More and more people are investing in real estate properties such as buildings and houses, mostly for rental purposes. However, a lot of property owners doesn’t have enough time for property management. Hence, most of them opt to hire a property manager to operate their estates.
If you are one of these real estate owners who want to hire — or already hired — a property manager, you may have some reservations. It may be your first time, or you had a bad experience with your previous property manager; regardless to say, there are necessary questions you need to ask.
Below are 5 questions to ask your property manager.
1. What is the price formation of renting a property?
Your property manager is responsible for setting up the correct price for your properties. Otherwise, you may lose a supposed revenue if the price was mistakenly assessed. Below should serve as a basis for your property manager when setting the right rental price:
● Checking similar properties. This should help ascertain the right price for your properties. Knowing how much your competitor charge tenants puts you at a competitive level. Your property manager should look at comparables, by checking or viewing properties for rent in your area.
● Considering the neighbor’s leased properties. Another way of charging the right rent is, to look at the leased properties in the same location.
● Newly constructed vs. old property. Prospective tenants prefer to rent a newly constructed building than the old one.
● Views, amenities and square footage are also crucial in adjusting and determining rent. Having a good view, amenities and larger square footage makes it more attractive and desirable to prospective tenants.
2. What are the terms of the Agreement? (This includes the length of the term, renewal of the agreement.)
A lease or rental agreement delineates the rules between landlords and tenants and bound themselves by their rental relationship. It is a contract that includes all the important details agreed upon.
However, you may authorize the property manager to sign for you—in a representative capacity—in the agreement. The terms of the agreement should include, but not limited to:
● Name of tenant
● Occupancy Limit
● Term of the tenancy
● Deposits and fees
● Repairs and maintenance
● Restrictions on tenant illegal activity
3. Do you have any references?
The property manager’s past accomplishments are indicative of the services delivered to previous clients. A good property manager always has an aggregate amount of good references. Although, it’s still better to meet and talk with the people with whom the property manager have dealt with.
Since online searches for references are sometimes not reliable. You can ask directly past clients, with whom the property manager had worked with, some good questions to ask are:
● Is the property manager responsive to your queries?
● Does he remit payments on time?
● How often does he give you updates on your property, is it more or less than you prefer?
● Do the quoted prices for repairs and maintenance is similar to what you expect to pay in your area?
4. What factors are taken into consideration when screening tenants?
Your property manager should have various techniques in finding and assessing potential tenants. Aside from considering your personal preferences as the property owner, when screening clients, your property manager should:
● Check tenant’s employment
● Credit standing
● Landlord references
● Criminal records
5. Under what conditions can I cancel my management contract?
You should not sign something that you can’t get away from. If at the onset you spot a potential inescapable contract, then consider it a red flag. If you feel that the service they are giving you is not what you expected, then you should have the freedom to change for a better-suited property manager.
However, there are some requirements for canceling your contract:
● There must be a just cause. It’s included in the contract that you signed with your property manager. Nonobservance of said “just cause” would mean a breach of contract.
● Give the required notice. Prior to the termination of the contract, you should give advance notice to the property manager. The period for giving notice is usually stated in the termination clause of the contract. Most contracts will require between 30 and 90 days notice to terminate a contract.
● Notification must be in writing. You should mail by certified mail, return receipt requested. Just to make sure that the property manager receives it.
● Notify the tenants. Inform them in writing about the change in management. Specifically that you terminated your contract with the current property manager.