Hiring a property management company is a big deal. Your investment is being left the in hands of other people to operate and help ensure your life is a little less complicated. Typically, once you’ve hired one, most likely you’ll be working with them over a prolonged period, so you want to make the right choice before being locked in.
Fortunately, there are ways to decipher whether or not a property management company is the right for you. The following questions will cover everything from the basics to the legal aspects of the hiring process, allowing you to make the best-informed decision.
The Basic Questions
1. How Long Have You Been in Business?
Though there is nothing wrong with young, new businesses, some customers may feel better knowing that the property management company they choose has some years of experience under its belt. Experienced property management companies should know the industry inside and out. They are actively involved and willing to give you expert advice about your investment.
2. How Many Employees Do You Have?
More established and experienced businesses often have a significant number of employees, making this an important question to ask. If you require extra service, help, or care, a company with more employees to go around will certainly be the better choice.
3. How Many Locations Do You Have?
If the company has multiple locations, chances are they may have an office near you or your rental property. If any issues arise that can’t be handled via email or phone, you can make your way to their nearest office and get things sorted out.
4. How Many “Doors” Do You Manage?
Knowing how many “doors” the company manages can help you reason how efficient they will be. Though the company’s job is to take on clients, they can be overbooked with too many “doors” and customers. Knowing whether or not your company of choice is overbooked will help you in your decision.
5. How Many Single Families Do You Manage?
Single-family management in a property management company may make a difference in whether or not you want to hire them. Managing single-family properties compared to multiple family locations differs drastically. Therefore, you’ll want to know how many of each property type their team manages to make sure their services apply to your property.
6. What Is Your Service Area?
Again, having a property management company that is far from your actual residence is a little counterproductive. Make it necessary to know each company’s service area! Also, if you plan to purchase more properties in the same region, it’d be best to find a single capable company to manage all your rental properties.
The Money Questions
1. How Much Is Your Monthly Management Fee?
For your budget management needs, asking how much the monthly management fee is, is important. You don’t want to pay too much, or even too little, as this can mean you aren’t getting the best service.
2. How Much Do You Charge to Place a Tenant?
If you are looking to place a tenant on your property, your property management company can help. Some companies have a charge when it comes to placing a tenant. Therefore, it’s nice to know if it would cost more (or even be necessary to use this service) by first knowing their price. You can then compare prices or make other arrangements.
3. Do you offer a Placement Guarantee?
Some companies provide a Placement Guarantee, meaning if a renter is evicted or moves for any reason, they will cover the placement fee of the new tenant for little to no charge. This builds trust as the churning of bad tenants to collect placement fees is avoided.
4. How Long is Your Placement Guarantee?
Even with this helpful guarantee, there can be stipulations. Ask about time frames and constraints before making your final decision.
5. Do You Do Repair Work in the House?
If you own and rent out a property, it is your responsibility when repairs are needed. However, your property manager may be able to handle this for you, saving you money and time.
6. Do You Mark Up Vendor Invoices?
If the property management company is responsible for repairs, they will hire a vendor to complete the job at the regular rate. After the job is completed, some management companies will markup what you will be charged by a certain percentage. Knowing this beforehand will leave little to no surprises when you’re billed.
7. Do You Charge Serving Notices?
Typically, a serving notice is information about rent increases, notices of entry or termination of the lease given to a tenant via personal service or delivery. If a company charges for Serving Notices, you may be paying more than you bargained for.
8. Do You Charge for Service Calls?
A service call usually means that the customer has called the property management company to come out and repair a part of the property. Such service calls can be expensive initially, but even more so depending upon the needed service.
9. Do You Charge a Re-Lease Fee?
When a current tenant’s lease reaches its expiration date, you may have to pay the property manager a fee to have them sign a new lease. It takes very little time and hassle, and usually, companies who do this are more likely to ensure that your tenants stay put and are happy.
10. Who Gets the Late Fees Collected?
Knowing who in the property management company gets late fees collected may help you while planning out your finances month to month. Of course, you want to avoid late fees, but knowing who to pay them to and when is important.
11. Do You Charge for Safety Inspections?
Many properties will need a safety inspection before and after a tenant moves out. Ask whether or not your property manager charges for this so that you can include it in the budget.
The Accounting Questions
1. When Do Statements Go Out?
Accounting is a huge part of owning, renting, leasing, and the overall handling a property. When your property manager sends out statements, it means that your tenants are alerted when rent is due, as well as other expenses.
2. When Do Owner Statements Go Out?
Knowing when your owner statements come out each month can help you when it comes to clients with questions and concerns. Hopefully, the owner statements and regular statements come out at the same time or close together.
3. When Do You Pay Your Owners?
Just as it is important to know when statements are due, knowing when your property manager pays its owners is important for both your accounting and personal budget needs.
4. Will I Get Copies of All My Work Orders and Vendor Invoices?
You should keep copies and records of all your work orders and vendor invoices, making it easier to handle taxes when the time comes. If the company you’re interested in does not provide these, you may want to keep looking.
5. Do You Provide Year-End 1099s?
If your property manager does not provide end of year 1099s, you may be at a loss when tax time arrives. Of course, if you are paying your property taxes year round, it should not be an issue, but having the guarantee of a prepared 1099 may help put you at ease.
The Legal Questions
1. Are You a Licensed California Real Estate Broker?
For you and your tenant’s protection, working with a licensed property management company is important. They may not advertise whether or not they are licensed, so it is crucial to ask.
2. Do You Carry E&O Insurance?
E&O Insurance, or Errors & Omissions Insurance, is professional liability insurance that protects the companies and individuals, which whom may have claims against them by clients. Another layer of protection never hurts, so see if your preferred company has this feature.
3. Are Your Property Managers Licensed Real Estate Agents in California?
A property manager who is also a licensed real estate agent will have more skills, knowledge, and experience that could be beneficial to you and your tenants. Ask if your company has these exceptionally qualified employees before moving forward.
4. Do You Do Regular Safety Inspections?
If a home is found to have safety violations after a tenant or client has been injured, you could be in deep legal trouble. Of course, if you live far from your property, you won’t be able to get out there to do frequent or even routine safety checks. This is no excuse to leave it as is, however, especially if you have a property manager. Safety inspections are needed to ensure that the tenants, and by extension, you, are safe – so make sure your property manager does an inspection regularly.
5. Do You Use California Compliant Lease Agreements?
If your rental property is in California, or you’re a resident of the state, it is likely, all legal action will take place in the state or under the state’s policies and codes. Find out if your preferred company has California compliant lease agreements before moving forward.
6. Has An Attorney Reviewed All Your Documents & Forms?
Finally, having an actual attorney review the company’s documents, forms, and other papers will ensure that everything is as it should be. You won’t have to worry, guess, or be in for a negative surprise down the line. If an attorney has not reviewed your company’s documents, you want to think twice before hiring them.
The Misc. Questions
1. Do You Lock Owners Into a Long Term Contract?
Knowing there is flexibility in a contract may be important for you, especially if you find significant problems with the company you hired after the fact. Asking about their contracts and the typical time frame can help you avoid being locked into a weak customer/business relationship.
2. What is the Process to Sign Up For Your Services?
This information may be found on the company’s website, but you may want to ask directly as well. This will ensure you have not missed anything or lost out on a useful service.
3. Can I Talk With a Couple of References?
A company is always going to put their best foot forward when first talking with you. Therefore, if you’re looking for a real and unbiased glimpse at working with the company, you will want to speak with some references. If a company refuses access to references or won’t even provide them, it could be a red flag.
4. How Long Will it take to Find a Good Tenant?
You don’t want your property sitting empty for too long, but you don’t want just anyone in there either. Ask your company if they have a time a frame for finding a good tenant before getting locked into any agreements.
5. How Do You Market My Property?
You want a company that knows how to bring in the crowd and many potential renters, which means they should have a solid marketing strategy. Ask about how they plan to market your property, so you know whether or not they are doing all they can to get your property noticed.
6. How Do You Screen Tenants?
You don’t want just anyone living in your property, which is why a screening process is so important to weed out the terrible tenants. If a process is too lax, you may find yourself with an awful tenant that you are stuck with for the duration of their lease, which can be a total nightmare. Learning more about the company’s screening process should help you rest easy.
As you can see, many questions should be asked when looking to hire a reliable property management company. It may seem extensive, but knowing the answers to the above questions will help things go a lot more smoothly for you over time. Remember to cast your net wide and be thorough in your search and questioning.