Hiring a Property Manager? Be Sure To ask These 5 Questions
By: Shannon Watson •
As an international investor in residential real estate, one of your very first decisions—even before the closing on the property itself—is how you intend to manage your property, given that you’re not likely to be close enough to do so on your own. In fact, it may be the most important choice you make, second only to choosing the actual property. Your property manager can make or break your ROI based on their attention to tenant screening, repairs and maintenance, and satisfying any conditions of your rental’s HOA rules. As you search for the best property manager for your property, pay close attention to your candidates’ answers to these five questions:
1.Are you licensed?
Having a licensed property manager means that your rental will be managed according to state regulations, particularly regarding security deposits and rental income. Licensing ensures that your manager has passed an approved course in property management and has passed the state’s licensing exam.
2.What are your management fees?
Industry standards tend to range from 8-10% of the monthly rent. Amounts significantly more or less than this could indicate a problem.
3.How often will you conduct an in-person inspection of my property?
Repairs and maintenance issues are less expensive when caught early. Unfortunately, many tenants don’t report leaky faucets, mold, or other problems because they are afraid of being charged for the clean-up or repair. Good property managers will not only inspect the interior at least once a year and the exterior once per quarter, but they also will send you detailed reports on their findings (preferably with photos as documentation).
4.How do you handle accounting, particularly payment of rent and maintenance/repair costs?
As an investor, you will want to know when you can expect to receive the rent payment (minus the management fees, of course). For example, if your tenant pays rent on July 1, do you receive your portion during July or in August? Also, ask for a sample of a monthly statement: are repairs and other expenses appropriately itemized?
5.Can I get a copy of the property management agreement?
Take the time to go over the details of the management agreement (and be sure to get it in your native language, if the agreement is in English and that is not your primary language). Is there a termination clause? Will the property manager keep any pet deposits, late fees, or other “extra” payments? Read the fine print and know exactly what the agreement entails before signing on the dotted line.
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