Avoid Hiring A Dud Property Manager With These 8 Questions
If you want to get the most out of your investment property, you need to hire a competent property manager.Ask any prospective PM these 8 questions first todramatically reduce the likelihood of appointing a dud.
If you want to get the most out of your investment property, you need to hire a competent property manager. But sometimes it can be hard to tell the difference between a competent property manager (PM) and a dud. The only way you can know for sure which one they are is after they’ve been looking after your property for 3-6 months.
But what if you could dramatically reduce the likelihood of accidentally appointing a dud PM? Don’t make the mistake too late - ask the prospective PM these 8 questions first.
1. How will you market my property?
How are they going to find the right tenant for your property, and fast? Who are they going to target and how are they going to do it? What’s their marketing/advertising budget? How will they incentivise the tenancy market to take action on your property? The most important thing your PM can do for you is to find a 5-star tenant and reduce vacancy on your property. Make sure they also have a Plan B in case the marketing campaign does not go as planned.
2. What do I need to do to my property to attract more rent/find a tenant faster?
Your PM needs to be an expert in leasing properties. They also need to tell you what you need to hear, solely for your benefit. For example: If your property is looking tired and hasn’t had a fresh coat of paint in more than 5 years, it is your PM’s duty to tell you that you could achieve more rent/find a tenant faster if you were to paint. Whether you take their advice or not is up to you, but your PM is not doing their job if they’re not telling you these things.
3. What’s the local rental market looking like at the moment?
Anyone who watches the news or reads the paper can tell you what’s happening in the sales market. It takes a little more effort to find information on the rental market. Your PM needs to be well educated on the rental market in your area not just so you know that they’re a professional, but because them knowing the latest rental stats ensures their marketing strategy is in line with the market, i.e. they’re not pitching too high in a declining market.
4. What experience do you have in this area?
An obvious question. What have they done in your market recently? Do they have any spin-off tenants from another property that they could take through yours? If so, you may eliminate the need to go through a marketing campaign.
5. How would you deal with [example of an issue]?
Take the PM for a test drive. Throw a typical property management scenario at the PM and see how they answer it. This could be about maintenance, termination, tenancy issues or even something completely left field. How do they answer it? Do they fluff around and vaguely answer the question? If so, this could be a sign of inexperience. If they answer swiftly, confidently, or even use a story that shows they’ve come across and sorted this issue in the past, give the PM a big fat tick for this one.
6. Why should I go with you?
What’s their point of difference? What sets them apart from their competitors (who you may also be interviewing)? What clear benefit does their service bring to you? They should be able to tell you that because their agency does ________ it means more money/less expenses, or less stress for you.
7. Do you have any testimonials from current clients?
There’s something special about social proof to help you make a decision. What do other people say about this PM? The testimonials should support what the PM has been telling you during the meeting, and sort the salesperson from the professional. Bonus points if they can offer you the contact details of one of their clients so you can call and find out for yourself.
8. What are your fees?
I’ve put this one last for a reason. When appointing a PM, your biggest deciding factor should be in knowing that they are a competent professional who can demonstrate that they can potentially make you more money, reduce your expenses, and eliminate the stress of investment property ownership. Having said that, it’s obviously an important question to ask. Be careful about bargain hunting - do you want your financial future to be in the hands of the person who would do it the cheapest, or the person who is the most competent?
Property management is a complex beast, with many scenarios and lots of moving parts. You could ask the property manager 100 questions, and still have more to ask. But these questions get to the heart of how the PM operates quickly. A satisfying answer to all of the above questions at least ensures you don’t appoint a dud to take care of your retirement fund!