Being a private landlord can be hard work, and trying to do it all yourself can be incredibly time consuming and very stressful. But there is help out there! Property management companies are a great way of becoming a hassle-free landlord. They can take care of your property, looking after your tenants, dealing with maintenance and collecting your rent. They let you get on with your life, knowing that your property is in good hands. Sounds great right? So how do you choose the best company for you?
Unfortunately, there is no standard property management company, no two managers are the same. They all offer a variety of services, at various levels of experience for varied prices. There are numerous packages out there which can be tailored to meet your specific needs, which is great if you know what you need.
The best way to find a property management company that is right for you is to conduct an interview. But with so many companies all with different services how do you even begin?
It can get a bit overwhelming.
But fear not! We have compiled a list of helpful questions for you to ask your property manager to make sure that you have chosen the right company for you.
So what to ask?
1. What Experience Do You Have?
- Ensuring that your property management company has a long proven track record is the first step to ensuring that you have made the right decision.
- A company that is fairly new to the game is likely to lack experience, and there is only so much that can be learnt from books.
- This question should be directed at your property manager themselves as well as the company. The individual may be a new employee in a long standing company and this is worth being aware of when making your decision.
- This is also a good opportunity to ask them how many rental units they manage. Too few and this could be a warning sign of either a start-up business or a struggling one, too many and your property might get lost in the crowd.
2. What Services Do You Offer?
You want to make sure that your property manager is giving you exactly what you want. Each company is different and all offer varying services and all are price dependent. Write a list of everything that you are looking for in a property manager and then discuss this with them when you meet. Ask them for their full suite of services and talk about how beneficial each service can be for you and whether it is worth paying for. Look at alternatives and make sure that you are fully knowledgeable of their practices and offers.
Do your homework.
3. How Much Do You Charge?
This is the big question really. One of the biggest factors that will decide whether you choose a property management company, is their fee. If it is out of budget then it is very unlikely that you are going to choose them. On the other hand, if their prices are incredibly low you may be suspicious as to why.
Monthly fees can either be a fixed rate or a percentage of your rental yield, this usually costs between 8-12% of your total monthly revenue. There are loads of optional packages, which means that you can tailor your experience to suit your needs. Obviously, with this, it means that prices vary drastically, so it is worth doing your research and finding what suits you best.
Are there any fees for when the property is vacant?
If this is the case then be wary. Property managers should be motivated to keep tenants in your property at all times. If they are being paid regardless then it removes the incentive to find you tenants. Remember, no tenants = no rent. And no rent = no money to pay the property manager. But this doesn’t mean that you should reject them. If they have solid procedures in place and good references, then this could be a great way to save yourself some money. Especially since fixed rates often are lower than fees calculated through percentages.
What miscellaneous fees are there which could be a possibility?
Many companies charge extra for additional services. A bit like a budget airline, you pay for the flight, but you pay extra to sit with your friends and even more to take a bag with you. Property management companies often work in the same way, giving you a basic package which looks financially appealing, but then requiring extra money for simple add-ons.
Here are some examples of additional fees:
Remember: Fees are negotiable! Don’t take their prices at face value, speak to them about what you want out of this and what your budget is, there is always wiggle room.
4. What Insurances Are You Covered By?
Make sure that the company are covered as much as they can be. Inquire as to what the price limits are in regards to coverage and what their terms and conditions are surrounding this.
5. How Will You Market My Property And Ensure That My Property Isn’t Vacant For Any Significant Length Of Time?
This is a very important question, especially if you are paying your property manager a fixed fee. If they are getting paid regardless then they are lacking an incentive to ensure that your property is filled with tenants, so they need a strong marketing plan in place to gain your confidence. Ask what platforms your property will be advertised on, and how else they will ensure maximum viewership. Will they take professional photographs and make the property look as aesthetically pleasing as possible to lure in tenants?
How will viewings be conducted? By yourself or by the property manager? What is the company’s availability for taking calls and questions regarding the property?
You want to make sure that your property will be filled from day one, and that your property manager will devote themselves to ensuring that that is the case. This is also a good time to ask about their record with vacancies. How often do their properties usually sit vacant? What is their current vacancy rate? High numbers for both of those questions should start ringing those warning bells.
Property management companies will each have different techniques for finding and vetting potential tenants. Check out what factors are taken into consideration when screening tenants. Does the company take into account employment, credit checks, landlord references etc? Think about what is important to you and ask if the property manager can vet tenants for your specific requirements as well.
Property managers will value your property and come to the conclusion of a figure which will be your rental income. They should be able to complete a comparable market analysis of local and similar properties. They will utilise their expertise and available information from the market, as well as factors specific to your property, to figure out the maximum rental income which is competitive and realistic.
It might be worth asking the property manager where they have got the figure from and what has impacted them upon coming to that conclusion. They should be able to explain to you how they have decided the rental price and explain to you what each factor means for your rental yield.
This is a good time to take note of things that could be done to get more from your property. If there are things that can be changed, which may improve the properties worth, then it might be useful to add these to the to-do list.
This is one of the most important questions for any landlord. You are trusting this company with what might be your biggest investment, and that rental income is inevitably paying for their services. Late and missed payments can be extremely detrimental and have a hugely negative effect on your finances. Making sure that your property manager has an effective and efficient method of rent collection in place is crucial. Ensure that the rent collection isn’t anything dodgy, like through cash or outdated with cheques. Online payments or direct debits are the best forms of rent collection, creating paper trails which prove rental payments and they are both safe and secure. The property manager should be able to confirm rental collection dates, when you should receive the rent and how late payments are dealt with and how arrears are resolved.
In addition, ask what the procedure is if a tenant misses a payment or refuses to pay rent. Do you they have an eviction service in place? Is this an additional cost? Do they deal with the whole procedure or will you have to step in? Make sure that you are confident in their abilities and understand the steps they will take to ensure that your rental income is protected.
9. What Control Will I Have Over Tenancy Contracts?
The property manager will create a tenancy agreement which is a legally binding contract between yourself and the tenant. It is basically a set of rules that say that the tenants must adhere to these requirements and you will do the same. But there may be things that you require which are not standard for tenancy agreements. For example, many landlords do not let to people with pets, however, you may allow them as long as the property is professionally cleaned and all damage repaired by the tenant themselves before the end of the tenancy. Specific deals such as this, would not be included in a standard contract and therefore may be missed by your property manager. Asking if you can have a say in the contract gives you some control of your property and ensures that you are happy with the agreement between yourself and your new tenants.
10. How Does Your Legal Cover Work?
If you find yourself facing the court and defending yourself as a landlord you are going to need legal help. Many property management companies will help you in these situations, however many do not. Those who do may expect you to stand up in court, others will represent for you. It is worth asking the question so you can decide what you want to do and how you would like this situation to unfold. Tenancy laws can be extremely complicated and it is worth making sure that your property manager is well versed in the legalities of renting a property. Ask them if they have had any experience with the legal side of renting and what their success rate is?
11. Do You Deal With Maintenance And Repairs?
Finding out who is in charge of maintenance and repairs can be very important. Property management companies could hire a contractor, use an in-house crew or even do it themselves. Finding out the qualifications and abilities of the repair person in question is important for understand whose hands your property is being left in. Some companies will take care of maintenance and repairs from start to finish, dealing with anything from tenants requests, to payment. This can either be considered positively or negatively, depending on what you want from your property manager. If you want to wash your hands of repairs and maintenance then this can be a godsend. If, however, you are not ready to hand over so much control, then you may want to restrict their power. Ask if you can be kept in the loop with regards to repairs; is there any possibility that money can be saved if you were to adequately do it yourself? It might also be worth asking how many inspections are carried out a year, and what is included in each visit. You can ask to be present for these inspections if you desire.
12. How Often Will I Receive Updates On My Property?
How often will your property manager communicate with you regarding your property? Will you be involved in every decision, or will they take control of certain aspects and only discuss with you if it is a larger, potentially costly decision? The type of communication they will choose is also important, as well as regularity. Make sure that you are both on the same page with regards to communication, as misinterpretation, or a lack of information, can have negative implications further down the line.
13. Can I Cancel My Management Contract At Any Point? If So, Under What Conditions?
Don’t sign something that you can’t escape from. If a company is offering an inescapable contract then your warning signs should be playing, as this is a big indicator that the company are not confident with their own abilities, and also that many people may have tried to leave early in the past. If you feel that the service that they are giving you is not up to scratch, then you should have the freedom to leave for a better suited company.
14. If I Decide To Sell My Property, Am I Contracted To List With You?
Some companies will ask you to sign a contract that states that if you were to sell the property at any point, then you must list through them. This is highly restrictive and a bit of a turn off for many landlords. This can also be a bit of a trap and something that many landlords are unaware of. You want the freedom to work with who you want and to sell your property the way you want. If they impress you, you may turn to them to sell, but if they fall short, then the last thing you would want is to entrust them with the sale of your property.
15. Will You Be Able To Help Me With My Portfolio And Advise Me On Investments?
If your property manager has a healthy arsenal of experience and knowledge behind them, then they will be able to offer you some really valuable advice. If they are willing to spend some time with you then this can be gold dust. They can help you to maximise your investment and grow your portfolio to make the most of your properties and time as a landlord. Don’t Ask, Don’t Get