Property Managers are the backbone of your buy & hold rental business. While you’re sitting back and counting your money, they are watching over your affairs and handling all the dirty tasks that you don’t want to do.
Finding a good property manager however, can be a hard task. There are hundreds of management firms to choose from and they all have different specialties, skills, experience and fees.
Ideally, you want to find a property manager that:
- Charges reasonable fees
- You can completely trust, they gotta be upfront and honest about all things good/bad/ugly
- Is an expert in their market with years of experience
- Has an investor mindset (bonus points if they are personally invested in real estate)
- Has a sense of urgency when filling vacancies, overseeing renovations, and making tough decisions.
- Is a badass mother who don’t take no crap off nobody! (I watched Cool Runnings recently, for the 100th time)
Below are some of the questions I used to find my awesome property manager, who I’ve been working with for over 4 years. I interviewed 5-6 agencies before deciding on the best fit for me.
Before Calling, Prepare Your Introduction:
Before jumping straight into questions, it’s only fair that you share information about yourself and what you’re looking for. This is important for two reasons.. a) it shows that you’re a legitimate investor who respects their time, and b) the more accurately you state your expectations upfront, the faster you will get to the right answers.
Try something like this for an intro:
“Hi Sue, I appreciate you jumping on the phone with me, and I’m looking forward to hearing about your company. First off, I think it would be helpful if I explain a bit about my background and what I’m searching for…
My wife and I are new investors in the XYZ area. We’ve been actively looking for / bidding on rental properties, and plan to close on 1-2 in the next few months. Specifically, we’re interested in duplexes and fourplexes in the XYZ neighborhoods between $200k – $300k price range.
My wife and I both currently have high incomes and are putting a lot of money aside for investing. Our long-term goal is to purchase 1-2 rental properties every year for the next five years and build a portfolio we can retire with.
We’re searching for a property manager that can scale with us as we acquire more rentals, and a firm we can build a long term relationship with. I was recommended to your agency by XXX, and checked out your website a little already. Before I get into my specific questions, can you give me a quick overview of your company and background?”
Remember: Write down everything they say. You will want to compare the answers later with your other PM interview calls.
Explain your fees… Are they typical for your area?
Kind of obvious… asking about fees. But you need them to input into your property analysis/calculator. More importantly, you don’t want to be caught by surprise later by fees you didn’t know or ask about.
The reason I ask if their fees are “typical for the area” is to a) gauge how much the PM knows about the market and their competition, and b) it gives them an opportunity to either explain their value proposition. I’ve found that most good property managers charge a little higher fee than their competition, because they offer a greater service (and they know it). Their answer to this question gives you an indication of how they value themselves.
Personally, I’d rather pay a higher fees for a premium service than cheap fees for a crap service. One of the biggest newbie mistakes when picking a property manager is only deciding based on the cheapest fees. You get what you pay for.
Related/alternative questions: What are your pricing options? Are there any misc fees? Is there a fee to terminate our contract? Is there a surcharge for managing renovations? Do you charge for finding tenants or renewing leases?
Do you invest in real estate personally? If so, tell me about your investments?
I like asking this question because it determines how “investor minded“ the property manager is. Even if the person doesn’t own any real estate investments currently, their answers can sometimes surprise and impress you. Ideally, you’re looking for someone with a similar growth mindset as yourself.
The first time I spoke with my property manager, she explained that her family owned multiple investment properties around town. Since she’s an investor herself, she manages my properties kind of like they are her own. Her decisions always have the investor in mind, which makes my business more profitable and successful.
Related/alternative questions: How did you get into real estate? Do you have any advice for a new investor like me? What local organizations are you a part of? How many properties does your typical client own?
A few photos from my parents rental remodel:
How does your monthly accounting and reporting work?
Property managers typically use professional software to help them manage tenant data, balance monthly income/expenses, and provide automated reports to their clients. Cloud-based software is becoming more common and some PMs may even have an investor portal where you can login and customize your reports.
One of the (small) headaches I have with my current property manager is manual and old-school processes. I’ve found some accounting mistakes due to fat-fingering, manual miscalculations, and basic human errors. That being said, I enjoy reviewing monthly reports and double-checking their work. It keeps me engaged and holds me accountable for mistakes too.
Related/alternative questions: Do you use a property management software? Which one? Do you offer direct deposit? What is your payment schedule? How is maintenance & repairs paid for? Which annual reports can I expect come tax time?
What other services does your company provide? What don’t you do?
It’s good to know if their agency is a one stop shop for all of your real estate needs. Or, perhaps they focus on a single particular niche. There is no right or wrong answer here, but you could find out that the company can solve more than just your property management needs.
For example, my property manager is also a licensed realtor/broker. She stays up-to-date with hot and cold property trends, gives me a heads up if she hears about any off market purchase opportunities, and can possibly help me market and sell my investments when the time comes. This is a huge value add to me being an out-of-state investor.
It’s sometimes good to ask what they don’t do. If they don’t offer a particular service that you’re interested in, they may partner with or refer you to another firm that does.
Related/alternative questions: Do you conduct your own inspections? Can you help me acquire more rentals or sell my rentals eventually? How do you market properties for lease? Do you work with HOA’s? Will you help me manage renovations? Do you file insurance claims on my behalf? Will you represent me in court for evictions, etc.?
Walk me through the process for new leases, renewals, and evictions?
The more you know about their processes, the more information you will have to feel comfortable making a decision. Personally, I don’t really care how my property manager handles things, I really only care about the results.
While you could ask specifically for statistics, (Like: What is your current vacancy ratio across all properties? Your average vacancy period? What % of tenants renew their leases? What is your eviction %?) you might find that the person responds with canned answers. I prefer asking about how those numbers are achieved.
Remember when asking about processes: They are the experts and there is a reason why they do things the way they do. If they describe a process or method you disagree with, rather than argue with them, ask why it’s done that way and what the benefits are. You might learn something new.
Related/alternative questions: How do evictions work in your city/state? What are your renewal goals? How quickly can you switch tenants when someone terminates their lease? Where do you advertise vacant properties? How do repair orders work? How/when do you increase rents?
Tell me about your team? Who will I be dealing with?
For well established property management agencies, it’s common to have a team of people that all work on different aspects of service. While this is good, it’s nice to have one main point of contact you deal with regularly who oversees everything.
My property management company has a person dedicated to renewals, someone who handles new leases and showings, and someone who manages work orders and repairs. I like this structure because each person is an expert in their specific area. But when it comes to communication, I only deal with one manager.
If you’re planning to own multiple properties all managed by the same agency, you should consider building a relationship with the company owners directly. As your business grows, you will probably be communicating with them more often.
Related/alternative questions: Who will I interact with at your firm? How do I get updates on my portfolio? How do I escalate troubles if needed? Who is your management team? How many staff do you have and what do they all do? Do you wear multiple hats?
What is your management style?
This is a pretty broad question but it can lead to some revealing personal qualities. You want to understand a) how firmly the property manager deals with tenants and b) how firmly they will deal with YOU. Since you’ll be working side-by-side with this person, it’s important that you get along with them and have a strong professional relationship.
For managing tenants, everything must be by the book. Property managers must know and abide by all local laws, and treat all tenants the same. Good property managers have a methodical and unemotional approach to their job. Kind of like a robot.
But when it comes to dealing with YOU, there must be some personality and fun involved. Most of the time my property manager calls me it’s with bad news. I’ve found the best way to balance tough conversations is with a little humor and personal jokes.
Related/alternative questions: What is your typical response time for calls/emails? Can I text you with questions? What’s your preferred communication method? Do you have some references I could speak to? (remember to check their LinkedIn and BiggerPockets profiles) How do you deal with tricky tenants? Do you perform criminal and background checks? Do you take/send photos of the property during inspections?
Lastly, don’t ignore your gut-feelings…
After you’ve been on the phone with someone for 20-30 minutes, you’ll probably have some good or bad feelings about them. I’m a believer in listening to those feelings. Some of the property managers I interviewed answered all the right questions, but at the end of the day I couldn’t see myself trusting them.
Did I miss any important questions? I probably did… Tell me what they are in the comments below.