One of the most important decisions you’ll make as an income property owner is hiring someone to manage the rental. A good property manager can help ease the burden of managing tenants, collecting rent, and performing other property-related duties. Hiring the wrong person for the job, however, can put your real estate portfolio at risk. Below are a few things to ask or look for when hiring a property manager.
Is the Candidate Licensed?
Licensed property managers and licensed property managers in charge have completed an approved property management course and passed a state licensing exam. A licensed property manager is bound to state-regulated procedures when handling our rental income and security deposits. To be sure your candidate is licensed, check to see that he or she is associated with a Property Manager in Charge (PMIC) or a Broker in Charge (BIC).
Visit Other Properties Managed By the Candidate
Ask the property manager to see some of the homes or apartments he or she manages. Take note of how well-maintained the units are. Visiting other properties managed by your candidate is the best indicator of how well your property will be maintained.
How Often Will Your Property Be Inspected?
Tenant turnover means income properties need to be inspected on a regular basis. To protect your investment, your property should undergo at least one interior inspection per year. The exterior of the property should be inspected at the beginning of every quarter. Be sure the property manager plans to inspect the units of long-term residents for issues the tenant may not have noticed or reported.
Is the Property Manager’s Fee Reasonable?
Most property managers charge 8-10% of the monthly rental income as a management fee, but rates may be higher or lower than that depending on your market area. Compare your candidate’s fee to what other property managers in your area are charging.
Check for a Termination Clause
Ensure your property management agreement includes a termination clause. This way, you can easily end to business relationship if you’re unhappy with your property manager. An example of a termination clause is agreeing to give the property manager 30 days written notice by certified mail of your intention to cancel the contract.
What is the Manager’s Rate of Eviction?
A high eviction rate usually means a property manager isn’t screening prospective tenants properly. A good property management company like www.Keyrenterpremier.com will perform a basic credit check on the rental applicant and request references from previous landlords.
How are Repairs and Maintenance Handled?
If your property manager bills you for repairs on your income statement, consider setting a limit on the amount charged. You could, for example, request that the property manager automatically bill you for repairs and maintenance issues under $150 but that he or she contact you for repairs over that amount. Some property management companies reserve a portion of your rental income to cover maintenance and repairs. In either case, be aware that certain emergency situations – such as fire or water damage – will require your property manager to take immediate action to protect your tenants and property.
Review the Details of the Management Contract
Depending on the management company, you may be charged extra fees like pet deposits or late charges. Read the contract thoroughly to ensure you understand both your own and the property manager’s responsibilities. A typical property management contact will specify how tenant and owner funds will be handled, how the property will be marketed, how often the property will be inspected, and how tenants will be screened and retained. Check the contract for a due diligence clause (also called “best effort”). A due diligence clause represents a property management company’s commitment to acting in your best interest when managing your property.
How Accessible is the Property Manager?
Above all, be sure your property manager can be easily contacted. Nothing is more frustrating than a property manager who is unresponsive or uncooperative. If you have trouble getting through to the property management company on the first call, strike that company off your list.
How Will Your Rental Income Be Handled?
Be sure you understand the property management company’s accounting policy. Ask to see physical receipts for all maintenance and repair costs. A good property manager should be able to show you exactly how, where, and why your money was spent. You should also ask the property manager whether tenant income is paid within the same month or one month later. Knowing the potential property manager’s intentions upfront will prevent unpleasant surprises down the road.
Jim Elfline is the Franchise Owner & President Executive leader at Keyrenter Premier, with extensive and successful experience in all facets of organizational and business development. Throughout his twenty-four year career in the nonprofit sector he has consistently created and delivered strategic development campaigns that generated revenue, has built brand awareness, and contributed to positive visibility. He has demonstrated results motivating others, constructing productive teams, and developing diverse collaborative relationships. He is a problem solver skilled at building consensus to garner positive outcomes. He is now applying that rich and diverse background to build a new business venture as the Owner and President of Keyrenter Premier Property Management.