Your Manager Will Handle Maintenance

Category: Finance, Real Estate.

Finding a good property manager is like any other vendor search- it s worth your time up front to make the best possible choice.

Consider: Your property manager will be receiving rent and fees on your behalf. That s because a bad manager can cost you a lot of money, up to the entire value of your rental property investment. A crooked manager could steal you blind. A na�ve or slipshod manager could bring in bad tenants who trash your building. Your manager will be in charge of finding new tenants. Your manager will handle maintenance.

Here s a thirty- question checklist for interviewing prospective property managers. A greedy manager could charge a fortune for simple repair jobs. The answers you get will provide a very solid understanding of each manager s qualifications. Finally, remember that you have to compare managers to others within an area. You can also get an impression of a prospective manager from other cues- I ll explain those at the end. It s possible that none of the prospective managers in one city will match the high standard of your terrific manager in another. The first questions have to do with finding good tenants, which I think is the key to a happy building.

On the other hand, if you can t find a good manager in a city where you plan to invest in real estate, maybe you shouldn t invest there. A building with good tenants tends to have fewer maintenance and other issues. Out of how many total units that you manage? How many vacancies do you have right now? What is the average length of time it takes to fill a vacancy? How do you market your rental units?

Is that average time getting longer or shorter? Do you require an exclusive arrangement for marketing to new tenants? What factors would make you reject a prospect? How does your web site look? Would you accept a tenant who met your qualifications in some areas, but not others? What screening methods do you use?

Which qualifications are most important to you? You want a manager who finds good tenants reasonably quickly. Your manager should follow an extensive screening process, but be willing to accept a" maybe" tenant if the situation is right. He should use a variety of methods to find prospective tenants, such as a web site, newspaper ads, Craigslist postings, signs, flyers and more. You want a look at the web site to make sure that is inviting to prospective tenants, and constantly updated. However, in almost all cases, they will still want a rental fee for moving the prospect into your rental unit.

As for the exclusive arrangement, property managers never mind when you or somebody else finds prospects for them. Make sure you have a clause that if the unit hasn t been rented for some time, and you or someone else you find brings in a new tenant, the rental fee is cut in half. The next questions relate to tenant management. You don t want it cut to$ 0 because the manager will still have to screen prospects. It s just as important to keep good tenants as it is to find them. What is your late rent policy? What does your lease look like?

What other rules do you set for tenants? How does the eviction process work here? What percentage of tenants do you have to evict? How do your tenants contact you? If the manager is really experienced, chances are they ve developed smart rules and policies over time. I recommend sticking with the manager s preferred lease, and rules unless, late rent policy you have a really major objection.

Tenants should be able to contact the manager through a variety of ways during the day, and have an emergency number for off hours. The next questions relate to maintenance. If the manager is always evicting tenants, he s bringing in bad tenants. Which kinds of maintenance jobs are handled in- house? Which ones do you use professional contractors for? Which ones do you use an outside handyman for?

How many quotes do you get for jobs? What are your rules for contractors being inside occupied rental units? How expensive does a job have to be for you to contact me before doing it? Who are your preferred contractors? Almost any plumbing, or electrical job, heating should be handled by a professional. Managers should have a well- thought- out system for assigning jobs to different parties- in- house employees, handyman and professional contractors.

Other jobs, such as paving a parking lot, require special equipment that usually only professionals have. You want multiple quotes for major jobs- say, anything over$ 50You should also have a rule that contractors can never enter an occupied unit- even if the tenant is not home at the time- without a manager s representative being there. But most small jobs can be done by handymen who will cost you less. Finally, you want the names of preferred contractors so you can run a quick check on them. You want managers to know the local real estate world inside and out. The last group of questions relates to experience.

How long have you been a property manager? Can I see some of the other properties you manage? How long have you been a manager in this area? Do you personally invest in real estate in this area? What is your fee structure? Finally, you need to understand your arrangement with the property manager.

How will I get reports? How much notice will you give before terminating a contract? Do you require an exclusive arrangement to broker the property? The manager s fees aren t really important unless they are much higher than everybody else s, or are so high that you really can t afford them. The best way is to get them on your own computer, on your time- as may be the case if they use on- line property management software. Reports are very important because they are your only window into how your investments are performing. You should not accept any exclusive arrangement to broker properties unless they have a limited term.

Also, you should require good notice for the contract to be terminated- at least 30 days. In other words, if the properties don t sell after a certain time, you can re- list with a different broker for no penalty. That gives you time to find another manager. Chances are he doesn t much care about the condition of the properties either. Here are some other things to watch out for: A manager with a messy office or personal appearance. A manager you have a hard time reaching by phone or email.

A manager whom you sense is trying to intimidate you with knowledge. If he won t return your messages now when he s trying to get your business, what are the chances that he ll do better later? The" don t ask stupid questions, I know all about this" approach is often a cover for not really knowing much at all.

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