As a rental property owner, your investment property is likely one of the largest assets you will have in your lifetime. Given that over 34% of American homes are renter-occupied, it is also one of the smartest investments you can make in today’s economy.
To make the most of your rental property investment, it is important to choose the right property management team to oversee the daily operations and success of that asset. From differing levels of expertise, pay scales, and customer service offerings – not all property managers are created equal. It is crucial to understand what you desire in a property management team, so you can interview prospective property managers around those expectations.
To help you get started, here are the top 10 questions to ask in a property management interview.
1. WHAT PROPERTY MANAGEMENT SERVICES DO YOU OFFER?
Most property management companies offer a full suite of services – from setting rental rates to marketing properties and screening possible tenants. They oversee move-in and move-out services, property upkeep, maintenance requests, and rent collection. The right property management team will also understand tenant-landlord legalities, allowing you to count on them to handle property litigation, eviction notices, and financial statements.
While some property management teams oversee an in-house maintenance crew, others simply have a network of qualified and affordable contractors. Just as every property management team will provide a different suite of services and expertise, they will also be unique in how they fulfill these services. Who makes maintenance decisions? Who should a tenant call after-hours? Ensure you have a clear understanding of their maintenance policy and process for receiving and fulfilling maintenance requests. The more defined the process, the better.
2. WHAT DOES YOUR PROPERTY MANAGEMENT FEE STRUCTURE LOOK LIKE?
As an industry standard, most property management companies will require a payment of the first month’s rent plus 7-10% of total monthly rental revenue following that. The first month’s rent simply covers the time and fees spent to market the property, show the property, process tenant applications, and other administrative duties.
Fees can vary based on the management services provided but try to ensure the residential fee agreement falls in the average range. If pricing falls in the average range, also ensure you understand exactly what is included in that fee structure. For example, some property management teams charge an extra fee for marketing your property. It is important to make sure the residential fee agreement includes the services you need at a price you can afford.
3. HOW LONG HAVE YOU BEEN IN BUSINESS?
Although there is no black and white rule for hiring a property manager based on years of service, we recommend selecting a team with at least 5 years of property management experience. This gives peace of mind that the business has adequate experience and a reliable track record.
4. HOW MANY RENTALS DO YOU CURRENTLY MANAGE?
The company’s size and rental locations help gauge their level of experience and expertise. If the company is large, make sure they have the bandwidth to give your property the appropriate staff and management it needs. If the company is on the smaller side, continue asking questions to better understand their level of expertise.
5. WHAT TYPE OF RENTALS DO YOU MANAGE?
Given the variety of rental property types – from single units to family rentals and commercial rentals – most property managers specialize in a certain niche. The more specialized the property manager is to your own market niche, the more value and experience they will bring you and your property.
6. WILL I WORK WITH ONE PERSON OR A PROPERTY MANAGEMENT TEAM? PLEASE EXPLAIN.
In addition to understanding the size of the business and its years of service, it is equally as important to understand the roles and structure of the property management team. Who handles rent collections and financial statements? Who should you reach out to regarding plans for marketing your property?
One person may oversee your property from start to finish, but the company may also have many employees overseeing different aspects of your property. Make sure you understand what to expect from who, so you can ensure your partnership is efficient and effective.
7. HOW DO YOU SET AND COLLECT RENT PAYMENTS?
A qualified property management team will regularly review market analysis reports to ensure they are setting fair and competitive rental rates. These reports show trends in variables such as unit size, amenities, location, and more. According to Rent.com’s annual Property Manager Report, 88% of property managers surveyed have increased their rental rates in the past year.
It is also a good idea to select a property management company that offers tenants the option of making online rental payments. Without that option, the chance of late payments or missed payments increases. Consider it a red flag if the company only allows payment via check or money order. Both you and your future tenants need a team that is technologically savvy.
8. WHAT STRATEGIES DO YOU USE TO FILL VACANT PROPERTIES?
The right property management team will use both advertising and marketing strategies through various channels to connect with prospective tenants. They will also utilize a marketing tool, such as a Multiple Listing Service (MLS), to advertise and market your property on sites like Trulia and Zillow. If the property manager plans to only list your property on their internal website, consider that a sign to move on.
This is also a great time to ask how long their rental properties typically sit vacant. With U.S. rental vacancy rates at an all-time low, you cannot afford to hire a property management team without marketing experience. Your property could be one website or listing away from a long list of interested tenants.
9. WHAT DO YOU LOOK FOR IN A TENANT APPLICATION AND SCREENING?
Once the slue of prospective tenants reach out, the property management team is responsible for screening and selecting the right tenants for your property. This question provides a great opportunity to understand their tenant screening process and how they determine the right overall fit for your property.
From background and employment checks to previous landlord references, it is vital that you understand their screening procedures. Credit checks are also becoming standard, as credit history can be an indicator of payment timeliness. One wrong tenant can create a world of trouble, so make sure the team has a screening process that creates the best chance of getting it right.
10. DO YOU UNDERSTAND FAIR HOUSING LAWS?
Reliable property managers and property management companies should be fluent in state and local fair housing laws. In fact, approximately 25,000 housing discrimination complaints were filed last year according to the National Fair Housing Alliance (NFHA). As a rental property owner, it is not your job to be an expert at everything – but it is crucial to have a team that is. You are looking to hire a property management team for a reason!
11. CAN I REVIEW SAMPLE RENTAL AGREEMENTS AND DOCUMENTS?
Leasing agreements, rental applications, and inspection reports are just a few of the professional documents property managers create and oversee. Reviewing a sample of these documents shows how professional and organized the team and their rental process truly is.
12. DO YOU HAVE REFERENCES?
Last but not least, word-of-mouth is one of the most powerful tools when choosing the right candidate for any hiring process. Get online and read reviews of the property management company and ask to speak to others who have worked with them in the past. This could include previous tenants, contracts, real estate agents, and brokers. Respectfully ask each reference for their brutal honesty and feedback.
If possible, plan to host the interview in person. Meeting the property manager or team prior to hiring gives a great preview of how well you will work together in the future. For example, did they arrive on time to their interview? Were they organized with all the right information? Did they dress professionally (or to whatever standards you have)?
Although you likely have a list of your own interview questions, consider this list the top 10 questions you do not want to forget. It takes more than just a good interview to ensure a great property management partnership, but these 10 questions are a great way to get you started in the right direction.