So you’ve decided to pull the trigger—you’re finally going to hire a property manager for your apartment community!
It’s important to realize, though, that not all property management companies are created equally. Some are more sophisticated than others. Levels of experience and rates can vary widely. Some may leverage new technology; others may be operating the same way they managed decades ago. Just as you’d do your due diligence on an investment property, you should do your due diligence on your property management company.
Here are 20 questions to ask (at a minimum!) when interviewing potential property managers or groups:
1. How long have you been in business? We recommend that a company be in business for at least ten years. This allows a long enough track record to call references before hiring.
2. How has your business model changed during that time? This will tell you how responsive the company is to industry changes and the evolution of technology.
3. What challenges did you face during the last real estate cycle downturn? The real estate market ebbs and flows. It’s crucial to find a property manager who knows how to handle your apartment community during good times, as well as the bad.
4. What property management services do you currently offer? Not all property management companies provide the same services. Be sure this company offers a full suite of services that meets your needs.
5. How many rentals do you currently manage? This will help you gauge company size and expertise. Be sure the company isn’t stretched too thin given staff capacity.
6. Do you manage any other rental properties in my area? You want to be sure your property management company understands the nuances of your sub-market.
7. What types of properties do you manage? A PM who manages single-family rentals will have a different approach than someone who manages commercial, multi-family or retail, etcetera. Be sure to find someone within your market niche.
8. How do you set rental rates? Any credible company should be able to run a market analysis that informs rental rates across several variables: submarket, unit size, amenities, etcetera.
9. What strategies do you use to fill vacant units quickly without sacrificing resident quality? This provides insight into their leasing strategies when pressed with a timeline.
10. Can you explain Fair Housing laws? A good property manager should be fluent in all local, state, and fair housing laws.
11. Do your team members have specialized roles, or are they generalists? You’ll want to know whether one person is responsible for managing your rental, or whether the company takes an all-hands-on-deck approach to service delivery (one person for marketing the units, another for repairs and maintenance, another who manages all accounting, etcetera.)
12. What type of insurance do you carry? Look for companies that carry at least a $1 million general liability policy and an errors and omissions policy.
13. What are the monthly management fees? Management fees generally run anywhere between 8-12% of total monthly revenues but can vary depending on the services offered.
14. Do you collect management fees when a unit is vacant? If so, run away. Property managers should be incentivized to lease units quickly—and forfeiting a portion of their fee in the meantime is generally the industry standard.
15. Can I cancel my contract without penalty if I’m unhappy? Avoid companies that try to lock you into a contract. You should be able to switch management companies if the service is sub-par.
16. Are their miscellaneous fees that I should expect to incur, and if so, for what? Some companies charge extra for marketing units, resident turnover, evicting tenants, etcetera.
17. What is your procedure for qualifying residents? Learn whether the company uses background, employment, credit, and landlord reference checks as part of their screening procedure.
18. What is the average vacancy rate among the properties you manage? Consider whether this vacancy rate is above or below the area average.
19. How long do units typically stay vacant after turnover? Look for companies that will have units rent-ready and leased up again within 30 days, which should be plenty of time for general repairs and maintenance.
20. What is your process for handling service requests? You’ll want to know the procedure for tenants communicating service requests with the PM, as well as your role in the process – will you be making the final decisions about repairs and maintenance? Can you require authorization for any expenses above a certain amount? Look for a company with a well thought out process.
21. How often will you provide me with updates about my property? You should be able to obtain information about your property as often as you’d like. More sophisticated PM companies will leverage technology (e.g., online dashboards) to provide you with real-time information about your portfolio.
22. What is your preferred method of communication? If you are someone who insists on speaking by phone, but this PM insists on communicating by text or email, this could be a mismatch. Look for companies that are willing to communicate through various media – not just with you, but with residents.
23. Do you have pre-existing relationships with local vendors? Find out who the PMG subcontracts with and whether any discounts are available through those existing relationships.
24. Will you be able to provide me with investment advice or help me grow my portfolio? More advanced property management companies will be able to help you identify market opportunities – whether through the purchase or sale of assets – and help you position assets in a way that maximizes your return on investment.
25. Do you personally invest in real estate? If so, that’s a good sign – indicates that the PM has an investor mindset and will care for your property the way they care for their own.
Depending on your specific circumstances, you’ll probably have other questions to ask potential property managers. However, this list of 25 questions is a good starting point.
It should go without question, but always be sure to meet with property managers in person before deciding to hire someone. This will give you a better feel for the person or group. For instance, were they on time? Did they seem organized? Were they transparent in sharing information with you? It’s easy to hide behind a guise online or over the phone. In-person conversations reveal so much more.