5 MOST IMPORTANT QUESTIONS
WHEN INTERVIEWING A PROPERTY MANAGER
(and other important considerations)
Wallace Gibson, CPM, MPM, professional management advisor on mrlandlord.com provides the following five questions. Unlike many jobs, property management is not an occupation best learned through trial-and-error. When there are people, property, and payments involved, it's essential to understand what you're doing, both legally and financially.
1. "Do you do property management and general brokerage?" Ask it just this way so you can determine if they really want to sell your property or sell you more property. If they do property management as a way to get or keep real estate clients, they are doing it as a "courtesy" and rarely have the experience, education or dedication to do the job properly. When the going gets rough with your property, chances are they will be too busy to return your calls.
"Full time property management companies provide the best vehicle for overseeing your single family, detached residence in your absence. The best ones for residential properties are NOT affiliated with real estate brokerage companies and do not depend on commissions for income." THE ABSENTEE LANDLORD'S SURVIVAL GUIDE (Second Edition, 1997)...Jack Rower
2. "How long have you worked as a Property Manager?".....NOT real estate....property management While property managers may have the same state license requirements as real estate agents who sell property, property management is considered a "specialty" requiring direct knowledge of the field. Additionally, the more experience the manager has, the more expertise you will have at your disposal.
3. "When was the last time you took a property management course?" Unlike the practice of real estate sales, property management is governed by specific rules that can be changed or altered in many ways....state legislature(VRLTA), case law, direct government regulations (Fair Housing/Discrimination) so having a professional manager who keeps abreast of these various changes is crucial to you as a client. Again, the more knowledge that is available to you in the management of your investment, the less likely you will be unpleasantly surprised during your relationship.
4. "What professional property management affiliations do you have?" Most real estate agents belong to a Realtor organization. Property managers, however, can obtain more expertise and education through such organizations as IREM * Institute of Real Estate Management; NARPM * National Association of Residential Property Managers; NAA * National Apartment Association. The more information and knowledge that a property manager has, the more information and expertise will be available to you in the management of your real estate investment.
5. "Do you own rental/investment property?" While it is easy for a property manager to say "they feel your pain", somehow it is easier to take bad news from someone who has been there....negative cash flow and all. Be suspicious of a property manager who has all their "eggs" in the stock market.
Lastly, ask yourself....would you rather pay a little more for an experienced property manager, or pay a lot more to an attorney when your property manager makes a costly mistake in the management of your investment real estate.
The following are additional comments and other considerations when deciding whether to select a professional property manager, as shared by regular contributors to mrlandlord.com.
Very good response from Wallace, but also ask for at lease 3 references, preferably 2 existing and 1 former client. Al, Iowa.
I looked into using a management company for my properties and decided against it because of what I like to call hidden fees. Their base charges per property were reasonable, but these other ones really made me choke.
* They kept all late fees if a tenant pays late.
* They keep all interest on tenant deposits.
* They wanted a 1 year contract.
* They take their fees no matter what before I would receive anything.
* They charge 1/2 of the first months rent or $300 whichever is more for finding a tenant. Very expensive....
* If you decide to sell they automatically became the listing agent for up to 90 days.
Not very attractive to me
* Remember, terms are negotiable. Things like finders fee for tenants, percentage of rents, etc. can all be negotiated.
* Make sure that they are insured and that they use independant contractors who are also insured. I would ask for a certificate of insurance on anyone who they have doing work at your property. It is one way to really help reduce your liability.
* Hold them accountable to have monthly P&L's to you along with receipts by the 10th of each month. That will let them know that you are on top of the business and will be checking what they do.
* One final note, From time to time I would suggest sending surveys to your tenants and have them rate the service they are getting from your management company. Ask them if they have had any problems. It is a good way to really see how they are doing.
Travis Haines, WI, Candlewood Property Management, LLC