Hiring a property management company to oversee your investment properties is a big step towards freedom. After deciding whether or not you want to hire an individual or an actual firm there are some things to consider before deciding who or what firm you will hire. Here are a few questions to consider asking when interviewing property management companies.
- How long have you been in business? They should have been in business long enough to have developed an efficient process and also long enough to have references and referrals for you to look at.
- What services do you offer? Property management services vary by industry and company size. Choose a company that offers what you need for your specific needs.
- How many rentals are you currently managing? This is a good opportunity to assess the size and expertise of the company. Inquire about the workload and roles within the company. Is there someone who covers, a separate person for repairs and a separate person for screening? Be wary about property management companies with a high number of rentals and minimal staff.
- What type of properties do you manage? Functionality, laws, and problems differ by class. Hire an expert in your specific area whether that’s single-family homes, office rental spaces, apartments, or multi-family properties.
- How do you set your rental rates? There should be a consistent and logical method to how rates are calculated.
- Do you have insurance? If so, what type and how much? Property management companies should have at least $1 million in general liability coverage.
- Do you collect management fees when a unit is vacant? You don’t make money on the rental property and neither should they. If they do, they will be less motivated to fill your rental.
- What is your procedure for qualifying tenants? What is your screening process? Do you use background, employment, and credit checks? Do you ask for references?
- What is your process for handling service requests? There should be a process and the process should involve documentation. Do you get the final say? Do you get to approve of the contractor? Can you require authorization for expenses over a certain amount?
- What is your preferred method of communication? They should offer multiple communication options to tenants (e.g., email, text, phone, management portal) and should be available to you in whichever way you need them to be.
- How often will you update me on my property? You should be able to receive updates as often as you would like. They should be able to provide notes on communication, home inspections, payment history, and photos (if you have requested them). These can be stored online for easy access or provided upon request.
- What are your monthly management fees? Management fees should fall between 8% and 12% based on the total revenue of the property and the services offered by the company.
- Are there any miscellaneous fees I can and should expect? Is there an extra cost for marketing, evicting tenants, screening tenants, or turning over units?
- Can I cancel my contract without penalty? Avoid property management companies that lock you into a contract. You should be able to terminate your agreement with them whenever necessary if you are unsatisfied with their services.
In your preparation for your interview, be sure to research out each company beforehand. See what questions you can answer from their website or other online platforms and then match the answers you found with the ones you were given. It’s also a good idea to meet potential management companies in person. Hiring a property management company is an important step in growing your rental portfolio, it should feel good. Ask yourself: Were they kind? Were they honest? Did they seem forthcoming and knowledgeable about their job, the industry, and the market?