5 Crucial Questions to Ask When Interviewing a Property Management Company
Monday, July 22nd, 2013
By: Steve Goldman, CCIM
By Marc Brun, Principal Broker, Brun Property Management
#1. The single most important question to ask is: “Are you licensed to do property management?” Most states require a property management company to be licensed with the department of real estate or real estate commission. You can usually verify this by going to the website of the department or commission. This information is public record. In Tennessee unless a manager is licensed, he cannot get paid for performing property management. The burden is on you to choose wisely and do your due diligence.
#2. How much does the manager charge? This is usually not a simple apples to apples comparison. Everyone’s fee structure is a little different. Is a percentage fee based on the net income or the gross income? Is there a charge when a unit is vacant? For extended vacancy? Is there a minimum fee? Is there a markup for paying bills? Is there a leasing bonus when a unit is rented? What is the charge per hour for handyman work? There may be other fees and charges as well. Ask!
#3. What kind of tenant screening will the property manager do for you? There are many services out there that offer background screening at reasonable rates. The old excuse that it is too expensive is simply untrue today. At a minimum, the background check should include criminal, eviction, sex offender and credit. Also the income and rental history needs to be verified. The screening should be done on all adults that will be living in the unit including adult children. None of this eliminates the potential to put in a bad tenant but it does help eliminate obvious bad apples.
#4. Ask a prospective property manager for references. No one ever gives a bad reference to contact but if you ask for at least five current and past references, you can pick and choose who you are going to contact. If they can’t provide you at least five, then they either have a lot of clients that may not be satisfied with their work or they don’t have that many clients to choose from. Neither one is a good sign. The references they provide should be for clients that had or have similar properties to yours. A reference that owns only a duplex is not a very good reference if you have a thirty unit property. Managing a larger property is quite different from managing a duplex.
#5. Ask for samples of their paperwork. This will show you how sophisticated they are and what you should expect to receive from them monthly. Ask them for samples of the management agreement, lease and monthly financials. They should be able to provide redacted samples of this paperwork. From these you can determine if they are operating with technology based in this decade or they are still using a typewriter, carbon paper or rotary phone! Leases should be generated on a computer, not filled in by hand. Financials should be generated using specialized property management software. If they are using pen and paper or Excel or Quicken they have not invested time and money to do it the right way.
P.S. Ask them how many units they manage. Can they provide a list? I believe in the old saying if you want something done give it to a busy person. Managing a lot of units requires good time management, good systems in place to handle almost any challenge and the ability to satisfy clients.
I hope this article will help you make a more informed decision. These are my opinions and the information provided is deemed reliable but not guaranteed. Rely on it at your own risk. I am a licensed real estate broker in the state of Tennessee and I am the principal broker for my firm, Brun Property Management. We specialize in managing residential properties throughout Knoxville, everything from single family homes to seventy-five unit multifamily complexes. We currently manage over 325 units in Knoxville. Feel free to contact us with any questions you may have for a no obligation consultation. Thanks for taking the time to read this article!
Brun Property Management
(865) 686-5312 – email@example.com – www.brunpm.com