10 things to ask before… Choosing a property manager
1. Are you accredited?
Accreditation indicates that a property management company adheres to high standards. Look for a company that has an accredited staff and leadership who have met the strict requirements for education and experience in property management. A major accreditation organization is the Institute of Real Estate Management, a division of the National Association of Realtors.
2. What does your insurance cover?
Make sure the company has a fidelity bond to insure against loss due to employee dishonesty. Coverage for forgery and alterations is also important to protect against loss. The staff should be knowledgeable of loss-prevention and risk-management programs.
3. What services do you provide?
Property management companies can offer an array of services, including management planning, financial reporting, market rent analysis and lease negotiation, to name a few. Determine what services your business needs. That information can help you draw up the best management agreement for your property.
4. Why types of properties do you manage?
A management company’s expertise should fit your needs. Does it have experience solving your sort of problem, such as a maintenance or vacancy issue? Has it managed your type of building, be it an office or housing complex? Find out what other properties the company manages, how long it has managed those properties and what the results have been.
5. What is your fee structure?
Possible fee structures includ e the following: management fees, generally based upon a percentage of collections; percentage fees, which can be based on different portions of income; and flat fees, or a flat fee plus a percentage of income.
6. What is includ ed in monthly reports?
Reports typically includ e monthly profit and loss statements, tenant receivables, accounts payable and bank reconciliation, if the property manager has a checking account for the properties.
7. How do I know you pay attention to detail?
Property managers have to juggle a lot. They should be able to handle all of their responsibilities — moving in tenants and maintaining budgets are examples — and focus sufficient attention on each.
8. What investors do you serve?
Does the company generally work with individual investors or institutional investors? It must have experience serving your type of investor because the financial reporting requirements will vary with each type.
9. What has staff turnover been like?
Staff turnover relates to organizational stability. Frequent turnover could reveal poor management or financial instability. Consistent service is an important element of property management.
10. When can we meet before I sign the contract?
Before choosing a property management company, meet multiple times with your likely choice to review its proposal and specifications. This meeting is the ideal time to clarify the answers to your questions and negotiate the management agreement. Any changes will be a hassle after you have signed the contract.
