Are you thinking about hiring a property management company to professionally manage your multi-family rental properties for you? If so, you’re making a smart choice!
Even though it’s a smart decision to hire a property management company this is a huge decision to make because you’re going to be trusting the management of your multifamily property to another company.
The good news is that you can have absolute confidence in a property management company before hiring them if you ask these questions first.
How Long Have You Been In business?
The first and most obvious question that you should ask a property management company is how long have you been in business? This question is important because you want to have confidence that you are indeed hiring an experienced property manager instead of someone who just recently started in the business.
Besides having experience, a property management company that has been in business for more than one year is also going to have an extensive network of contacts in the community. These contacts will include contractors and vendors that they can tap into quickly should repair or maintenance work needs to be done on your multi-family property.
New property management companies may not have the right contacts in place yet including vendors, contractors, and other maintenance personnel who can help them when needed. Inexperienced companies may also not know all the local ordinances as well so it makes send hire a company with the experience to professionally manage your multi-family investment property.
How Big Is Your Property Management Company?
Besides their level of experience, another important thing that you want to ask a property management company before hiring in is how big their company actually is? This is important because you want to clarify that the property management company indeed has a team of people who are responsible for handling multiple issues, instead of having just one person doing everything.
Once you confirm the size of the company, you also want to verify who your point of contact in the company is actually going to be because should you have questions regarding your multifamily rental property.
As with any other company that you may have hired in the past, you want to have confidence that you’re going to be able to speak with a live person in the company each time you call instead of just getting transferred to voicemail.
What Are Your Fees?
After determining the size and experience of the property management company, the next thing that you want to ask is what are the fees that you’re going to be charged?
Specifically, you should find out things like if the property management company is going to charge you fees for renewing a lease, finding a tenant, service calls, and you want to verify if you’re going to have to pay a monthly fee while one or more units in your multifamily property are unoccupied.
What Are The Terms?
After clarifying the fees that you can expect to pay with the property management company, the next thing that you want to verify is the terms of the contract. This is important because if for any reason you find yourself unhappy with their property management services, you may want to get out of the contract, so it’s always better to verify in advance if you can cancel at any time or if there are fees which you will be expected to pay if you decide to terminate their services early.
How Many Rentals Do They Currently Manage?
We’ve offered several important questions to ask a property management company so far, another one that you should add to your list is how many rentals are they currently managing? The answer to this question should be commensurate with the size and experience of the property management company.
For example, It’s been our experience that a property management company with two employees should not be managing hundreds of properties at a time because there’s no way that they could handle all the property management responsibilities which come from managing a large portfolio of rental properties.
The same is true if the company has a portfolio of under 100 properties, it should not require a large staff to manage let’s say 40 or fewer properties because this could also be a sign of mismanagement within the company itself.
What Is Their Vacancy Rate?
If everything adds up, and all of your questions have been answered satisfactorily, another important question that you should ask a potential property management company is what is their vacancy rate?
Their answer to this question is important, they should be able to give you a “specific number” instead of giving you a general response by saying something like they hardly ever have any vacancies or their vacancy rate is “very low”.
Any property management company that is in business for the long run won’t hesitate to pull statistics for their business because they know that most owners in today’s world want to see actual data before they choose to use a property management company services.
What Are The Property Types That They Manage?
We’re almost to the end of this article so if you’ve made it this far, you’re awesome!
There’s no doubt that we’ve given you a lot of excellent questions so far which should provide you with some good food for thought when hiring a property management company. Another question that you should add to your list of questions to ask a potential property management company is what are the types of properties that they manage?
Since you’re specifically looking for a property management company to manage your multi-family rental property, you should specifically look for a property management company that specializes in managing multi-family properties over single-family homes.
Multifamily properties come with a wide variety of challenges and require a different skill-set from a property manager compared to the skill set that a property manager who manages single-family homes should have so you shouldn’t hesitate to verify what types of properties they manage before you choose to hire them.
How Do They Determine Their Rental Rates?
Last of all, but most important, of course, you should also ask a property management company about their rental rates.
Are their rental rates determined by doing a comparative analysis of other similar rental properties in the same area? Or, do they determine rentals based upon other metrics or in-house data? Don’t hesitate to ask these questions because working with a company that uses the wrong methods to determine rental rates could mean that your multi-family rental property sits vacant for a longer period of time than you initially expected away.
We’ve offered you a lot of questions in this article that you should ask a potential Property Management Company. The good news is that when you have the answers to these questions, you should be able to walk away with confidence that you are indeed hiring the right property management company for all of your needs.
A property management company will save you the time, money and hassle of managing your multi-family investment property yourself so you should not hesitate to hire a property manager especially as you grow your portfolio of multifamily investment properties.
If you have any questions about hiring a property manager, or if you have feedback about a property manager that you hired in the past, feel free to leave us a comment below!