If you’re considering buying a revenue property, there’s a pretty good chance that you’ll at least consider hiring a property manager (PM) to care for your investment.
As the title suggests, property managers manage properties. This means your PM will be the one advertising for tenants, screening the applicants, filling out paperwork like leases and walkthroughs, and pretty much anything else involved with maintaining a rental.
So how do you separate the good PMs from the bad? You can hit Google and search for property managers or you could ask other investors for references. Regardless of how you come up with a list of potential PMs, you’ll want to interview each candidate to make sure you’ll be working with a professional that will properly care for your investment.
Questions to ask a property manager:
• How many units will the PM be responsible for? Ideally you want as few units as possible per manager.
• How will the PM decide what to charge for rent? How does he/she know what market rent is?
• What’s the tenant screening process? Do they perform reference checks? Credit checks? What kind of documentation is required to apply? Photo ID? Paystubs?
• How often do their tenants pay their rent on time? (Correct answer: “Always.”)
• How many evictions has the PM filed in the past year? If a PM is doing a good job of screening tenants, this number should be very low.
• How do I or my tenant contact you after hours? What’s the process if the tenant has an emergency?
• What contractors do you have existing working relationships with?
• Are you a Real Estate Council of BC member? (Correct answer: “Yes.”)
I’d also expect any PM on my short list to provide some references that I can talk to. Asking for a list of 25 might be overkill but a professional PM with a good reputation should happily provide you with the names of at least two or three satisfied clients.
Questions to ask a PM’s references
• How hard is it to reach your PM during office hours? How about after hours or during emergencies?
• Do you always receive rent when it’s due? If no, why not?
• How’s the written documentation? Does the PM provide a detailed monthly report/invoice? Did you receive a copy of all the tenant documentation? Do they provide copies of repair invoices (plumbing, appliance repair, etc)? Or are you just expected to take them at their word?
• How involved were you with tenant screening? How involved are you permitted to be?
• Has the PM ever had to evict one of your tenants? If yes, why? If more than once, how often?
• Does the PM ever charge for “extras” or is his/her invoice all-inclusive?
• Is there a lot of tenant turnover? Is the unit constantly being re-rented every six months?
• Is there a lot of PM turn over? How long have you been with the management firm and how often during that time did you get a new PM?
• On a scale of 1 to 10, how would you rate this PM? Would you hire this PM again?
Hiring a professional doesn’t absolve you of responsibility; you’re still the one that’s in charge of managing the manager so be proactive and hire the best. A good property manager is a timesaver for investors. A bad one, however, can cost you dearly, both financially and emotionally.
Tony Browton is an award-winning Realtor who lives and works on BC’s Sunshine Coast.
His weekly blog can be found here http://www.truebluerealty.ca/blog