Many real estate investors will hire property managers to handle the regular maintenance and rental responsibilities for the investment property they own. Finding a great property manager involves asking the right questions when you interview for the position. You want a property manager who has the experience and education necessary to protect your investment.
Property managers also need to understand the landlord-tenant laws for the state where the property is located. This can help the property owner avoid costly legal mistakes.
Property owners can be investors or they can be absentee owners. Such absentee owners include members of the military who are temporally stationed on overseas duty bases.
Property Manager Experience
Managing rental property involves more than just receiving the rent payment and finding renters. They need to understand the local rental market and the landlord-tenant laws for the state. Property managers can oversee both residential and commercial properties and some may specialize in one over the other. If you own commercial property, you need a manager who has experience with these specialized leases.
The first thing you'll want to determine is whether the prospective manager has ever actually managed rental property before. This area of questioning should give you an understanding of the property manager's background. You'll decide from their answers if they have the experience that is the right fit for your needs as an investor or property owner.
Find out how long the applicant has worked in property management. Ask about the number of client properties they are currently handling and the types of properties they are overseeing. Some managers will handle dozens of accounts and you don't want your investment to get lost in the shuffle. You may also shy away from someone who has never managed property before.
Some managers work as part of a larger group or company. In this case, you will be looking at the history of the company as well as the individual manager. Discuss how available they will be when you need to discuss the property. You will probably want a manager who is working full-time as a property manager.
Ask for references from other clients, both current and past.
If you own a 10 unit building and the manager has only had experience with single-family homes, they might be too inexperienced for your specific needs. Also, if you have a commercial property and the manager has only handled residential needs, they may not be the best fit.
This next area of questioning involves a prospective manager's education. Questions about college degrees and higher education are important, but your focus here is to learn about their education specifically as a property manager. You want to know if they have acquired the knowledge and training necessary to obtain proper certification.
Ask if the manager has a real estate broker or property management license in the state. Most states require property managers to be licensed before they can show apartments.
Property managers may have various certifications as well. These can include:
- Institute of Real Estate Management (IREM)
- National Apartment Association (NAA)
- National Association of Residential Property Managers (NARPM)
- Community Associations Institute (CAI)
These organizations offer education and training courses and provide certification.
Knowledge of State Landlord-Tenant Law
Property managers need extensive knowledge of state landlord-tenant laws—especially when it comes to rental residential properties. This item is non-negotiable. This individual is representing you, and any missteps on their part could result in lawsuits against you and your property.
Make sure the manager understands the city, state, and federal laws for property management and dealing with tenants. Ask about their experience with federal fair housing laws. You may want to ask if they have ever had occasion to evict a tenant and see how they handled that situation. See if they have ever been involved in any lawsuits against property owners.
Property managers need to know about safety codes as well. They must know the type and number of exits and smoke or fire detectors required for a property. In some portions of the country, they may also need an understanding of radon detectors and requirements for safety window bars.
Property managers also need insurance to cover liability. Ask your candidate for a copy of their liability coverage showing effective dates and coverage.
Keep in mind that yes-and-no questions are easy to answer dishonestly. You might start with them, but be sure to press on and ask for more specific, detailed information. And be sure you know the answers as well so you know whether the applicant is correct.
Filling Vacancies and Retaining Tenants
Your manager will be interviewing possible tenants or working to maintain current tenants. They must understand state requirements for securing security deposit fees and how to return those fees when a tenant moves out.
You want a manager who can find tenants and get an empty property filled as quickly as possible with another suitable renter and while abiding by all laws. If the property manager has a high tenant turnover rate or a tough time filling vacancies, they are probably not the right person for the position. Ask about their process for screening tenants.
The type of investment property you own will determine the type of renters you will be seeking. Commercial properties typically lease for longer terms than do residential properties. You may ask the manager how long it typically takes them to fill an empty unit. Find out where they advertise the property or if they keep an updated list of possible tenants.
These questions should give you a clear and accurate picture of an applicant, even if you ask just a portion of them, tailoring them to your needs, your property, and your concerns.