Apartment Investing – 5 Questions to Ask When Interviewing a Property Manager

One of the most important aspects of investing in apartment properties is finding a good property manager. Good property management can make the difference between a great investment and one that could cost you a lot of money. It is essential to your success.Before you interview potential management companies, I would highly recommend that you ask the following folks for their recommendation:
1) Your Commercial Broker
2) Other Property OwnersWho have they used in the past? Who have they had success with? Which companies should you avoid?These folks will be your best source of initial information in finding potential property managers. Many times, one or two names will come up over and over – even in larger markets. This can really help narrow your search to the top candidates.Now, before you hire a property management company, here are 5 questions to ask when interviewing their managers:
1) Property Management Fees
Of course, as investors our first question is how much will their services cost. Property Management Fees can range from 5% to 10% and even more. Be sure to have a clear understanding of what their fee includes. For example, are there any extra bookkeeping or accounting fees above the base cost?2) Property Management Agreement
How long will the initial contract for services last? Is there any cost associated with moving to a different property management company, and if so, how much? How much notice is needed to cancel their service? Is there a grace period in the beginning where you could change property managers without incurring a penalty? It is always a good idea to have your attorney do a once-over on the contract before you sign. If there is something in question, don’t be afraid to ask.3) Reporting & Accounting
How often will reports be sent to you? In what format – email, mail, fax? How often will they send you a check for the difference in profits? Do they have reserve account requirements for repairs?4) Maintenance Expenses
Do they have their own maintenance folks on staff, or are they sub-contracted out? What are their rates for different services? Make sure you also have a clause in your contract that the property manager must get approval for any repairs above $X. Of course, based on your individual property and circumstances, this amount will vary. But it is a good idea to get approval for larger repairs first.5) Resident Screening
What does their rental application look like? What does the lease look like? What are the rental requirements? Do they accept Section 8 or other forms of government assistance for their residents? What is their eviction process, if needed, and how long does that take. What does that process cost?As you can see, I have actually given you many more than 5 questions to ask a property manager. There are truly a myriad of questions beyond this to ask up front when hiring a property manager.

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