Looking for a property management company can be daunting. And even once they’ve mastered the basics of real estate investing - investors know that finding a good property management company can make or break their investment.
But believe it or not - there are seven simple questions you can ask any prospective property management company that will tell you most of what you need to know, and whether they’re the right property management company for you.
1. What licenses or certifications do you have?
Licenses and certifications are important signs of how knowledgeable, professional, and up to date a company is and how well it follows industry standards. By making sure that a property management company has the right licenses and certifications, investors can rest easy knowing that their properties are in good hands and are being managed in accordance with local and state laws.
Some important licenses and certifications to look for include state-issued property management licenses.
Some popular certifications in the field include;
- Certified Property Manager (CPM)
- Certified Property Manager Specialist (CPS)
- Certified Facility Manager (CFM)
2. What types of properties have you managed in the past?
Unless you plan to specialize in one specific type of property, you want a property management company that has worked with multiple types of properties in the past, so they can grow with you as you branch out to new property types.
Not only that, but you should also ask about the prospective company's experience managing properties of a similar size, location, and target demographic as your property. These factors can all impact the challenges and opportunities of your property, because remember - every property is unique.
3. What's your technology stack look like?
A property management company that uses the latest technology can give you real-time updates and info about how your properties are doing. And real-time info means faster, better decisions.
Potential property management companies should also be leveraging tech to take on administrative tasks of property management. Not only is it easier and faster for them, but it reduces the chance of mistakes and makes sure that important tasks are done well.
When companies make mistakes and experience inefficiency, real estate investors lose money - full stop. But technology can help fix this. So if you’re an investor who is looking for a property management company, always make sure they’re employing the latest tech for things like rent collection, financial reporting and screening.
4. Can you send me a sample of a financial report?
Financials make or break an investment property’s value, and you need a property management company that is upfront and transparent about finances.
Ask the property management company for an example financial report that they send to property owners. This gives you an excellent sneak peak into what their financial reporting is really like, and whether you like how they present it.
5. What payment methods do you offer tenants?
Tenants need to be able to pay in different ways, and you need make sure any potential property management companies can handle multiple payment methods.
Why? For a couple reasons. Property management companies improve tenant satisfaction and reduce the chance of late or missed payments by giving tenants more ways to pay rent and other fees.
Plus, having different ways to pay can also help you work with tenants who have different tastes, financial situations, and tech skills. And as it does with everything, incorporating technology into tenant payment methods lessens the administrative burden on property management companies, and decreases the probability of errors.
Some of the most common ways to pay are;
- Online payment portal
- Automatic bank payment
- Via credit card
- With physical check
6. How do you screen potential tenants?
Sufficient screening helps ensure your properties are only rented to qualified, responsible people. This can help lower the chances of property damage, late rent payments and other problems that can hurt the performance of an investment.
Background checks, credit checks, income and employment verification, and rental history checks are all common parts of tenant screening.
Ask your property management company how they screen tenants, and what type of background checks they run.
7. Tell me about a time when you resolved an issue with a tenant
This is similar to when an employer asks a prospective employee, “tell me about a time you had to XYZ”.
You want a property management company that handles disputes and issues with tenants well, and in a respectful manner. Not only is that common human decency, but tenants that are happy with their property managers and landlords have lower turnover, which makes for less headaches.
Finding the right property management company starts with asking the right questions. These questions will likely be a great top-filter process, and allow you to end up with two or three very good candidates to investigate further.