20 Essential Questions to Ask When Vetting Property Management Companies
Are you a real estate investor looking to grow your investment portfolio? If so, then you already know how important it is to have a good property management team to support your success. Choosing the right property management company can be a daunting task, but it's crucial to ensure that your investment runs smoothly and your tenants are happy. That's why we've created a comprehensive list of 20 essential questions to ask when vetting property management companies. As fellow investors, we understand the significance of having a reliable and trustworthy property management team. That's why we want to share this list with you to help you make informed decisions when selecting the right property management company.
The inspiration for this post came from an insightful piece of advice given by Corey Clarkston, a renowned asset management expert, in the second-ever Elevation Equities Podcast. During the podcast, Corey emphasized the crucial role that property management companies play in the success of any real estate investment. He stressed the importance of thoroughly vetting and carefully selecting the right property management company.
In response to this advice, we've compiled a comprehensive list of questions that we believe are the Holy Grail of questions when it comes to choosing a property management company. By asking these questions, you'll have a better understanding of what to expect from a property management company, and you'll be able to make an informed decision that is right for you and your investment goals.
In this blog post, we'll cover the 20 essential questions that every investor should ask when vetting property management companies. By using these questions as a guide, you can be sure that you're choosing the best property management company for your needs and goals.
1 - What is their tenant retention policy?
Keeping your tenants happy and renewing their leases is crucial to your investment's success. Ask the property management company what their tenant retention policy is and how they ensure tenant satisfaction.
2 - How long does it take for a unit to be made ready after a tenant moves out?
The longer a unit is vacant, the more money you lose. A good property management company should be able to turn a unit around in less than three days.
3 - What is their marketing plan to keep units full?
Keeping your units full is crucial to your investment's success. Ask the property management company what their marketing plan is and how they ensure your units stay full.
4 - Is maintenance done in-house or contracted out? If contracted out, how much does it cost?
Contracting out maintenance can be more expensive than doing it in-house. Ask the property management company if they do maintenance in-house and what their hourly rate is. If they contract out, ask how much it costs.
5 - Can you call their references?
It's always a good idea to check references. Ask the property management company for references and follow up with them.
6 - Have they been sued in the past five years?
Lawsuits can be costly and time-consuming. Ask the property management company if they've been sued in the past five years and for what reason.
7 - Do they provide training to their managers?
A well-trained manager can make all the difference in the success of your investment. Ask the property management company if they provide training to their managers.
8 - Can you interview the proposed on-site maintenance staff?
The on-site maintenance staff will be responsible for keeping your property in good condition. It's a good idea to meet them and make sure they're a good fit for your property.
9 - Do they have a written management plan for your property?
A written management plan is essential to ensure everyone is on the same page. Ask the property management company if they have a written management plan for your property.
10 - Are there any upfront charges or fees?
Make sure you know what you're getting into before you sign a contract. Ask the property management company if there are any upfront charges or fees.
11 - Do they use current management software?
Management software can make all the difference in keeping track of your investment. Ask the property management company if they use current management software.
12 - Can you see sample reports?
Sample reports can give you a good idea of what to expect from the property management company. Ask to see some sample reports.
13 - What is their marketing budget?
Marketing is crucial to keeping your units full. Ask the property management company what their marketing budget is.
14 - Who performs tenant background checks and how much does it cost?
Tenant background checks are important to ensure you're renting to responsible tenants. Ask the property management company who performs the checks and how much it costs.
15 - Does their company require you to list your property with them if you sell?
Some property management companies require you to list your property with them if you sell. Ask the property management company if this is a requirement.
16 - Do they use a bank account to collect rents? If so, can you be an authorized signer?
Knowing where your rent is going and who has access to it is important. Ask the property management company if they use a bank account to collect rents and if so, ask if you can be an authorized signer on the account.
17 - Do they provide an option to get out of the contract in case of nonperformance? How much notice do you need to give?
Sometimes, things don't go as planned, and you may need to get out of a contract. Ask the property management company if they provide an option to get out of the contract in case of nonperformance and how much notice you need to give.
18 - Can you have their cell phone number?
Having direct access to your property management company can be invaluable. Ask the property management company if you can have their cell phone number.
19 - Why should you use their company?
It's always good to hear why a company thinks they're the best fit for you. Ask the property management company why you should use their company.
20 - What are their weaknesses?
No company is perfect, and it's always good to know their weaknesses upfront. Ask the property management company what their weaknesses are and how they plan to address them.
Conclusion
Choosing the right property management company is crucial to the success of your real estate investment. By asking these 20 essential questions, you'll have a better understanding of what to expect from a property management company, and you'll be able to make an informed decision that is right for you. And don't forget to check out the Elevation Equities Podcast for more valuable insights and advice on real estate investing.
By Eric Johnson, Full Time Investor & Co-Founder of Elevation Equities