Property managers

Property Managers (PM) are absolutely vital in the Rental Property business.

If you do not have good property managers, your real estate business will go down the drain and you will lose money and possibly lose your properties. I have experience in property managers that have lied, stole money, put false expenses on my properties.

All of this could have been avoided by finding a good PM. Below is a list of questions that I asked prospective property managers when I’m going to start investing in a new area.

You want to find is a PM that you can trust, and give the responsibility of running your business.

This initial phone conversation is just the start of a long relationship with your property manager. Your goal here is to get information as well as start developing a report with the property manager. You want to find somebody that you can get along with and enjoy working with.

I learned a long time ago that I do not want to work with anybody that I would not want to hang around because life is too short to waste it on people that do not matter to you or that want to waste your time. Find a property manager that you can work well with and enjoy to work with.


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22 Vital Questions to Ask Property Managers

 

How long have you been a property manager?

This question is more of a general question for your information. I have had bad property managers that have had many years of experience.

I’ve also had good property managers that had no experience but I had to coach them on how to do the job right. I would suggest finding a property manager that has experience managing properties if you are new to rental properties. Remember that property managers are your employee and they need to do what you say.

If they do not follow your instructions and it seems like they are possibly lying to you, time to get rid of them. Like hiring any employee, you want to hire slow and fire fast. Make sure you hire the right person the first time because it takes a lot of work to fire them, find somebody new, train a new person up, and start your business building again.

 

How many properties are you managing right now?

This too is another question that is more for your information and is not necessarily a deal breaker. Obviously the more properties the property manager is managing seems to normally be a good sign but not necessarily.

It is just a number that they are telling you and would be hard to verify. I just like to have a conversation with them to see if I hit it off with them and I feel comfortable working with them.

 

How many vacancies do you have right now?

Getting to know how many vacancies right now is a good indication of the market and the property manager as well. The market might be a rough area to rent properties, meaning that the tenants move in and out of rentals easily.

I have rented in some areas that I would probably have one eviction year if I’m not really on top of everything. Places like this, it seems like the tenants change homes like they change their shirts. I personally don’t see how they can do that, I hate moving.

Another thing is this shows how well the property manager keeps his properties rented. If he does not do a good job with maintaining the properties, keeping the tenants happy, and knowing what amount of rent to charge for a particular home, vacancies will get high.

Remember that you are in the service business when you’re renting properties. If the service your providing, which is a home for a renter, is not up to market standards you are going to lose tenants quickly and lose money.

 

How long does it take, on average, to fill a vacancy?

This is a great question because the longer property is not rented the more money you lose.

If your property rents for $700 a month and the property is vacant for 1 ½ months that’s $1050 out of your pocket in lost revenue because the property is vacant.

 

Did you create your own lease and property manager contracts?  If no, where did you get them?  Please send them to me so I can review them.

I like to look at the lease my property managers are going to use because it shows me what type of manager they are and what they expect other tenants. If the lease is very lenient the property manager may be very lenient on the tenant and possibly allow problems to arise and may cost you money in the long run.

If the contract is very strict and rigid, it does not necessarily mean that the property managers hard-nosed, you want a property manager like that. Just know that this property manager may be pretty meticulous and on top of things which will help make you money.

 

What is your late rent policy?

Some property managers charge $40, $50, $75 for late charge from the tenants and even keeps all of it for themselves. I have had some property managers that do that, and I’ve also had others that charge $40 and split the late fee with me 50-50.

So the property manager gets $20 and I get $20. The property manager needs to keep at least 50% of the money because they are the ones doing the work with collecting on late rents which can be a headache.

 

What percentage of tenants do you have to evict?

Some areas may have a very low eviction rate and others may be very high. I have found that the lower class markets tend to have more evictions than the middle to upper class markets. For whatever reason it is I’ve just seen that to be true.

In the places where you have high eviction rates the key is to do a thorough background check on the prospective tenant. Make sure you do a criminal, credit, and eviction check on the tenant before they move-in.

 

Would you please explain to me the eviction process in your area?

Each city, county, and state all have different laws for the eviction process and it is wise to learn the process as are getting started with buying rental properties.

Your property manager should know the eviction process and also what to do and not do while he is evicting the tenant. You don’t want to break any laws but you do want to get the bad tenants out quickly so you can get good ones in.

 

What are your management fees?

Management fees vary from area to area and even manager to manager. Some charge higher in some charge lower. An average fee would be 8% to 10% of the total rents collected each month.

You may get some higher some lower but remember you get what you pay for. I have one area where I pay 12% to my property manager but he is worth every single penny.

 

What do you charge for finding new tenants?

This is basically a finders fee for finding new tenants for your property. The manager has to do marketing, showing the property, taking applications, signing leases, preceding the first month rent and security deposit, and giving the tenant the keys to move in.

This is a lot of work and your property manager should be paid for. Some charge extremely high rates of the entire first month’s rent as a finders fee but I find that to be ridiculous.


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If your PM does charge a high finders fee make sure it is in writing that you will only pay that fee one time each year from the date it is rented. This is to protect you so that you don’t have to pay again if you have to find a new tenant in the same year.

The property manager’s job is to find a good tenant, one that will stay there for many years and not just turnover in six months. One area that I am in I pay my property manager $100 finders fee every time the properties rented even if it is in the same year which I have had in the past.

 

Do you guarantee the tenants you place?

Whenever your property manager places a tenant for you, he will charge a leasing fee. This is for all the expenses of marketing, time showing the property, and other expenses they will incur.

This is not out of the normal but I only go with PM’s that will guarantee the tenant for 6 months. If the tenant breaks the lease within 6 months of moving in, it is the PM’s fault they placed bad tenants.

The next tenants they place should not have a leasing fee for them.

 

If a property is vacant, do you charge for monitoring and maintaining vacant units?

This type of fee is a huge red flag for me. If the property is not rented, I am not making money. And in turn the property manager should not be making money because he is responsible getting the property rented and for keeping it rented.

If I am not getting paid, then my property managers not getting paid.

Doesn’t it seem like a conflict of interest if the property manager charges $50 if the property is not rented, but also makes $60 if the property is rented. There is only a $10 incentive for him to get the property rented which is not very much. I stay away from property managers who charge this.

But even if they do, I have negotiated some out of this charge because I will not pay it and they remove it.

 

Do you also market properties as a broker?

This is an interesting question because like I said in some areas the marketing can be craigslist.com or my even be through the MLS and need a broker to rent them out. Either way it doesn’t really matter in my opinion, I just like to know.

 

If I decide to sell my property, do I have to list it with you?

Some PMs may require this in the contract that they sign with you I would completely strike it out and remove that from the contract or find new property manager.

 

Can I see some of the other properties you manage?

If you’re in the area and can see the properties, it’s always a good idea to look at how the property manager does his business.

I also like to talk to the tenants to ask them questions like;

  1. How do you like the property?
  2. How long have you live here?
  3. How long does it take for the property manager to return your phone calls?
  4. How long does it take for him to respond to repairs needed?

 

Do you recommend special incentives for tenants?

In some cases it may be good to offer incentives to prospective tenants or even current tenants. I invest in one area that snows heavily and gets very cold. So if I have a vacant property in November I dropped the rent amount $75-$100 to get it rented before it starts to freeze.

I have some tenants that have lived in my properties for over 3 to 4 years and I like to give them a little something to show them my appreciation for being such great tenants.

They can be a small gift card to Home Depot or Lowe’s or even Starbucks. I also like to have a thank you card for them expressing my gratitude. A little gratitude goes a long way.

 

If I want additional marketing for specific vacant units, how would we arrange that?

If there is a property that is being vacant to long for one that I don’t want to stay vacant long at all I may want the property manager to go above and beyond his normal marketing for property.

 

How do you screen prospects?

There many ways a screen the prospects for your properties and your property manager should do all of them for you. Things like: checking employment history, checking rental history, checking references, and even running a background, credit, criminal and eviction check.

Another thing is hopefully your property manager is a good judge of character just by meeting somebody. Some people have a gift of discernment that helps in this process and some do not.

It is just wise to listen to your property manager to see if they like the tenant are not and if they desire to rent to them.

 

Do you give each applicant a credit, criminal, and eviction check?

Doing a credit, criminal, and eviction check is an absolute must for me and my properties. I have been burnt so many times because of not doing these checks and have fully implemented them into my business.

A $30 check will save me at least thousand dollars a year and eviction fees and loss rents. If the property manager will not do it make sure that you will have the ability to do one yourself.

 

How do you collect rent and when is the rent due?

In some areas, a personal check is just fine, and in other areas cash or cashiers check is the only way to do business. Depending on the area you need to do what you can to make sure that you get your rent on time every time without any issues.

The rent is always due on the first of the month and is late on the second. If the tenant wants to pay a late fee then the eviction process does not start.

On the second if they do not pay the rent you give them a three day notice letting them know that the eviction will start on the fifth of the month. Once you start eviction process don’t stop until you get every penny.


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How do your tenants contact you?

This is more for your information and it probably varies by property manager and even tenant. It’s always good to have a property manager that can have multiple ways of contact; email, text, phone, and even mail.

 

What is your maximum response time?

For tenants I think an adequate maximum response time from the property manager is 24 hours. Anything longer than that and you are going to start losing money. Your tenants are your customers and in turn are the property managers customers and you must make sure they are well taken care of.

 

If I am unable to reach you, what is your maximum response time to get back to me?

For me, the maximum response time should be 12 hours after I contact my property manager in any way that I do via text email or phone. If my property manager does not respond to me within 12 hours I start to get concerned about my properties and my property manager. There should be no reason for a property manager to take more than 12 or possibly even 24 hours to get back to you.

Anything longer than that is just unacceptable. Communication is huge in this type of business if you have a property manager it is vital. I live as far as 1500 miles away from a place that I invest so I rely on communication.

 

If you have any questions or comments, please comment below!

I’ll be sure to respond.


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22 Best and Vital Questions to Ask Property Managers