A few years ago, we were approached by a gentleman that was looking to hire a management company to run his property. It wasn’t just any property – this was a property he’d built himself in the 70s. He knew every nut, bolt and screw in the building. Apparently, he had been making regular yearly calls to various management companies looking to hire but things never seemed to work out. He just never seemed to find the right company.
You may have already experienced the same feeling. Hiring a Property Manager can be a stressful time for some investors.
In my experience, each market area will have various types of Property Managers that you can get quotes from. The options will vary from a friend’s friend that looks after properties, to real estate agents, to mom and pop shops, all the way to larger management firms.
As an investor, it’s important to properly align yourself with a Property Manager that has the same principals as you when it comes to running an apartment building. Chances are that you will be working with this person for a long period of time therefore its a good idea to find someone that you like and respect.
When the gentleman called us, we were a young company and hungry for business (as we always are…).
After several discussions and meetings, we won the business. We’ve been managing the property ever since and our relationship with this owner has blossomed into a wonderful partnership. We spend a lot of time providing him with great service, providing the property residents with great service and things have worked out great. But, a big part of what sold this business, and we’ve found helps us stand out from other property management contracts, is our onboarding process. It’s not just about bringing in a new client – it’s all about ensuring that the owners and their tenants are set up for a successful partnership.
Getting the management agreement signed is the easy and sexy part of this business. Managing the property and all its stakeholders is a completely different ball game. When you’re looking for a property manager, ask them about their onboarding process for new owners and their tenants. If you want to ensure your property is going to well taken care of and that you have a professional running your rental property, understanding what they are going to do as soon as you become a client will help you.
Having on-boarded hundred of property owners over the years, I know how important this first step is to the relationship between property manager and owner. If you’re not having your expectations met at this stage of the relationship, it could be a short and bumpy ride.
Below are 5 Key Items to Ask a Potential Property Manager Before You Hire Them:
1. Do You Have an Owners Manual?
The very first item that you should look for is some sort of owners manual detailing how the management firm runs their operations and what you can expect to happen in certain situations.
Having clear expectations from both parties on any business transaction is a must. In the world of Property Management and investment properties, it’s critical that the owner and the property manager be on the same page on how run a building. Ambiguity and assumptions are dangerous and therefore should be avoided at all costs.
Items to address in the manual could include the following:
- When do I get paid my cash flow?
- When and how do I get my statements?
- How do you deal with late rents?
- What dates do you send out eviction notices out by?
- How often do you check on my property?
- What is your move out procedure look like?
- How does the Property Manager handle expense expenditures?
When such a document exists, there are no surprises as to how things work. Sometimes you and your property manager may agree that a situation should be handled differently, but generally, an owners manual or a guide to the policies and procedures will ensure that you know what to expect from your property manager.
2. How Do You Communicate with Your Owners?
How you’ll communicate with your property manager is important. Find out how your property manager will typically communicate with the owners and establish your own communication strategy that will work for both parties. Setting the ground rules for regular meetings/discussions is critical.
Some property owners are of the opinion that no news is good news while others want to know every detail. Let your property manager know where you sit on this so that you are getting the information that is important to you.
My suggestions:
- Agree on times and frequency of phone calls. This is intended to be a minimum. Example would be 1 phone call per month to review financials if you’re an owner of a larger property. For single family houses, you may only need to speak quarterly or semi-annually.
- Agree to an email volume that can accommodate both parties. Do you want email notifications about every little thing, or just when something important happens?
3. What Will You Do For an Initial Property Inspection?
Now that the fundamentals are in place, you want your property manager to go do a full inspection of the property. You want your Property Manager to know every detail on the property and you should help him in every way possible. In an ideal situation, your manager should be able to produce a ‘building file’ on the property. This building file would essentially act as a central holding spot for all the property details.
Some key items are the following:
– Taking pictures (professional ones are recommended)
– Documenting general condition of common areas
– Roof and window condition
– Age and serial numbers for hot water tanks
– Alarm System details
– Functioning keys for all doors
– Water shut offs
– Elevator details
– Pool maintenance
– Heating source(oil, natural gas, electric …)
– Central Air system
A well-documented building file can be very useful for both owners and property managers. If you’ve recently purchased the property, providing your property manager with the inspection report can help speed up this process.
4. How Will You Handle Tenant Introductions?
Tenant relations are one of the most important tasks for any owner and property manager. You want your manager to take the time to go and meet with each of your tenants. This goes a long way to building and cultivating great relationships.
In addition to the introductions, welcome letters should be distributed with all the details on how to work with the new managers.
5. What Kind of Software Do You Use? And What Is Available for Your Owners?
If you’re working with a professional management firm, chances are that you will be provided with a web-based portal to access your property details. Find out how this works and whether the manager will provide you with all the login details of how to access your portal as well as how to use it.
In most cases, you might be using the portal more often that you speak to your manager so it could be a key component to your overall management solution.
There is a lot of emphasis on property steps and questions to ask when hiring a Property Manager, and these are important, but many of them overlook how much emphasis should be put on the on-boarding process. Now you know what to ask about and look for when you meet your property manager.
Written by Tony LeBlanc.
Tony LeBlanc is a zealot when it comes to managing your property. His first gig? He was a precocious teen and live-in superintendent. Yes, that’s right, he was practically born into the industry. His resume is lengthy, but here are the highlights: A successful entrepreneur two times over, income property owner, and a competitive body building software engineer with a financial background that would fluster your financial planner.
Ground Floor PM is a strategic firm born of his desire to create wealth for property owners. With his solid financial acumen, and technical skills, he’s created property ecocystem, with to the minute financial reporting and forecasting. His reputation for anticipating trends and recognizing value are renown. Prepared to act as an advisor on future investments, he sees himself as a partner in your long-term growth. How’s that for a service perk?
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