Common Questions for a Property Manager!
- May 16, 2019
- 8 min read
Updated: Mar 26
You've searched, analyzed, and negotiated your way into an investment property. Hello, cash flow, and hello, Freedom! Okay, now what? Well, not so fast. For many, the real work starts after your rental real estate purchase; to get the property to perform, it needs to be managed properly, weather you manage it yourself, count on a friend to help you, or hire an amazing property managment company like G3 Management!
Landlords can manage properties themselves, but if you ask around, you'll find that it requires time, can become complex, the process moves quickly, and if mishandled, might transform your investment property into a liability... wait... no margaritas? Managing an investment property requires specific skills and attention to detail. While some enjoy it, many find it time-consuming. Finding the right property manager can be challenging, but this article will help distinguish between amateurs and professionals.
Top 16 Questions to Ask a Property Manager
We've selected our top 16 property management questions to ask a property manager. Whether you're considering managing on your own or hiring someone, asking the right questions is key to finding the right person to oversee your rental property investments. Let's get started!
1) What are the various services you offer to your clients and tenants?
Services are essential! The purpose of hiring a property management company is to make sure your rental property is well-maintained and continues to perform. A reputable property management company should be capable of marketing, leasing, managing, selling, and assisting you in analyzing and investing in your next property. Additionally, it's crucial to consider the guarantees the company provides, as this ensures you receive quality management and confirms they have a vested interest in maintaining your property.
2) What experience does your company have in managing rentals?
There are "property managers" and real estate professionals who have never actually managed a property... hard to believe, right? If a property manager has no firsthand experience in property management, how likely are they to handle your rental property effectively? It's crucial to inquire about the manager's experience in managing properties.
3) Are there any onboarding fees or rental marketing fees?
A lot of property management companies hit you with onboarding and property marketing fees when you sign up, which makes you wonder why you're paying extra for their services. But G3 Management doesn't do that—they include onboarding and marketing in their all-in-one plans. This approach is great for clients because it gives you value without those annoying upfront costs. It seems unnecessary to have these fees when there are options that focus on what's best for the client and make management easier.
4) Under what conditions can I cancel my management contract?
Many property management firms are known for binding clients to contracts that are difficult to terminate. Always ensure you understand the cancellation process before committing to a contract! Contracts are beneficial and safeguard both you and the management company, but the top firms offer clients the flexibility to cancel with ease. If a company attempts to trap you in a contract that's hard to exit, it's best to steer clear.
5) How do you determine the rent amount?
Set the price too high and you'll see only tubleweeds; too low and you'll miss out on potential earnings. A property manager should be capable of conducting a rental market analysis of current rental rates for your rental property and look a rental market trends to secure the highest possible rent while ensuring it rents quickly. They should not only provide this analysis but also demonstrate all the comparable properties in your area used in the evaluation. Additionally, they shoknowuld possess the expertise and experience to assist you in analyzing your projected cash flow after all expenses, including their management services based on their rent analysis, and help you view your rental as an investment.
6) Do you offer tenant placement protection or 'Guaranteed Rent'?
Some companies, like G3 Management, offer a tenant placement guarantee at no extra cost, while others charge for it or don't offer it at all. This guarantee provides protection by ensuring the property management company replaces non-performing tenants at their expense and is something worth considering. DO NOT confuse this with 'Guaranteed Rent' or a 'Rent Guarantee,' which is a misleading recent marketing tactic used by some dubious companies to trap clients into long-term contracts with poorly vetted tenants, who may damage the property, ultimately leaving the rental property owner to deal with the consequences, Tu Nguyen , a seasoned property manager with Birmingham property investments, explores this scam thoroughly in this insightful video.
7) What is your tenant placement fee?
Throughout the industry, the majority of property management companies and real estate brokerages charge 100% of the first month's rent to secure a tenant for you. Others, like G3 Management takes a different approach, charging only 65% to market the property, conduct showings, screen applicants, and place a tenant. This is typically your highest management fee and so it is important to inquire and understand how a company will charge you for this service.
8) Are you currently an active real estate investor in my market?
Do they practice what they preach? A management company that promotes investment properties should definitely be investing in real estate themselves! If they aren't investors, then what you have is essentially a task manager aimlessly managing your investment property without direction.
9) What are the management fees and other pricing options?
Tiered pricing, flat rates, lease-only pricing, etc., etc., etc. Different property management companies have different pricing structures of all shapes and sizes. It becomes difficult to compare apples to apples and determine which will work best for you.
The more pricing options a company offers, the better you can tailor pricing to your needs. Typically however and across the board, a percentage based on rents collected is preferable, as it incentivizes managers to reduce vacancies and secure the highest rent. Despite this being a better structure, it's crucial to check the company's guarantees, tenant placement speed, and tenant selection to avoid problematic tenants.
"The longer your property sits vacant the higher your costs are in utilities and the less cash-flow you receive."
10) Are there full management fees when the property is vacant?
If a company is charging you full management fees when there are no tenants, what incentive do they have to ensure it gets filled? Unless you're placing your own tenant and allowing the management company to take over management after the fact, you're better off looking at a plan that only charges management fees based on rents collected and reduces those fees when there are no tenants.
11) Do you offer direct deposit to owners and an online portal?
Not only should a property manager have the ability to deposit your monthly payments directly into your account every month, but you should also have access to reports, maintenance requests, and check on the status of your property whenever you want via some type of online owner portal access. Look, we live in a fast-paced world, and it's only getting faster. Being able to receive payments directly into your account and logging into your online owner's portal to check up on your property, run reports, and see whether it is vacant or occupied will only save you precious time and hassle in the long run.
12) How do you market my rental property?
Are they whipping out the old stapler and posting your listing on a few telephone poles, or does the company have the ability to bring your listing into the modern world? Your property manager should be able to advertise your property through multiple marketing channels and websites. Do they take pictures? Do they make videos? If they are still posting it next to the 'best deals' column in the newspaper, it may be time to look elsewhere. Effective rental property marketing is crucial!
13) How long will it take to find a Tenant?
The longer your rental property sits vacant, the higher your costs are in utilities, and the less cash flow you receive. Place just anyone in there, and you have issues down the road. A good management company will follow fair housing laws and be able to find a tenant within 2-4 weeks, and some of the best offer a guarantee to limit how long your unit will sit vacant before they find you a tenant.
14) Do you conduct property inspections and, how often?
If your property manager never sets foot in your rental, that's a bad sign. Reputable property management companies conduct rental property inspections; some charge for them, some don't. Regardless, this is an important question to ask to ensure your investment property remains protected and that the lease is enforced.
15) Do you offer any assistance or protection during an eviction?
It's all good when it's good, but sometimes it's not. Evictions happen, but how your property management company handles them and what assistance they provide to you is crucial in protecting your property and your fees associated with an eviction. Some of the best companies offer some type of eviction protection services, which helps cover most, if not all, of your costs associated with an eviction.
16) How often will I get updates on my rental portfolio?
You should be able to get updates and have reports available on your portfolio whenever and as often as you need them. Your rental is an investment and a business, and just like either of the two, you need access to determine its performance. An owner portal here will go a long way in ensuring you are able to quickly check the status of your property and help you make future decisions regarding your investment.
Bonus Tip: Are your fees based on rents collected or rents due?
One of the most commonly overlooked or misunderstood aspects of management fees by rental property owners is whether their monthly fee is calculated on 'rents collected' or 'rents due,' a detail often realized only after signing a property management agreement.
Fees based on rents due are charged to the owner regardless of whether or not the management company collects the rent.
Fees based on rents collected such as G3's pricing structure, are advantageous to the owner, as they are not charged the full management fee unless the management company successfully collects rent from the tenant... it truly is about the fine print!
Final Thoughts
Regardless of whether you are a self-managing ninja or hire a stellar property manager, some of the skills and traits needed to be successful remain the same:
Communicative: Being able to clearly communicate expectations while not being aggressive.
Responsive: A good property manager must act. For tenants, understanding that their concerns are taken care of leads to increased occupancy.
Organized: Property management is very detail-oriented and requires a high level of organization. The ability to retrieve tenant, applicant, and property data is crucial.
Calm: A property manager must calmly handle emergencies and last-minute issues, as they arise.
Basics of Marketing: It does no good to have the best rental on the market, but no one knows about it. Marketing is crucial in today's environment.
Committed to Learning: Laws, rent rates, ordinances, tenants, and strategies all change. A good property manager is constantly seeking to remain updated.
Passionate: Let's be honest, we've all engaged in activities we don't enjoy. However, an excellent property manager is involved, proactive, and enthusiastic about real estate and investing.
Many property managers lack essential skills, leading to poor service and declining investments. However, G3 Management excels in these areas, ensuring excellent service and thriving investments. Why settle for less when you can keep your investments flourishing?
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About the Author Ricardo Reis - Learn About Ricardo
Entrepreneur, Inventor, Investor, Military Veteran. Ricardo is a member of G3 Management & Investments a division of Great Lakes Real Estate and a real estate professional. He is a real estate professional and a successful real estate investor for over 15 years.
NOT INVESTMENT, FINANCIAL, LEGAL, TAX, OR OTHER ADVICE: This blog is for informational purposes only and not a substitute for professional advice. We do not offer advice, solicitation, recommendations, or endorsements. You are solely responsible for evaluating the information's merits and risks. Always consult a qualified professional before acting.