You recognize the benefits of hiring a property management company and now it’s it time to find one. The investment in time now to find the right partner, will save money and headaches later.
We recommend interviewing at least three companies.
Here are some key interview questions to ask that will help ensure you are hiring a highly qualified management company. We’ve also included our answers to the questions, to help you get a feel for our company.
What is their tenant screening process?
Strong tenant screening is the best defense against problem tenants and protects your cash flow and investment value. When a company screens tenants, they should run an extensive background check, including credit and criminal history, eviction history, landlord references, and employment verification. A management company should not rely on applicants to pull their own credit history.
At Gordon James, we handle the entire screening process using a legally vetted, time-tested and systematic process that includes all of the above checks for every applicant. Due to our comprehensive screening, we’ve never had to evict a tenant.
How many evictions have they have had?
Evictions are costly and time consuming. If a company has dealt with many evictions, it is a sign their screening process is ineffective or that they rush to fill vacancies by placing any tenant without enough regard for qualifications.
We have not had a single eviction since we began managing properties in 2008. This is due in large part to our stringent screening standards. If the screening process reveals any red flags, they disqualify the applicant. Our structured screening process protects both owners and our company.
Do they have preferred vendors? And do they require that vendors add them as an additional insured?
When management companies work with preferred vendors and contractors, owners and tenants typically get faster service and repairs. Management companies can also get volume discounts with these providers and pass the savings on to owners. Companies should mandate that vendors add them as an additional insured under their policy, which provides additional protection to the owner.
We have worked with many vendors over the years and have formed relationships with licensed and insured companies that provide the highest level of service for a reasonable price. Our preferred vendors give us priority, so any issues that come up at properties we manage are dealt with quickly. We also receive preferred pricing, which we pass on to the owner. Our preferred vendors name us as an additional insured.
How quickly does the company pay owners?
Understand how and when you will receive your rental proceeds, including what day of the month they issue payment. Does the company mail checks or use direct deposit? Can you access your banking information through an online system that allows for easy updates?
Our company pays out all owners by the 5th of each month and electronically deposits rental proceeds into the owner’s preferred account within one business day. We provide online access to owners that allows 24/7 ability to view reports and records and update banking information.
Does the company require the owner to keep a reserve?
Some companies require that owners provide a reserve equal to at least one month’s rent to cover bills, repairs and other expenses. Others will pay bills and expenses from rental proceeds and have adequate assets to cover costs until the next rental payment comes in, a sign of financial security.
Gordon James Realty does not require that owners keep a reserve.
How much information will they provide about your rental and how will they keep you informed?
Does the company provide regular communication and convenient-to-access information about what’s going on with your rental, including maintenance requests submitted, income, expenses and receipts? Or does getting this information require owners to call, email or wait for mailed monthly reports? Will they be forthcoming with any information that’s important to you?
We believe in total transparency with our clients. All maintenance requests, income and expenses are easily viewed 24 hours a day via our online portal. Our main priority is to make it as easy for you to access any needed information about your investment.
Does the company charge markups on contractors’ invoices or have other fees?
Find out about any fees the company charges to ensure you get an accurate picture of what their services will cost. Some companies add a markup to contractors’ invoices, usually adding at least 10 percent to the owner’s total bill for the service. Some companies may have a lower overall management fee, but compensate by adding fees for many management tasks.
We’re committed to straightforward pricing, so our fee includes all our services. We don’t mark up invoices. In fact, we pass on the savings we get from our preferred vendors to our owners. Our job is to help you maximize your investment income.
How is the management relationship with the company structured?
Some management companies assign a dedicated property manager for each owner or property. At others, owners work with a team of management professionals. There are pluses and minuses with each approach, so determine
Our company uses a hybrid approach. We separate leasing and property management into two distinct divisions, so we can provide extensive specialized training to personnel in each role. We assign a dedicated account manager for leasing and property management to each owner. However, we also work as a team, so our leasing and management teams collaborate to provide the highest level of expertise and ensure our great service never takes a vacation, even when your dedicated manager does.
Are they licensed?
Most states require that property managers be licensed, but requirements vary by state. To obtain the required license, managers need to be well versed in landlord-tenant laws and other applicable regulations as well as professional ethics.
We are licensed to manage properties in Washington DC and Virginia. We have both licensed managers and Realtors on our staff.
Will they allow you to use your own contractors?
If you have a trusted plumber or electrician, can you use them? Or does the company require that you use their preferred companies? Even if you don’t have contractors you use, having the option to get another quote or opinion for work is valuable. The freedom to make your own choice, if desired, can give you more confidence.
We have in-house maintenance staff and preferred vendors on call 24-7. If an owner wants to use their own contractor, we are happy to accommodate and work with their choice of company. We don’t believe in locking owners into our vendors or contractors.
Is the company available 24 hours a day to handle emergencies?
If the furnace breaks down in the middle of winter, how quickly will they be able to respond to the request and arrange for the needed repair? Round-the-clock accessibility for emergencies helps ensure compliance with laws specifying response times for certain repairs. And, it helps keep tenants happy and protects your property from further damage.
We have clear protocols for after-hours emergencies that allow us to respond quickly. We have contractors on call 24/7 to handle leaking or malfunctioning water heaters and furnaces, main drain backups, flooding and other emergency problems.
Does the lease follow local and federal law?
Ask the company how they ensure their contracts comply with all local, state and federal laws. As the owner, you are legally responsible for any legal breach, so ensuring the company will stay up-to-date is critical.
Our company meets with an attorney quarterly to review all agreements and leasing contracts. Rules and regulations change frequently, and this review ensures that as our owners’ agent we are abiding by all laws.
What are the company’s policies and practices regarding fair housing?
Make sure the company’s leasing practices won’t lead to federal discrimination charges against you. Ask about their leasing process and what safeguards they have in place to prevent violation of fair housing laws. Test their knowledge by asking about state and local fair housing laws, too.
We never discriminate. We understand and abide by all federal and local fair housing rules and regulations, and our systematic screening process requires the same checks for all applicants every time. The lease agreement we administer includes all necessary provisions required by state and federal law. We partner with Transunion and Experian to screen our applicants. If a tenant is denied for any reason, we inform them of their right to obtain a copy of their report by contacting these agencies. This process allows us to remain compliant.
What are the terms of the management agreement and how can owners terminate it?
Does the company offer a way you can be released from the agreement if you’re not satisfied? Make sure you understand the terms and conditions for terminating the agreement to protect yourself.
We don’t believe in locking owners into a year-long commitment. Our agreement includes a 60-day opt-out clause for owners for any reason. This keeps the pressure on us to make sure we are doing our best to serve the need of owners and their tenants.
Does the company sell real estate as well as manage properties?
If they do sell real estate, are you required to use their agent if you decide to sell? If the tenant wants to buy the property, does the management agreement state that the management company will get the commission? Management firms that also act as real estate brokers can have a conflict of interest. Make sure also you understand where the company’s true expertise and priority is: selling real estate or managing properties.
We have licensed Realtors on staff that can assist in the sale of your property, but we don’t mandate that you sell your property with us. We believe in giving owners the option to choose the path that best suits them. Our hope is that an owner who is satisfied with our service will consider us when hiring a real estate agent.
How will the company determine the market price for your rental?
Will their market analysis be based on their own experience or on comps? Do they search Craigslist, Zillow, the MLS, internal comps or a combination to arrive at a rental rate?
We consider the 300 properties we’re managing, but more importantly, we believe in looking at market data for all available properties. This approach allows us to capture a wider view of the market and current market conditions to more accurately price your property. By looking at both internal and external data, we are able to find the most reliable comps.
How will the company advertise your property?
Have the company walk you through its marketing plan, including where advertisements will be posted. Ask whether they take professional pictures to include in advertisements.
Great property photos are crucial for leasing homes, second in importance only to setting a fair market rental rate. Renters now have access to pictures of hundreds of properties as they search online, compared to days when brokers would show them only a select number of homes. Pictures are the key to capturing potential tenant’s interest and getting them in the door. We advertise on more than a dozen sites, making sure ads target likely renters and highlight the property’s strengths.