreement if either party is dissatisfied with the partnership. Your attorney should review any management agreement prior to you signing off on it.
#10: 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 with. Ask them not only to tell you the good things but the bad too. A property manager should have no issues in supplying references prior to an agreement being struck.