If hiring a property management company is on your list of action items, you need assurance that the company’s management team delivers what your tenants, your property, and your investment portfolio needs.
Property Management Company Vetting: A 20-Question Checklist
Aligning on these key needs begins with asking the right questions during the vetting process. Here are a few questions we’d like prospective clients to ask, as well as a few you might not have thought of.
- Do you have a list of references? This should be offered before you ask, but at the very least, you need a list of 5-10 property owners you can call directly to ask about their experience with the company you’re considering.
- How many units are you actively managing? Understand this answer in context; a small, local company with hundreds of units under management may be stretched thin, while a larger company managing thousands of units could have tried-and-true systems in place to make sure there are no gaps in management.
- What does your property manager hiring process look like? A property management company that hires exceptionally well and has low turnover has the ability to manage relationships on many levels, and processes that work.
- What services do you offer? Not every company offers what you need, so understand their limitations from the beginning. Feasibility studies, for example, can be an added bonus if you’re actively building your investment portfolio.
- What is your pricing structure, and what other fees can I expect to pay? Unexpected fees can hurt your profit margin, and you’ll need to know what percentage of rent a property management company charges and what extra fees to expect when comparing prospective management companies.
- How do you handle maintenance? Is there a markup? A great property management company will hire and manage maintenance staff in-house, and has access to third-party repair companies they trust in the event they’re needed. Know in advance what you’ll be paying for maintenance services.
- What maintenance reserve do you require? You’ll need to know how much capital to set aside for reinvestment into your property for regular and unexpected maintenance jobs.
- What does your onboarding process look like for new properties? It’s important to know what to expect and who will walk you through getting set up as a new property owner under contract with a property management company.
- What is your average vacancy rate? This is something a great company will know by heart, and be proud to share. Check average vacancy rates in your area to establish a benchmark for comparison. As of August 2, 2023, the national vacancy rate reported by the U.S. Census Bureau was 6.3 percent. That number varies by geographical region.
- Do you have a standard lease agreement? If so, ask to see it. Ask if you have any input in creating a custom lease agreement for your property.
- How would you describe your relationship with tenants? Double check this answer against the property management company’s online reviews.
- How do you attract quality tenants? Ask about marketing tactics, screening tools, and tenant selection standards.
- What is your eviction rate? Renewal rate? A low eviction rate is great and speaks to a quality tenant recruitment process. A high renewal rate means quality tenants stay a long time, which is ideal for any rental property.
- Do you offer a tenant portal? A company that makes it easy for tenants to pay rent will likely collect more rent in a timely fashion. If tenants can submit questions or service requests via the portal, that means better reporting for you and higher renter satisfaction.
- How do tenants contact you? Multiple points of contact means fewer tenants feel disconnected from their management office. That’s a win.
- How would you describe your response time to tenant or owner questions? Typically, one to two business days is acceptable. Taking weeks to respond is not.
- What’s an example of a property issue that you handled well? Listen for attitude, adaptability, and innovative thoughts. Pay close attention to procedures that work well for any situation.
- What type of reporting should I expect, and when? This needs to be clear from the beginning. You need regular updates on your property’s performance, vacancy rates, rents collected, and progress on any large maintenance projects.
- How do you handle vacancies? Are there fees for vacant units? Some property management company policies state that fees are collected on vacant units. If that’s the case, the answer to the first question and question number 9 will be critical in your decision-making process.
- What is your community management philosophy? Here’s where you can get an idea about a company’s approach to community building: events, engagement, and tenant loyalty are key factors in building a successful and happy multifamily community.
We Help You Ask the Right Questions
At Class A Management, we’ve been managing single-family and multifamily homes for our clients successfully for more than 40 years. We think our services and track record are pretty impressive, and we like sharing stories about our communities and developing customized strategies for yours. Reach out anytime to ask about property management company vetting questions, or to set up a time to ask us all these questions and more. We offer the service and experience you need to grow your investment portfolio and value.
