When looking to hire a property management company, it’s important to ask the right questions. Especially as a new landlord, it’s hard to know what the “right” questions are. We’ve detailed the top 20 questions to ask a property management company before hiring them, so you can alleviate uncertainty and feel confident with your decision.
1. Are you a licensed property manager? Do you have the required certifications?
In the state of California, in order to legally manage a rental property for
someone else and receive compensation, you must be a licensed real estate professional. Be wary of “property managers” who do not have a state-issued real estate license. On top of a state license, there are also many professional trade organizations that will offer certification classes in property management.
2. How long have you been in business?
We suggest hiring a company that has experience in your market and knows how to handle difficult situations. Have they dealt with tenant disputes, maintenance or utility issues, earthquakes, etc? Hiring a startup company could potentially leave you as their test subject. Make sure they have some successful years of experience.
3. How long have you been operating in the Escondido area?
Have they been operating in the area very long? Or did they just expand to the area? It’s important for the company to be familiar with the community and surrounding area of your property. Companies newer to the area may not have the network built to ensure quality care. Newer companies might not be familiar with the nuances of the market or have in-depth knowledge of local laws.
4. What types of properties do you manage?
Even though a property manager is successful in one area of real estate, make sure their portfolio is similar to your property. For example, a retail or commercial property manager might not have the same expertise regarding HOA management as a property manager who oversees condo or single-family properties.
5. What are the management fees?
This is a key factor when determining what property manager to hire. Keep in mind that in most cases, management companies are paid based on the amount of rental income coming in from the property. Be cautious of a low upfront management fee that seems too good to be true, because it probably is. Some companies will add on additional charges such as tenant finder’s fees, maintenance markups, emergency on call services, maintenance reserves, evictions, court costs, and other charges. Make sure you are clear on all expenses you may incur, and your fee structure is outlined clearly by the property manager. It should be detailed in writing in the management contract.
6. How do you send reports? Can I see a sample?
A property manager should be able to clearly explain everything on your financial reports to you in a precise manner. Ask the property manager to provide you a sample report to review before you begin an agreement. This will help you understand your own reports once they are created. Make sure to ask questions about anything that is not clear. The way a property manager reports financial data to you can impact your ability to truly understand what is going on with your property.
7. If I have a question or concern, how soon can I expect to hear back?
A quality property management company should always get back to you within 1 business day. If you have a question or concern, you deserve to hear back quickly. For many people, their rental property is their largest asset. We’ve had new clients tell us how it would sometimes take days or even weeks to get a response from their previous property management company. We believe every aspect of managing your property should be treated with the utmost care, including responding to you in a timely fashion.
8. What property management services do you currently offer?
Ask what services they offer and know what services you need. Different property managers offer varying services. Ask what responsibilities they expect you to handle. Some companies offer different levels of services. Determine the time and effort you want to put into your rental property. This will help you choose the best property management service for you and your goals.
9. How many rentals do you currently manage?
Having an understanding of the company’s management capacity is crucial. A property management company could oversee anywhere from 10 to 10,000 properties. It’s good to know how they manage their properties and clients. Will you be working with one manager or several? Sometimes it’s best to go with a smaller company that gives you more personalized service.
10. How do you set rental prices?
A good property management company should be able to run a market analysis to estimate rental rates for your property. Click here for our free rental analysis on our site. You want to make sure they are dialed into the specifics of the Escondido market - not just looking at California as a whole, or the U.S.
11. How are potential tenants screened?
Properly vetting a tenant before signing a lease is very important. You want to make sure your future tenant is responsible and pays rent on time. This will prevent future headaches and potential evictions. Does the manager run credit checks? Do potential tenants have to fill out a rental application? Does the manager verify employment history? What about speaking to previous landlords? The tenant screening process should be thorough and consistent.
12. How are service requests handled?
What is the process for tenants to communicate service requests to the property manager, and what is your role in this? Who makes the final decisions about repairs and maintenance? Are you able to require authorization for expenses over a certain amount? Look for a company with a comprehensive and clear process.
13. Do you collect management fees when a unit is vacant?
A property manager should not require you to pay them if the property is empty. If they can’t keep your property occupied, they should be okay with forgoing some income to prioritize your best interests.
14. What types of insurance do you carry?
We suggest hiring a company that carries at the minimum a $1 million general liability policy, as well as an errors and omissions policy. You might consider having your lawyer look over their policy.
15. How is rent collected?
A good property manager should have a rent collection policy that streamlines how tenants pay their bills. Does the property manager pick it up, do tenants mail it in, or is there an online payment option? Every lease should outline when the rent is due, the amount due, and any late fees associated with a late payment. The lease should also clarify at what point the tenant is considered in default of their lease terms and when the eviction process can start for nonpayment.
16. How and when do property owners get paid?
Don’t forget that you’re hiring them to make money. Find out when you’ll be receiving your checks, and how often.
17. Do you conduct property inspections, and if so, what charge is associated with them?
Your property is at risk if your property manager doesn’t conduct inspections. This will usually require a small fee, but it is worth it. It ensures you catch problems before they spiral out of control.
18. How long is the management agreement for?
Understand the terms of agreement, including the length of the term and the renewal of the agreement. If you’re dissatisfied with the service, can you cancel your contract without penalty? Your attorney should review any management agreement prior to you signing off on it.
19. How long do units typically stay vacant after turnover?
A productive and experienced property manager will have properties flipped and leased again within 30 days. This is plenty of time to refresh the unit and perform any repairs. When looking for new tenants, they should be taking professional quality photos and listing it on the MLS, as well as top online rental websites such as Zillow, Trulia, Hotpads, etc. Visit the rental listings page on their website and take a look at the quality of their current listings.
20. Do you have references?
If you’re still unsure about hiring them, get in touch with people who have worked with the PM before. This could include other clients, business professionals, real estate agents, mortgage brokers, attorneys, contractors, or any other parties the manager has built a relationship with. Don’t just ask them to tell you the good things, but the bad things too. A property manager should have no issues in supplying references prior to signing a contract.
This is only a quick list of questions. Depending on your unique property, you might have other questions to ask. If possible, meet with potential property managers in person before hiring them. If they have a central office, go to the office and meet the team. Find out who you would be directly working with and ask them some of these questions.