Thinking About Hiring a Property Manger? Make Sure You Ask These 5 Questions First

Buy and hold rental properties are the foundation of real estate wealth building. All it takes is one rental property to get the ball rolling and start producing positive cash flow. With every new rental you own the need for a property manager becomes more prevalent. Even though you may be physically able to manage your properties, it often doesn’t make the most sense for your business.

You will be pulled in several directions with constant tenant calls and have little time to focus on anything else. A dedicated property manager will handle most every aspect of the property from simple maintenance to rent collection. You will see a slight decline in your cash flow bottom line, but your rental business will be on autopilot. Regardless of how many rentals you own, you should at least consider the benefit of hiring a property manager. Here are five important questions you should ask any prospective property manager.

• What is your experience? There are several ways of finding a reliable property manager. Just from networking meetings and investment groups alone you can probably find your pick of who to work with. Once you have a few people to choose from you need to be comfortable with who you work with. You will lean on your property manager for almost everything with the property and they will act as your point of contact. The first question you need to ask is about their experience. They don’t necessarily need to be a ten-year veteran, but they should be able to handle any task you require. If they have managed other properties, ask for a reference. Don’t be afraid to reach out to the reference and get as much information as you need. Whether you do some digging around online or a simple social media search you should be comfortable with who you hire.
• What tasks will you handle(specifically)? Obviously, the more tasks a property manager can handle the more valuable they are to you. As you interview prospective property managers it is important to compare apples to apples. Someone that handles more tasks should be put at the front of the line. However, just because someone says they can do something doesn’t necessarily mean they should. You don’t need a license to deal with rent collection or resolve tenant issues. However, if they state they can handle plumbing, electric, painting and any other trade specific item you need to ask for references. The goal with a rental isn’t to simply complete a task and put a band-aid on it. By having a jack of all trade’s property manager handle something seemingly minor in a property you could be making the issue much worse. Instead of a simple fix, you will end up spending much more down the road. Whatever they say they can handle, question them on previous jobs or properties they have worked on.
• Can you provide automated property reports? As much as you may trust your property manager, you can’t simply hand over the keys to the property and let them run with it. You are still the owner and need to be kept abreast of everything with the property. With all the technology currently available it is easier to keep in touch and stay updated than ever before. It is important that you find a property manager who can deliver updated information for whatever you want on the property. Anything from how your tenant pays the rent, to the cost of the furnace tune up should be quickly sent to you so you can store it for your records. You need to be able to obtain before pictures so there are no disputes come move out time. Anything you ask for should be sent to you in a nice tidy email, spreadsheet or chart so you can safely have it for your records.
• How do you handle evictions? In a perfect world you will never have to deal with an eviction. However, the odds are that at some point it is bound to happen. Like anything else in business, you are better off getting out in front before things go wrong. Ask your PM what they do either to prevent an eviction or to deal with it when it happens. Ask how much involvement they have with the courts and if they know the local eviction laws. They more they know in this area will help expedite the process and make things as smooth as possible on your end.
• What do you charge? It isn’t a coincidence that price is the last item listed. You have heard many times that in business you get what you pay for. The reality is that most property managers change between eight and twelve percent per month, with the average right at ten. While the bottom line is always a consideration, you shouldn’t walk over the dollar to pick up a penny. One or two percent more, for someone you feel more comfortable with is worth every penny. You have every right to ask what they charge, but unless the price is outlandish you should go with the most qualified candidate.

 A property manager has a ripple down effect of making everything else in your business easier. If you are considering a manager take your time to find out exactly who you will be working with.