More homeowners are finding themselves as accidentally landlords recently. Whether you are moving for a new job or relocating to be closer to home, many Americans are finding that they cannot sell their homes for what they owe on their mortgages.
So, if you are a landlord, the next question becomes whether or not you hire a property manager to help you find tenants, fix problems with your home, and collect the rent or do you do it all yourself.
My wife and I have recently decided to rent out our home. And, we have decided to hire a property manager. We are currently interviewing three different companies that were recommended by friends and coworkers. Of course, this is not a decision to be made lightly. Here are several questions that you should ask a property manager before hiring them.
How many properties do they manage? – One property manager than I interviewed limited the number of properties they handle per person so they can give your property the attention it deserves.
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What are the costs? – Do they take an industry norm of 10% of the rent as a fee? Is there another feed every time the home is vacant and a new tenant is needed? Is advertising costs wrapped up in the monthly fee?
Are they full-time? – Again, this may be an indication as to how much time and effort they can put into filing your vacancies and taking care of issues that crop up at your home.
How will you contact them? – I have heard horror stories of property owners having a hard time getting into quick contact with their property manager.
Are they certified and licensed? – There are several associations and groups that educate and test property managers before they are licensed.
Do they have a contract? – You need one! Period!
How do they screen potential applicants? – Do they pull credit reports? What do they look for specifically in an ideal tenant for your home?
What will they outsource to others? – Do they have a of service professionals such as handymen, lawn care crews, and others?
How do they collect rent? – How do they handle security deposits? Many states have rules regarding security deposits and rent payments. Do they use bank drafts? How do they send you the rent?
How does their eviction process work? – This is hopefully a problem that you never have, but it is good to know their procedures. And, the property manager needs to have a standard procedure how they handle this according to your state’s laws.
How do they handle maintenance issues? – Does the property manager want you to maintain a fund that they have access to for small repairs? Do they recommend that you purchase a separate home warranty from a third party?
Is there a reserve requirement? – This is kind of related to the maintenance plan of the property manager. I met with one that required homeowners to keep $500 in a separate maintenance fund to help with minor repairs.
Do they provide statements? – Or, do they provide you with online account statements on their website? This can be a great feature if you are an out of town landlord on the move.
What is their cancelation policy? – What if you decide to sell your house? Does your property manager firm have a cancelation policy when you terminate your contract with them?
Whose responsibility is yard maintenance? – Typically, yard work is a responsibility that falls on the tenant. But, you want to make sure that it is included in the rental contract the property managers have with tenants.
Do they have a move in checklist?? – Most property managers have a checklist, but it is always a great idea to ask for a copy of what they will use when you are interviewing property managers before you hire them.
How will your property be advertised? – Which websites will your home be advertised on? Will it be listed on the multiple listing service (MLS)? Will your property manager give you a rundown of how your property was shown each week and where it was advertised? Will you be responsible for showing your home while you live there? Or, what is the property manager’s policy on showing properties?
How often will they visit the property? – I have interviewed several managers who only visit your house once every four months. I interviewed another who checks on it every month. It is not hard to see which one I favor.
Do they have references? – This is critical, and this is how my wife and I find all of the professionals we work with. You should not pick people out of the phone book. You need to ask your friends, family, and coworkers for their recommendations. It is the best way to find a successful professional.
Do they also sell property? – Not a critical deciding factor, but it can be a good thing to know if things change for you later down the line.
These are all key questions to ask a property manager that you are considering to hire to manage your home. Do not take these decisions lightly. Conducting the due diligence now when hiring a property manager can help you to prevent issues down the road.