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3 Simple Steps to Selecting the Best PM Company

3 Simple Steps to Selecting the Best PM Company

Background checks are common practice when vetting a potential renter, but what kind of due diligence do you perform when hiring a property manager? Property management companies can be an investor's most powerful ally, but before signing a management contract, it's just good business to do your research. Any good property management company will welcome scrutiny from a potential client; just follow three basic starting points when you start the investigation.

1. The Interview

Hiring a property manager is just like hiring an employee, but on a larger scale. Develop a set of interview questions that you'll ask your prospects, and take notes when interviewing managers. Establish the basics, like how many employees are on staff and which contractors the company works with, and then move on to more philosophical business questions. By the end of the interview, you need to know precisely what level of reporting and involvement to expect as an investor. But, you also need to know what your renters should expect from a property management company. Ask about accessibility, troubleshooting and turnaround time. Learn about a company's average property, its rent rates per square foot, and its average occupancy rates.

2. Always Check References

As part of your interview process, ask for the names of five investors with properties similar to your own or one you may purchase. The company's list of references should vary in location and the duration of the property management company's relationship; talk to old and new clients to gain more perspective on what you should expect in the near and distant future.

3. Put Yourself in a Tenant's Shoes

From each of the reference properties, get the names of a few tenants who might be willing to give you even more insight into the property management philosophy you may be dealing with. Ask if the company is accessible, if expectations of renters are clearly defined, and if problems or repairs are addressed in a timely fashion. Always ask about a renter's satisfaction, and if you get a negative response, ask for more details. Again, find both new and long-term renters, and remember to ask those valuable long-term renters why they keep renewing that lease.

Just like any other employer-employee relationship, hiring a property manager isn’t a relationship to enter into lightly. Perform a thorough check of the company that you’re trusting with your investment property, and avoid ugly surprises down the road.

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