Questions for Interviewing a Property Manager

Interviewing a Property Manager and Questions to Ask:

Finding a professional that is a good match to steward your investment property can be a tremendous asset. Arming yourself with the knowledge to evaluate them can be a proactive way to ensure success in laying the foundation for a successful partnership and a profitable rental investment property. The following discusses some ground to cover with potential property managers, as well as other factors to consider prior to hiring one.

Professional Background
When interviewing prospective property management companies or a manager, it is best to get an overall picture of whether or not you are dealing with a professional. As in all industries, there are great, average and not so great people to chose to get the job done. In property management, there are licensed professionals and then there are unlicensed people who are still willing to manage your property for pay. In many states, if a person is going to manage a residential property for a property owner other than themselves, they must be licensed to do so through the state.

In addition to being licensed, it may be relevant to ask about other certifications, qualifications or memberships in professional associations. Often times, memberships and additional certifications demonstrate a professional's investment, adherence to standards, heightened expertise and overall commitment to the industry in general. For a property management professional, a good place to start would be to find one that is a member of the National Association of Residential Property Managers (www.narpm.org).

Experience
In some industries, intuition or creativity is desirable, however, in property management, experience is arguably the single most beneficial trait to look for in a property manager. Experience, in all realms of property management, whether it be property marketing, advertising, tenant selection, rent collection, maintenance, repairs, financial reporting or property inspections, helps reduce problems. Reducing problems increases your bottom line.

Questions such as "How long have you been in business?", or "How many properties do you manage?" should give you insight as to whether this company has been around for some time or is just starting out. In addition, asking whether or not the manager is a rental property owner him or herself will give you a good idea if this person knows the ins and outs of the challenges facing rental property owners and if they share the same perspective and knowledge.

Importance and Value of Relationships
Property management obviously deals with real estate, however a large component of good business management has to do with the quality of relationships between manager and owner and manager and tenant.

Asking for references, reviewing testimonials or online reviews of a company can give a quick snapshot of overall client satisfaction. A reputable company will be able to provide you with client names that you may contact. A stable company that values relationships will evidence itself by good recommendations by both current and past clients as well as tenants.

Management Style
During any interview, a primary goal is to determine if there is a good fit between the two parties. The same goes for property management as there are plenty of different management styles and communication styles. Many companies will individualize service as much as possible, but they still have their policies. Be up front about your expectations from the very beginning and hopefully in return, the management company will let you know what you can expect realistically. For example, if you want to be notified prior to every repair, make this known. Some companies will only notify owners of a repair over a certain dollar amount; sometime this is negotiable, but sometimes it isn't. It can be a deal breaker for some, but it is best to know that ahead of time. If expectations are not discussed and appropriately matched between the two parties, then unnecessary problems generally ensue.

Communication styles vary as well. Some companies are still operating on a traditional model of communication via paper and phone calls. Many companies have switched over to electronic communication and documents. Having this preference aligned is necessary to avoid frustration later.

If you don't like the feel of the office, the manager or the staff, know these things won't change. Despite the reasons, sometimes two personalities just don't mesh when it comes to business. If there is a personality conflict or just a plain bad vibe, it is better for both parties if you keep shopping around.

In the event that you are unhappy with service after signing a management contract, many contracts include a termination clause. Ask about this clause and read about the penalties of terminating a contract. Sometimes, despite best efforts, it is best to part ways and you will at least want that ability in a contract.

Industry Specifics
A good, experienced property manager will be able to guide a property owner through the specifics of the entire rental process. Asking about this process will be very telling. If the property manager can not communicate the process, his or her best practices or industry details clearly, then beware. Much of this has to do with the experience of the property manager. Sample topics to cover with a prospective property manager include some of the following, though this list is not conclusive:

*Marketing of Property (Are there additional costs? Some companies charge extra and some automatically include it.)

*Showing of Property (How is this done-do they personally show or do applicants check out keys?)

*Tenant Selection (What type of screening do you do and what criteria is used to qualify?)

*Rent Collection (When/how is this done and are there electronic options?)

*Funds Disbursement and Reporting to Owner (When can I expect my money, reporting, etc.? What are options for receiving payment? Monthly disbursement and reporting at a minimum and on average by the middle of the month.)

*Handling of Maintenance and Repairs (Who do you use, is this negotiable and is there an up-charge?)

*Billing (Do you pay property bills and do you charge extra for that service?)

*Evictions (Can you/how do you handle them if necessary?)

*Inspections (How often are they performed and how much do they cost?)

*Tenant Check Out and Final Accounting (How is the return of security deposits handled and how is the property inspected?)

*Pricing (Can you explain your management fee structure? Very important!)

Pricing
Pricing can vary widely from one company to the next and because so many different pricing structures are used, it can be hard to compare apples to apples. To begin with, it is best to understand what services are going to be covered. Some companies provide comprehensive services all for one flat fee based on the percentage of monthly rent collected. For residential properties, that average fee can range from 7 percent to 11 percent of the monthly rent. Some companies charge the monthly fee, plus add on additional charges for things like a lease-up fee, bill payment, invoicing, and coordination of maintenance and repairs. Some companies will have the monthly fee, the front-end and back-end charges plus a charge even if the property is vacant! There can be a whole host of other things that companies charge for, so be sure to ask about them and read the contract carefully.

Since pricing and fee structures can be vastly different among property management companies, discussion with the manager as to the breakdown of each charge and careful reading of the management contract is crucial in gathering information as to identifying the true cost of hiring a property management firm.

Technical Stuff
If everything is a go and things seem like a good fit, don't forget about the nitty gritty. Reading through the management contracts for specifics and to make sure there are no surprises is a must as many of these contracts vary from company to company. In addition, discussing things like the best or preferred way of communication can further identify if there is a good fit and sets the stage for meeting expectations.

If technology is extremely important to you, this is the time to inquire about software, financial reporting, online account access, online payment, and the such. Many companies have several of their processes automated, and some do not. Many companies have learned how to leverage their time by using updated technologies, allowing them to spend less time on office activities and more time at the properties or with people.

Why Your Company?
As in any interview, you'll want to know what a particular company has to offer that is different or better than the competition. You'll also want to be assured that your needs will be taken care of and your concerns will be addressed. By the end of the interview, you should have the confidence to determine whether or not this particular company or manager will be able to do that for you.

Overall, taking the time to find a professional that is a good match to your needs and expectations can be a time consuming process, yet it is one where the time spent performing the due diligence can significantly benefit you and your investment long term.