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Your Landlord Resource Podcast
Your Landlord Resource Podcast
50+ Must Ask Questions When Hiring a Property Manager, Part 2
This is part 2 of last week’s episode we discuss over 50 questions to ask when you are interviewing a property manager. If you have not had a chance to listen to part one, STOP. Listen to Episode 39 before continuing to this one.
In this episode we go over questions that pertain to leases, tenant screening, maintenance and inspections, move-in/move-out procedures, including marketing and renewals! Evictions and tenant communication questions are in there too!
We not only give you the questions to ask, but we also discuss WHY they are important to you as a rental property owner. This is key because each of you has different aspects of property management that are important to you.
We made sure to share personal stories of not only how we manage our own properties, but how we manage properties for others and several issues we have found while using a property manager for our out of state property.
A LOT of good stuff in this episode!
BONUS! We created a Property Manager Questionnaire of all the questions we suggest you ask so you can just blast it out in an email or use it as a reference if interviewing a property manager in person!
LINKS
👉 YLR Episode 7: A Guide to Move Out Procedures and Security Deposits
👉 YLR Episode 20: The Nuts and Bolts of Residential Rental Property Insurance
👉 YouTube Video: Troubleshooting a garbage disposal. We include this link this in our tenant binder and send it to them when they text for help.
👉 Hemlane: A great alternative to using a property manager when you want some involvement in the management process. FREE 14-day trial!
👉 Read our blog: Tips on Taking Professional Looking Rental Property Photos
Connect with Us:
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👆Click HERE for our FREE Landlord Forms and Doc’s
🤳Text Us: 650-489-4447. We love questions and love letters!
📩Email us at: Stacie@YourLandlordResource.com, Kevin@YourLandlordResource.com
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This is where you are going to ask about the frequency of periodic inspections that they do. Every property manager should have a schedule for visiting the property. A good property manager will check in with the property and tenants even if they haven't heard from them. Because many tenants won't report needed repairs and damage, and inspections help to avoid any costly surprises when the tenant moves out. Welcome to your Landlord Resource Podcast. Many moons ago, when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lacked confidence and the hands on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast forward to today, Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire. All while building a streamlined and profitable rental property business. This is your Landlord Resource Podcast. Hey, hey there, landlords. Welcome to the Your Landlord Resource Podcast. This is Stacie and I'm here with Kevin, and where we usually do a little back and forth in the beginning of the podcast, we have a lot to go over today. So I think we're going to jump right into it. Today's podcast is part two. We are discussing the 50 plus questions to ask a property manager before you hire them. If you haven't listened to part one that dropped before this one, stop, go back and listen to that one first. So you can have a better understanding about what we're talking about today. As promised, there is a special promotional offer, which we will tell you more about at the end of this podcast, so stay tuned. And I think Kevin's going to pick it up where we left off, which I believe is questions to ask about leases and tenant screening.
Kevin:Yeah, so let's get to it. First thing you want to ask them is to walk you through the rental criteria you use for screening tenants. Who decides to accept or deny a tenant? So, 95 percent of the time, the property manager is going to handle all of this. They likely know the criteria that the area can handle better than the landlord. Typically, these criteria are a mix of earning power, reference checks, a credit check, and a background check. It is required by law that all prospective tenants be held to the same rental criteria. And most property managers will select the first qualified applicant and move on. You'll also want to know how long does it take for them to approve tenants and have a lease signed. As we mentioned in the previous episode, It can take us two to four days to fully process an application and have an answer. This gives you an idea of how long the unit will be vacant. Now this is one we know we had a problem with, but you should know if you have any say over their standard lease agreement. Of course, the answer to us was no. So here's the deal. As the property owner, you should go over the lease agreement the property manager will be using. You will be held liable if the lease agreement is legally invalid. When a lease was renewed recently, we read it over and what we found was language in our lease that was illegal. We understand what they were trying to say. But the exact way it was written indicated that deposits would not be returned under any circumstances. And that my friends is highly illegal. You have to be able to show and prove what those security deposit funds are used for and can't just automatically keep them. So, we had to notify them that we did not want that line in any of our leases.
Stacie:Yeah, this goes to show you that some inexperienced property managers will cut corners and not use an attorney to look over their lease to advise them if something's incorrect. And the bottom line is you want to request a copy of the lease that they use before you sign on because that lease is created on your behalf and you can end up paying some serious damages if there's something illegal in it.
Kevin:Yep, send that lease to your attorney and have them look it over to see if anything appears off on the lease. Okay, so moving on, you want to ask them how they handle the security deposits. So, who holds onto it? The PM or the landlord. If the property manager, where do they hold it? In a trust account for the landlord?
Stacie:Yeah. So shameless plug, hop in real quick. If you have not listened yet, we did a podcast on the move out procedures and how to handle security deposits. I think it's episode 7. We will link it in the show notes if you want to go back and give that a listen.
Kevin:Not shameless. It's just good information for landlords to know. The next thing you want to ask about is their eviction process. Don't spend a lot of time here because the whole goal is to hire someone to place a great tenant where this is very unlikely to happen. But you do need to know the basics like how many tenants have you evicted in the last year. This can be a red flag because if it's a lot, there may be an issue with their application vetting process. What's your process for evictions? You want to know if they hire this out or handle it in house. As we've mentioned before, you'll want to know if eviction is included in your monthly fee or not because evictions are expensive. Likely, the notifications of late rent and pay or quit notices are included, but once it gets into a formal eviction, you'll probably have to pay an additional fee for that. Which is important to know because you may prefer to just offer cash for keys or do a tenant buyout instead. This is why it's important to know about the process and the fees. Okay, this next one is important. You'll need to ask them what their definition of rent ready is and how long does it take for them to turn a vacant unit so it is rent ready. It takes time to get a property ready to rent out. Two things are important here, time and turnover procedures. A shorter turnaround time is better as it allows for renting the property faster. Minimizing vacancies and maximizing rent collections. But, if the property manager claims they can turn over a unit in just three days they probably aren't doing a very good job of inspecting and ensuring systems are maintained to keep the unit in good condition for the next tenant. See if they have a detailed plan for turnover and a timeline to get the property ready for the next tenant.
Stacie:Yeah, I'll be honest. Our turnaround time can be anywhere from a couple of weeks to a month. And the reason being is many of our tenants stay for a few years and the wear and tear is much greater than someone who only stays a year. Here's a case in point. We had a tenant move in after a guy who had been there for six years. Before he moved in, we did quite a bit of work and upgrades to that unit. We replaced old lighting and plumbing fixtures and put in all new appliances, new window blinds, carpet, all the good stuff. The new guy only stayed one year. So when we had to flip it, it only took us about a week before we were ready to show it. We got a new tenant signed and in there within another week. So our turnover time was only two weeks. So keep this in mind when you talk to the property manager about it because their answer may be, it depends. The next question is one that we have some things to say about and it's lease renewals. You'll want to know if the lease automatically renews and what the renewal policy is. Here's the deal. You want to do whatever you can to keep a good tenant in your unit. But you still have to do some work to verify that all is well. You'd want your property manager to be checking their income to make sure they still qualify to rent from you. Because these days people can change jobs often. This is not to say that the income level changes, but sometimes it might so it's good to know that they can still cover the rent okay
Kevin:Which is what I suspect happened with that tenant that added a couple of roommates mid lease in Idaho There's no way to know if she had financial troubles at renewal now, but I guess kudos to her for handling the situation. I just would have liked to have been privy to that change in lease terms is all.
Stacie:Yeah, well, some property managers will just automatically renew a lease, but that's not a great idea. You should be looking at the market rents and seeing if there is room for an increase, as well as looking at their payment history and inspection reports to see if the tenant is truly someone you want to sign back on for another year or not. All right, next up, you want to ask, how much move out notice do you require? And do you do a pre inspection before the tenant moves out? Typically, tenants need to provide 30 to 60 days notice before they vacate a unit. And offering a pre inspection before move out is required by law in California. We're not sure about other states here. A pre move out inspection is something performed about two weeks before the tenant vacates and you offer to walk through and show them potential issues that may be deducted from their security deposit.
Kevin:So let me clarify for the listeners, a pre move out inspection is not required. We as landlords and property managers must make the offer for the pre move out inspection, but if the tenant chooses not to have one, that's all right.
Stacie:Correct. So, for instance, we have a policy about holes in the walls. We will walk through and notate about how many and where they're located. One, because we don't allow the tenant to fill the holes on our textured walls because it takes a bit of skill to do that correctly. And two, this is so we will be able to plan how much work that we have to do before painting the unit. So this premoveout inspection process not only helps us plan for the turnover by ordering any product that we need, we can also get the right tradesmen in place and on the books to get the work done. But, it also helps the tenant know what they're looking at for security deposit deductions, so when the adjusted statement comes, they're not surprised and shocked.
Kevin:And in many cases there are circumstances where they can remedy the issue themselves. We require the property be returned to us in the condition it was received And we hand them an immaculate unit.
Stacie:Yes, we do
Kevin:So when we do this pre move out inspection, we are showing them the crumbs in the drawers, the dirty oven, the grease and the dust on the cabinets that all need to be cleaned before they hand in keys.
Stacie:And we do send them a list of charges that will be deducted from the security deposit if certain items are not cleaned. Along with that, we send the contact information of our cleaning crew, who know exactly how we want the unit cleaned, and encourage the tenant to hire them so that they can get the cleaning part of the deposit, if not all of it, returned. And this leaves us in a place where we can work with the cleaning crew so we can get in there and do a day or two of messy work like pulling carpets and painting before they clean. Then when the cleaning is completed, we're good to go on starting unit showings. It's a delicate dance, but one we've been doing really well lately. And one thing I suggest is not to show the unit when the old tenant is still living there. If they're not clean people or they have pets or their furniture is comprised of a bunch of miss-matched stuff not that there's anything wrong with that, but it makes it hard for the next tenant to imagine themselves living there. All right, up next, you want to ask How quickly do you fill vacancies between tenants? Now where you want them to schedule showings and start taking in apps as soon as possible, be mindful if they say it's just a few days. You may question the quality of the tenant that they have placed and if the vetting process is good enough. Again, you don't want to just get someone in there to keep money rolling in and then have them default on rent payments and have to go through an expensive eviction process. On the other hand, if they say it's a month, you're going to want to know why it's so long. You also want to ask them what their procedure is for payments when placing a new tenant. When a new tenant signs a lease, we ask for the security deposit up front, as well as any prorated rents before we hand them the keys. Okay, this next one we've already discussed a little, but you should know how they determine what rent to charge for the unit. If you're not familiar with the area, you're going to need to lean on your PM a little bit here. One problem we have is that they may tend to keep rents low so they can draw in applicants and turn the unit faster. And we're all for quick turnover, but keep the rents just below market rate, not one or two hundred below what comparable units in the area are getting, just so you can get some income rolling in again. The next one is super important, so listen up. Ask them if they take photos of the property before and after the move in and move out. Because they should, and this is very easy for them to do. You'll need this documentation of the property's condition should any disputes with the tenants arise. And the same goes with any inspections, including mid year or periodic inspections.
Kevin:Yeah, and here's a tip. Make sure they don't take videos. Often it's hard to see detail of issues on video, plus most small claims courts only allow still photos that can be printed out. A judge is not going to take someone's phone and watch a two minute video along with commentary about the issue. Most of the time, each side only has two to three minutes to defend their position, so a few still photos to present is the way to go. Something that is relatively new is if a property manager will offer a tenant placement guarantee. If the tenant is evicted or moves out before the lease is up, one of the questions to ask the property manager is whether or not they will find a new tenant for free. There is also insurance that can be purchased for this exact scenario. It pays the landlord the remaining rent should a tenant default. Not something we do, but something to consider. We touched on this briefly, but ask them what lease lengths they offer, and do you charge extra for month to month leases. Some property managers only do month to month leases. While others will do a one year lease and some do multiple years. Some charge a higher rental rate per month for month to month rental agreements. We do. So it's important to know what their policy is on this. Now, this next one is a subject we did a podcast about, and that's tenant buyouts. We also discussed it in our three part series about leases, but you should ask your property manager if the lease has a breakout clause. Life's unpredictable, and some tenants need to break their leases. You should have a policy set that applies to all tenants, so one cannot say you favored someone else's situation over their own. We have had tenants get job offers they can't refuse that forces them to move. We have had tenants who need to move back home to care for a sick family member. We have had tenants lose their high paying job and have to vacate to avoid an eviction because they can't find another job. We even had one tenant who two months into their lease had their parent pass away. They inherited the home and wanted to move into it, so they didn't have to pay rent anymore. As you can see, stuff happens, so your lease should be ready for it. It's also another reason why you would want to get your hands on your property manager's lease to review it. One more reason to review their lease is you need to know if there is language in the lease regarding the tenant having to pay damages beyond wear and tear. This is for those who believe in the you break it you buy it philosophy. The tenant will get charged for anything they break. This is another reason why mid year and periodic inspections are important. If anything is found, the tenant should pay right then. Do not wait until the lease ends and take it from their security deposit. That is your skin in the game in case any issues come up at move out.
Stacie:Yeah, this is something we've been really lucky with. Not a lot of damage to the units is found during our inspections. All right, we're moving right along. Let's go over questions to ask a property manager about maintenance and tenant relations. This is where you are going to ask about the frequency of periodic inspections that they do. Every property manager should have a schedule for visiting the property. A good property manager will check in with the property and tenants even if they haven't heard from them. Because many tenants won't report needed repairs and damage, and inspections help to avoid any costly surprises when the tenant moves out. The next thing you're going to want to ask them is if they require tenants to have a renter's insurance policy. So here's the deal. Renters insurance is super important to require of your tenants. It covers their property if there's a catastrophic event like a fire or flood, and it also covers you as a landlord, should the tenant be negligent, and be the cause of something like a fire or a flood. But, as property managers, having to keep track of every single tenant's renter's insurance policy can be an undertaking. So don't be surprised if a property manager says that they don't require it. I'm sure that they'd be happy to manage it though if you ask them to. We went over this in episode 20 when we discussed the nuts and bolts of residential rental property insurance and we also wrote a blog about it. So check those out. We're going to link them in the show notes for you. It's important to ask about the process of returning the security deposit. You're going to want to know when they return the security deposit, as well as if they get approval from the landlord first, before they return it. First, as for the timing of returning the deposit, most states now have a time limit on how long it can take to return a security deposit after a tenant moves out. In California and Idaho, it is 21 days after move out to either return the deposit, either in full or with deductions, or notify the tenant of damages that you're waiting to complete. You know, like if you're waiting for a replacement appliance or a window that they damaged. A good property manager will pretty much wait until the final days to return that deposit to allow time for inspections or if the owner wants to walk through themselves. And I will tell you, we have done inspections a few days after move out. And then when our contractor goes in to do preventative maintenance a week later, he notices stuff we completely overlooked.
Kevin:So many times this has happened to us. I think the biggest one we missed was this huge hole that was patched next to the refrigerator door. I mean, the color didn't even match and the texture job was pretty bad. But we were looking for totally obvious stuff, like actual holes. I can't believe we didn't notice that.
Stacie:Yeah. I mean, he finds all kinds of stuff, damaged floors, broken blinds, missing cabinet shelves, or that one time where the tenant nailed Christmas lights all along the crown moldings. He took the lights down before he moved out, but never filled the holes in. We had no idea.
Kevin:The only reason he knew about the lights was because he had to go in for a repair over the holiday season and he saw them tacked up there. Otherwise this is not something we even consider to inspect.
Stacie:Yep, so note to self look up when you're doing your inspections.
Kevin:Definitely
Stacie:So the answer to whether they get owner approval will depend on when they took possession of management If they did not place the tenant then they should not be responsible for knowing the condition prior to the tenant moving in and the owner should be involved with determining whether the property was returned in the condition it was received. The owner will hopefully have photos and signed move in checklists from the tenant or the previous property manager. Now, if the tenant was placed by or moved in after the property manager took over management, they should have a good idea of what the previous condition was and be able to determine if the property was returned in the condition that it was received. Unless you live in the area and it's convenient for you to do this walkthrough, leave it to the PM. If damage is noticed after the security deposit has been returned, they should work with you on this. Also, whether or not you decide to do a walkthrough can depend on how long the tenant has lived there. Someone who has lived in your rental for a year or two will not have the wear and tear you'll see from a family who has lived there five to ten years. In that case, the whole place likely needs to be repainted and appliances replaced, and updates made depending on how long the tenant's been there.
Kevin:Which leads us to the next question, which is, How do you handle deferred maintenance and this will go with how often do you do inspections to find out when maintenance needs to be performed. When inspections are done, you or your property manager will be able to see if appliances, flooring or bathroom tile and grout are getting worn, if the roof is getting near the end of its life or if there is dry rot forming from a leaky sink, toilet or window. Some of these are issues you want to get resolved sooner than later, but it's important to know the condition of your rental so you can plan for these maintenance and repairs. By deferring it, a simple repair could turn into a complex and costly one. Now, speaking of repairs, you should ask a potential property manager who they use for their repairs. When a tenant calls for an issue, which electrician, plumber, and appliance repair person do they use? Here's why that matters. Whomever steps foot on your property to do repairs is liable for not doing the repairs correctly and causing potential damage and safety hazards to your tenants. They are also a liability for theft from the tenants and physical harm to the tenants personally if they have not been screened properly. Anyone who works on your property needs to be licensed, insured, and bonded, or at a minimum, insured and bonded. Additionally, they should add you to their liability insurance as an additional insured. What this means is that if they mess up, their liability insurance will work directly with you, or your insurance carrier, to cover the damage. You might think it is better that the property manager has a variety of people to call for repairs and maintenance, when in reality, they really only need a select few. A good handyman should be able to troubleshoot most issues, and if they cannot resolve the issues themselves, they usually can refer out to a licensed person to complete the repair. We have a licensed contractor who, if he cannot repair something, will call his licensed contacts, a plumber, roofer, appliance repair person, to do what he can't do. Here's a case in point. We have gas stoves in our California units. When we purchased the new ones, the old gas lines had different size fittings and were located much higher off the ground than the new connections. Because he does not have extensive experience working with gas. he called his plumber to come in and handle it for all the new stoves On the other hand in Idaho we had a breaker that kept popping when the tenant used the new microwave. Stupidly, we made an assumption that the property manager would send out someone to troubleshoot the issue, which they did but it was a licensed electrician to the tune of$265 for less than one hour of work. It ended up being a warranty issue on the microwave and not a worn out breaker that could have easily cost us much less. These are the kind of things you want to know. Get a list of their vendors and check them out for yourselves. Many times contractors will allow their licenses or insurance to lapse, or there are very specific complaints filed against them with the Better Business Bureau. Next up, you want to know where they stand with the quality of repairs completed. And this is fine either way, but you need to be on the same page about it. So if you are an owner who wants the work completed on your units to be pristine and of best quality, you need to make sure the property manager has vendors who can do work like that. If you're an owner who wants the job done quickly and inexpensively without regard to the quality of work completed, they need to know that too. A good PM will have both options available.
Stacie:And this is a tough one for me because I like any work to be completed with the best quality. I like my edges of the trim plumbed together, not off and jagged or misaligned. And I hate, hate, hate when painters paint over the edges of switch and plug plates without removing them, or some of them just paint over it all completely. If it costs more to pay someone to go take them off, so be it. But on the other hand, getting that$265 invoice for 45 minutes of work was upsetting, even though he was likely high quality at that price point. But bottom line, communication is key. Never assume that your property manager is going to know better. They have many, many properties to manage and it's pretty tough for them to remember that you want a painter who doesn't drip paint on the doorknobs and one that drops all the recessed trims and remove switch plates before rolling on the paint.
Kevin:To piggyback on that part about the cost of the electrician, you'll want to find out what the amount is that the property manager has approval to pay for repairs on your behalf. For the most part, we see$500. Anything above that is considered a costly repair for a rental and should have owner authorization. Now, after the repairs are completed, the property manager should be sending the owner proof the repairs were done when sending a copy of the invoice. Before and after photos are what you are looking for here. If there is a corroded part from the stove, pictures of the old part showing the issues and pictures of the new part installed would suffice. Why? Because there are PMs out there that will work with the vendor to create false invoices and charge the owner. The vendor gets a cut and the property manager takes a cut and the owner knows no better. Photo evidence also helps if there is a warranty issue as well. The last thing to know from a potential property manager is if they mark up or charge a coordination fee for work completed. Rule of thumb here is it's not usually done for regular repairs, but if they have to oversee a remodeling project where there are a number of subs involved, they will charge an additional fee. An example would be if a bathtub faucet is found to be leaking and they had to cut open the wall to repair it. They find the leak has been going on inside the wall for some time and there is dry rot. This means the whole wall has to come down and be repaired, so now you are looking at a contractor to fix the wall along with a tile setter for new tile and a plumber to install new fixtures. If a property manager has to manage that task you should be willing to compensate them for that additional time needed for them to make sure the job is completed satisfactorily
Stacie:So, something to think about with that is if they are not charging a fee, what kind of work can you expect if no one's managing that job? All right. Let's ask some questions about tenant communication. You want to know how tenants are supposed to contact them regarding an issue, as well as what their average time frame is for responding to tenant requests. So, you want to see multiple methods of communication here. We primarily prefer texting, and most all tenants we deal with will choose texting over calling and emailing. Most property managers will use software that has an online portal for tenants to submit a request for a repair or something else like permission to have a guest that has a pet. When a request is submitted, the system will send an alert to the management team and much like a text message, the information is received quickly. Many managers will also have a mainline to call with an after hour service to handle emergencies that arise. And email is another obvious method. As for the amount of time it takes to respond, you want to see between 8 and 24 hours. At the very least, a response needs to be made that the message was received and that they're working on making proper arrangements so that the tenant will feel like they're important and a priority. Anything longer than 48 hours is, in our opinion, unacceptable. The tenants are paying rent to live in a residence that is operational, and where it can take upwards of 48 hours to actually get out there and evaluate the issue, some level of communication needs to be made within the first 24 hours. You should also want to know if they try to troubleshoot the issue first, or do they just call someone out to handle it for you. Case in point, last week we had a tenant who called and said that their garbage disposal was not working. And he said it was as if the unit had no power. So I texted him back two things. One, I asked them to check the plug where the disposal was plugged into. Often times tenants shove a garbage can and dishwasher detergent and a bunch of other stuff under that kitchen sink and it can knock the plug loose from the receptacle. Disposals also have their own reset button to turn the power off. If it's struggling to work, it'll cut power to save the unit and not overwork and blow out the motor. So, we ask tenants to check for anything in the disposal, clear the jam, and then try to reset it. We have a video that we send to them so they can see exactly what we're talking about. And we'll link that in the show notes so you can see what we send to our tenants, but the gist of it is, the reset button had tripped and it took me all of three minutes to troubleshoot it over text. The tenant was thrilled to be up and running so quickly and I didn't have to pay someone to go out and find a problem that they could find in a minute or two. The best way to save on maintenance is to confirm the tenant's issue is a real problem and not a user error. So it's important to know if the PM will troubleshoot the issue with the tenant before calling out a contractor. As I mentioned in the previous episode, most property management companies use a software to streamline their operations. These allow the owner and the tenant to use one software to access management. You might want to ask them which one they use. If you're familiar with them, you can get an idea of their level of professionalism based on the quality of the software that they use. For owners, you should be able to see the leases for each tenant book keeping records of rental income and any expenses that were paid out as well as maintenance that has been performed. Many softwares will send the owner a notification email anytime there's a change to their portfolio. For instance, we received an email yesterday from our Idaho management software to let us know that documentation had been uploaded from a unit inspection that they completed. It had a checklist of items inspected and photos of the unit as well as appliances, etc. For tenants, they will usually have a portal where they can pay rent, upload rental insurance documents, access a spreadsheet of any rents that have been paid and any fees or expenses that are due. This is also where they can submit a request for any repairs or requests that they might have. This automation has made work for property managers much easier, allowing them to appear more professional, get reports to owners much quicker, and take on additional clients given the efficiency that this software allows.
Kevin:Many property managers we know use Hemlane, which is a great management software. The nice thing is that they also service DIY rental property owners as well. So, Hemline is a software that is built to grow with your needs as a landlord. For a minimal amount, there's a really good basic package. But what we love is the option to upgrade and add 24 7 maintenance management. And it gets better. If you reach a place where you are ready to hand off management to a property manager, Hemline has that too under their complete option.
Stacie:Yeah, we love them for landlords who like options with their property management. Their pricing is pretty good, and like Kevin said, they are built to grow with you. So, when you're ready to hand your properties off to a property manager, they will help set you up with one of their local networks of property managers. We'll put a link in our show notes so you can check them out.
Kevin:Last but not least, here are some questions about marketing and renewals. You absolutely want to know how this property manager would market your property. Ask to see samples of other like properties so you can get an idea of the wording, photos, and information included in the ad. You'll also need to know where they will place these ads and what, if any, would be the cost to you for this marketing. So many times when we are looking at comps for our own properties, do we see ads from property managers that are just awful. There is often barely any information, like how many beds and baths, and then a number to call for information with one or two photos that look like a toddler took them. They're dark and blurry and you can't get any idea of what the property has to offer.
Stacie:Yeah, and then we see that their days on market are like at 23 and it gets us all nervous like, Oh no, the market's so slow. And then we list our ad with all kinds of information, professional looking photos, and we get someone signed it in a unit within a week. So, yeah, it works.
Kevin:Yeah, we cannot stress to you enough to look at the current ads for rental properties they represent. Oh, and I wrote a blog all about how to take professional looking photos of your unit. We'll link that in the show notes so you can give it a read. You should also ask what their procedure is when listing a property. Do they advertise and show it while it's still occupied, or wait for the unit to be vacant? There's no right answer here, but we prefer to have our units vacant first, especially if a tenant has been in there for several years. It's really hard to properly turn a unit with paint, potential flooring, maybe appliances, and a good deep cleaning within a week or two. This is the best time to get in and do preventative maintenance as well. Fix any issues inside and out before someone takes possession. This is why you have reserves, so you can handle a month of vacancy to properly prepare the unit for the next tenant. And most tenants will be easier to place if they see the unit empty so they can imagine the space as their own and not what others have done to furnish and decorate it. You also will want to know how they calculate market rents or what they base their rental rates on. A really good property manager will know the market well and consistently keep tabs on the variables that affect it. Typically, property managers will use market samples of competitive properties in the area, also known as comps. These properties will have similar amenities to your property and can determine potential rents best using this method This next one is important and we have learned firsthand that not all property managers are out to raise rents willy nilly, but you will want to know if they raise rents at renewal or if they just renew tenants with no increase at all. Some owners and surprisingly some property managers do not believe in raising rent, even if the market calls for one. They believe that good tenants can be rewarded for paying rent on time, not calling in for every little thing, and caring properly for the rental. And don't get us wrong, when we have a good tenant, you want to do what you can to keep them in there. But if they're a good tenant, they'll have an understanding that you're operating a business and need to keep up with market rents. Here are a couple reasons why you do. This is more for multifamily units, but if you decide to sell your rental property, the first thing a buyer wants to see is the rent roll and how much you are earning. Same goes with a bank if you decide to take out a HELOC or buy another property or have reserves on hand. And if for some crazy reason your city, county, or state decides to pass a rent control law, you will not be able to raise that rent near market rate for years. And ask us how we know. Well, we personally had, and still have, a tenant in one unit that was a few hundred dollars below market. Stacie and I talked, and we were all ready to raise him up and do tiered increases to get him just below market when California passed AB 1482, a rent control law that puts a maximum 10 percent increase per year on rental properties. There are some exceptions to this law, but we didn't qualify for them. Stacie is also a property manager for a multifamily that before the estate transferred to the heirs was mismanaged and had no rental increases for years. Now, the family wants to sell the property and is struggling because the rents are so severely below market and cannot be raised fast enough to entice a solid buyer. I don't care what your reasoning is, but we strongly suggest keeping rents just a tad below market rate.
Stacie:Yeah. It's taken us years to work that tenant up to near market rate. All right before we end this, I have some other things to consider when hiring a property manager. One benefit to hiring a property manager, that's if they're a licensed realtor, is that because they're working with rentals in the specific area of your rental property, it's safe to say that they know the market. If you're hiring this manager with the hopes of giving yourself more time, likely to find time to invest in additional properties, then the PM you sign on with should be able to assist with that process. So ask them if they do sales, what kind of relationships they have with the other owners that they manage for, and if they'd be willing to work with you to review a potential property before you put in an offer. You never know if they have a client who's looking to sell and might be willing to accept a seller financing deal, or that has the kind of property that you're interested in. And maybe that's a burr property. Maybe it's a turnkey rental, or maybe it's a value add property. So the best case scenario is to find that amazing property management company who can not only manage your rental, or rentals, but can either bring deals to you or analyze a deal that you bring to them, given their experience in the market. They know the good and bad areas, they know the rental rates, they know the economy, and they know landlord laws and ordinances that are going to affect your ability to do well with a rental property. That, my friends, is the icing on the cake when it comes to property managers. There are some great property managers out there who can provide a valuable service, particularly as a portfolio grows and the landlord/s business expands. So before hiring a property manager, investors should spend some time doing the research. Talk to other investors in the area, conduct thorough interviews, and get the specifics that will make or break your relationship with a new property manager. You're paying a property manager to work for you. So look at those monthly management fees as the price paid for free time, which is essential if you want to grow your rental property business. The very last thing to consider is the pain it causes your tenants every time you switch property managers. Do your best to research and get it right the first time because it's a bit of a pain for your tenants to switch portals if you find out down the line that the property manager you hire isn't working out. They will have to re register all of their information and reset up their bank account to pay from, add proof of renters insurance, and likely they're going to lose their files on what repairs were done and when. So with that said, it's important to really take your time finding the property manager that is right for you and your rental property. Now, how can Your Landlord Resource help with this process? As we mentioned prior, We have created a questionnaire for you to use when evaluating a property manager. It's a PDF, so you can email it out to a bunch of PMs in your area, or you can use it as a guide if you prefer to do personal interviews. It's set up so it lists the question and then has a box below where they can write or type their answer in, or you can write your notes. And I will tell you, it's a lot. And where if we were to receive this 50 plus questions. We we'd be like whoa
Kevin:Yeah, but first of all we would be impressed and excited to work with someone who cares so deeply for their rental property business. And second let's be real If someone sent us this questionnaire, you'd hand it off to me to complete, right?
Stacie:You are 100 percent right there. I would do that for sure. But this whole thing would take them 15 to 20 minutes to complete. And guess what? It may be hard to find a property manager to take time to complete it, but really think about it. If they are apprehensive or complaining about this one little task that you need them to complete so you can be sure they're a good fit for you, then they probably aren't who you want to work with, right? Find the property manager who enthusiastically completes it and appreciates that you care enough to even ask. That's the manager who will work hard for you. So you can download this questionnaire for FREE until December 31st of 2023. And then we're going to start charging a nominal fee for it. The link to download it is in our show notes. Okay, that is everything we have to say about finding a good property manager, my friends. These last two episodes have been packed with a lot of information for you all to think about. We really appreciate you taking the time to listen to what we have to say about landlording and property management. If you're eager to learn more, we have a free weekly newsletter that we send out. It's packed with tips, landlord specific articles, and of course, the link to this podcast. You can access that by going to yourlandlordresource. com forward slash subscribe or you can click the link it's in the show notes. That's all for now and remember until next time you've got this landlords.
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