What Questions To Ask A Property Management Company – Here is a simple question. Would you hand over $200,000 in cash to a stranger after reading a few pages of their website and saying, It sounds silly, but that’s exactly how many landlords go about hiring a property manager.
All property managers are not created equal and retaining the services of one should not be taken lightly. After all, you are giving them control over your extremely valuable asset.
What Questions To Ask A Property Management Company
In fact, at the beginning of 2018, the median home value in the US was estimated at $210,200. So basically, the average homeowner pays the property manager about $200,000 to take care of them.
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Whether your investment home is worth above or below average, take the time to do your homework when researching which property management company to hire so you can feel confident that you are giving your asset to the right company. The questions you need to ask are much more than just finding out what their fees are.
When interviewing real estate managers, ask the following questions and you’ll be well on your way to choosing the best company to meet your needs.
Share this image on your website. 1. How long have they been in business? Choose an established company
Starting a property management company is surprisingly easy, and a savvy individual can make their basement closet look like a Fortune 500 company online.
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However, it is not advisable to risk your high-value rental asset on the management capabilities of a company that is just starting out on a shoestring budget.
One of the key benefits of hiring a quality property manager is the relationships they bring to the table. relationships with service vendors, HOAs, insurance companies, etc. .
Property managers must manage a variety of activities such as advertising, showings, background checks, lease preparation, ready renovations, inspections, maintenance coordination, rent collection, owner statement preparation, and customer service inquiries from tenants and owners.
This is possible for one person to manage only a small portfolio of properties. But what if the company manages 50, 100 or 200+ properties?
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Do they have enough staff to ensure that important tasks related to your property are not diverted? Is one team member responsible for the end-to-end management of your property, or are they split up, with multiple team members managing specific areas of management?
Getting a lot of 5 star reviews in a short period of 1-3 months is not as difficult as getting good reviews over a sustained period of time. Make sure the company you are considering has a good track record of 5-star reviews over several years.
Also consider that it’s much easier to get great reviews when the company is a one-person business with the company owner doing everything. Business owners clearly have a vested interest in their company and go above and beyond to provide good service.
For a more established company with a team of associates, consistent 5-star reviews show that the company has excellent business systems and a customer service culture that results in a consistently positive experience for their customers.
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If you talk to 10 different property management companies, you will be told 10 different pricing models. This can be confusing for property owners unfamiliar with the industry.
The main thing to watch out for is unusually low fees. Quality property management is not cheap to provide.
There are salaries to pay for qualified staff members (you know, the people who actually take care of your property), investments in advanced technology tools, licensing costs (most PMs must have a real estate license), insurance costs. (liability insurance). , errors and omissions insurance, workers comp insurance, vehicle insurance, etc.) and a variety of other expenses so they can have the privilege of serving you.
If the quoted fee seems significantly lower than the average of other quotes, you’ll want to look deeper into their fee structure and/or service plan.
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Usually you will start with a phone call or an in-person meeting with the prospective property manager. During this discussion, they will quote you their “total” fees, and this is usually how most owners formulate their hiring decision.
It’s not uncommon for these documents to exceed 20 or more pages and are written in a way that most people would need a legal degree to fully understand. And it is in the details of these pages that some management companies will include “
Fees that more than make up for the fantastically low rate they originally quoted you and you hired them based on.
When you add up these unexpected costs, you may find that you end up paying more than the average management fees for other companies.
Property Manager Interview Questions
Another way some companies are able to provide below-average fees is by removing their service offerings. Now this may not be a bad thing if your main concern is to achieve lower than usual management costs and you are less concerned about the general under-management of your property.
However, if you expect a top-notch, high-quality management service, don’t let the shiny low price blind you to investigating if the management company offers less service than you expect.
When hiring a property manager, the management agreement usually gives them the right to incur maintenance costs on your behalf. It is important that they have this power so that they can respond quickly to legitimate tenant maintenance requirements.
However, most property owners are not comfortable giving their property management carte blanche authority to spend whatever they see fit.
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This is where having a pre-authorized cost limit specified in the management contract for non-emergency repairs. The amount of this limit varies from management company to management company and may be specific to the property they manage for you. The general range is $250-$500.
You’ll want to know if the management company contracts with outside, independent vendors or if they have an in-house maintenance team. Neither way is necessarily better than the other, but it’s important for you to understand how each can affect you.
If they use an in-house service, you’ll want to consider how much their fees are compared to using an outside company.
Also, the management company requires you to use their in-house maintenance company. If so, this may create a conflict of interest, as now the management company not only earns income from managing your property, but also from renovating your property. This can create an incentive for them to make unnecessary repairs at your expense.
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If outside vendors are used for maintenance, you should be sure to ask if the management company specifies the maintenance bill or if you only pay what the vendor charges.
If property managers are required to be licensed by their state’s real estate commission, it is likely a requirement that they fully disclose to you any notes they receive for services they offer or for entering into a contract on your behalf. Don’t wait until after you sign a management agreement with them to find out.
Similar to the conflict of interest of using in-house maintenance above, flagging maintenance invoices creates a potential incentive for the management company to complete unnecessary repairs on your home just to generate additional income for you. .
This is not practical for odd and end-to-end repairs, such as replacing the occasional garbage disposal or leaking faucets. But for high-ticket items—furnace replacement, major appliance replacement, painting, and flooring—it’s a good idea to have at least 2 competing bids so you can be sure you’re getting the best price and quality.
Important Questions To Ask A Property Manager
While property managers would like all flooding or heating outages to occur during normal business hours Monday through Friday, they typically occur at night and on weekends.
You hire and pay a property manager to service not only your property but also your tenant. Are they available 24 hours a day, 365 days a year to handle emergency service needs?
Not only do they have the ability to receive the call, but do they have service providers that can also respond to emergencies outside of business hours? One of the benefits of having a property manager is that you don’t have to deal with those calls at inconvenient times, but make sure your management company does.
Commit does not complete a thorough move check before occupying the tenant. Even more surprising are property managers who don’t complete a move-in inspection.
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Hey, doing a relocation check, especially doing it right, takes time, and many management companies don’t have the adequate staffing levels to complete this all-important step in the relocation process.
It is important that you ask them if they take
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