Top 10 Questions to Ask Before Hiring a Utah Property Management Company
If you own rental property in Utah and are considering hiring a property manager it is a wise idea to prepare some questions before talking to anyone on the phone. Asking strategic questions will give you a good baseline to determine which companies have sufficient experience and qualifications to manage your rental home or apartment.
The questions below are designed to interview Utah property managers, but may be helpful even if your rental property is outside Utah. You’ll notice that one of the questions is not “What do you charge for your services?’. While pricing should be a factor in determining which management company to choose it should NOT be the only factor. You should be focused more on value than price. We will discuss Price vs. Value in a future post.
The following questions should be asked to whomever you are working with at the property management company to evaluate their experience and qualifications:
1- Will you or someone else be directly responsible for managing my property?
This question is important as many property management companies may have someone other than your property manager selling their services. It may be a sales rep, secretary, owner, etc. If your entire perception of a company is established with someone you will only work with during a few initial calls or meetings, it may be best to ask to speak with the person who will directly oversee the management of your property. Sales reps may be compensated on their ability to get you to sign a management agreement rather than truthfully helping you understand how the company operates.
Be wary of companies that will not allow you to speak with or meet the individual that will be responsible for directly overseeing your property. If they won’t allow you to speak with this individual it most likely means that they are inexperienced and/or completely overwhelmed. Either way it could put you in an extremely vulnerable position if you hire such a company.
2- Which style of property management do you use: portfolio or departmental?
This question is used to determine how you are going to interact with the company and the potential difficulties you may encounter in getting information from the company.
Portfolio style property management companies have a specific property manager or account manager that is responsible for overseeing your property. In this style of management you should have one main point of contact with the company which is usually the property manager. This style of management typically allows you easier access to information as your property manager should know all the details of your property, tenant, finances, etc. I personally prefer this style of management from a customer service perspective. It will allow you to get to know the individual that is overseeing your property and they are accountable to you as the property owner. However, there may be certain drawbacks to this style of management depending on the workload (portfolio size) and experience level of the property manager to whom you are assigned.
Departmental style property management is usually found in companies that manage a high volume of properties and they are looking for the most efficient and profitable style of management to benefit the company. They are usually less concerned about client experience. Departmental style companies will have several departments that function independently of each other. A typical departmental company may have a leasing department, accounting department, new client department, customer service department, etc. However, a true departmental style management company typically doesn’t have a main contact or single individual that is responsible for overseeing your property. If you chose a departmental style management company it may be difficult to have a simple question answered as you may be bounced around from department to department. If a problem is discovered each department will look out for itself and try to pass the blame onto another department. While you may find lower fees with this type of company you rarely find accountability or excellent customer service.
You may find some management companies that claim to have a hybrid management style. This means they have combined the portfolio style with the departmental style. Hybrids are typically more of a portfolio style as long as you have a single individual responsible for overseeing your property, who acts as your main point of contact. This individual may internally work with other departments, but you should be able to hold your property manager accountable for the performance of your rental property..
3 – How many UNITS do you oversee? (Ask property manager directly)
You may be inclined to ask home many units or properties does the company oversees, but that doesn’t tell you anything about the workload of your specific property manager. I like to ask this question directly to the property manager that will oversee my property, so you really get a feel for their workload.
A unit is equivalent to a door, so a single family home would be one unit, a duplex would equal two units, or an apartment complex with 50 apartments equals 50 units. It is important to understand the number of units the property manager oversees, so you can appropriately determine your property manager’s workload. Ideally it is best to have a property manager that oversees between 50 and 75 units. A more experienced property manager may be able to handle closer to 100, but companies that have their property managers overseeing over 100 units are typically overloading their managers and are more concerned with their bottom line then they are with providing their clients with a high level of customer service.
4- How much experience do you have? (Ask property manager directly)
It is important to understand the level of experience that your potential property manager has. The number of years the property management company has been in business has little impact on the experience level of the individual directly overseeing your property. Most property managers will answer this question in measurements of time: “I have 2 years of experience”. You may also want to follow up with them and ask how many years they have worked in the property management industry and what is the size of largest and smallest portfolio they have managed. This will give you a better understanding of their experience.
Be cautious in doing business with property managers that give vague answers or property managers that only have one or two years of experience. It takes one or two years in this business just to become competent and another two or three years to become good at what you do. Property manager is a high stress position and most management companies struggle with turnover in this position. You should seek a Utah property management company that has low turnover with experienced property managers (5 years or more in the industry).
5- Can I get references from 2 or 3 current clients?
This is an important step in properly vetting a property management company. It is easy for a company to claim that they provide great customer service, but it is good to hear this from a few of their current clients. It is best to speak to clients that work with the same property manager who will oversee your property. If possible it is best to call the references rather than send them an email as you will get a more candid response. You’ll want to take some time to prepare a few questions in advance, so that your time with the references is not wasted. You may ask items like: How long have you been a client?; What do you like best about working with [property manager’s name]?; What is one thing you wish the property management company did differently?.
6- Who answers or responds to leasing inquiries?
The trend in property management right now is outsourcing. Many companies are looking to save time and resources by hiring third party call centers to answer their leasing calls and to respond to leasing emails. In my opinion it is best to have an in house leasing department or even the property managers themselves respond to leasing inquiries. It is hard to sell potential renters on a particular property or unit if you have never been to the property. You may also want to ask a follow up question to find out when a company answers their leasing line. Leasing is not a Monday through Friday 9 am to 5 pm task. Leasing calls should be answered during evenings and on Saturdays as well. Companies that advertise they answer leasing calls 24/7 are usually outsourcing to call centers. I don’t know how valuable it is to have someone answer a leasing call at 3 am if they can’t answer any specific questions about a property and have to rely on a script. Leasing calls should be answered by individuals that have seen the property and can answer questions about the property, lease agreement, and application process.
7- What type of inspections will you conduct at my property?
Inspections are an important part of providing quality property management for clients. You want to make sure that your property management company offers the following types of inspections:
Tenant move-in/move-out Inspections – these inspections are used to document condition of the property before a tenant moves in and then again after the tenant moves out, so they can be charged for any damages they may have caused during their tenancy. These inspections are most effective if there is a form accompanied by pictures. Videos are difficult to compare side by side. Many management companies are not very effective at these inspections as it takes time to do them properly. It is ineffective to have a property manager do a walk-through inspection and take “mental” notes on condition.
Tenant Occupied Inspections – these inspections should be completed 2 to 4 times during a 12 month lease term. The purpose of these inspections are to ensure the tenant is honoring the lease agreement and maintaining the property or unit. It is also to ensure that any maintenance that the owner is responsible for is addressed. Companies that inspect more than 4 times a year run the risk of annoying tenants and causing unnecessary turnover. There must be balance between protecting the property and honoring the tenants right to quiet enjoyment offered by the lease.
The inspections should include a form and photos and follow up with the tenants to correct any lease violation or maintenance issues that need addressing. Documenting lease violations or maintenance issues without proper follow up is pointless.
Be cautious of management companies that claim they complete “drive-by inspections” whenever they are in the area, especially if this is the only tenant occupied inspections they offer. A good management company should be able to explain their inspection schedule to you and explain what steps they take if they find lease violations.
Vacancy Inspections – these inspections should be conducted on a regular basis when a property is between tenants and is vacant. These inspections are particularly important on single family homes to ensure the property is safe, secure, and looks good for potential tenants. One to two vacancy inspections a week should be sufficient.
8- Ask the property manager some situation based questions.
You will want to ask the individual that will oversee your property a few questions dealing with different types of situations to test their knowledge and expertise. You may want to ask the following: What would you do if the tenant brings an unauthorized pet onto the property?; What would you do if the tenant doesn’t pay rent on time?; What would you do if there is a lease violation discovered during a routine inspection?; What would you do if you receive a neighbor complaint about a tenant?.
These types of situational questions will allow you to evaluate the experience level of a property manager beyond them telling you they are experienced. You will want to make sure they have clear and concise answers as if they have dealt with these issues many times. It should be relatively easy to tell if someone is inexperienced as they will stutter and stammer and their answers will sound made up. Listen to the confidence in their voice more than what they are saying as this will help you determine if you trust them to oversee your property.
These types of situational questions should be easy for any seasoned property manager to answer.
9- What happens if a tenant does not pay rent? (Ask property manager directly)
While this question was also one of the situational questions it is especially important because this deals directly with you receiving your payment from the management company. A property management company can’t pay their clients if they have not collected rent from the tenants. This question is more of a procedural question to ensure they have solid procedures in place. A quality management company with seasoned property managers should be able to recite to you from memory their policy on rent collection.
You want to make sure there are specific deadlines and consequences for due dates and non-payment of rent. If a tenant can’t afford to pay rent any longer it is best to get them out as quickly as possible and in a manner that is legal. Utah property managers should include in their rent collection policy when they post a “3 Day Notice to Pay or Vacate” and when they turn the tenant over to their attorney for eviction. You may want to avoid companies that don’t have a set policy or say they deal with late rent on a “case by case basis” this is a strong indicator that they are not looking out for your financial interests.
10 – When and how do I receive my distribution and statement?
This questions is to assess two important items. First, how do you get paid as a client and second, is the property management company utilizing current technology.
It is always best to receive your money as soon as possible, so you will want to make sure the company you select processes your payment during the first half of the month. Make sure that you can receive your monthly payment electronically as this will dramatically decrease the amount of time it takes to receive your payment. Physical checks can take several days to reach you and then you have to make a trip to your bank which can take even longer.
Your monthly statements, which should detail your income and expenses for each property being managed, should be delivered by email at the same time your monthly payments is issued. Your statement should be generated by computer and should be thorough enough for you to determine the financial position of your investment.
You may want to ask a follow up question to see if you can access your account with the property management company online. Most capable property management software systems should have an owner portal. You should be able to login to your portal to see your current and past statements, review lease agreements or management agreements, see open bills or maintenance items, etc. If a management company you are considering doesn’t offer these things it probably means they are behind in technology or they are too small to afford such technologies. In either case you will want to avoid working with such property management companies.
This list is by no means a complete list of questions that should be asked when evaluating a Utah property management company, but if you ask these questions it will give you great insight into what type of company you are considering
If you are interested in learning more about ProRenter’s property management services you can click on the link below. We offer FREE consultations and rent analysis.