In a special five part series, investor Simmi Wadhera outlines the key lessons she has learned from dealing with property managers and advises fellow landlords on what they should consider before hiring one.
Do you know the most critical factor in making the management of your day-to-day real estate operations successful? In my opinion, it’s having a great property manager. They are your agents in ensuring you retain long-term happy tenants, oversee required maintenance and repairs and help maximize cash flow. So, while the right property manager can make your real estate experience a pleasant and profitable experience, the wrong property manager can make it a complete nightmare. To avoid costly mistakes, you should follow five steps. Here is the first one.
1. Do your due diligence
Just as you would take precautions in carefully selecting a real estate agent or lawyer, it’s important you do your homework when selecting a property manager. How? Start by getting referrals from people you trust and research factors including their experience, services they provide, fees etc. Another must-do is to conduct a face-to-face interview with all of your prospective property managers. The following is a list of potential questions to ask during the interview:
-How many properties do they currently manage?
-How many employees are on staff to manage these properties? Consider if the ratio of properties to employees is too much. In my opinion, one person with the proper processes, tools and resources can manage 25-35 properties as long as someone else does the financials.
-Does the property manager have experience in managing your specific type of property, such as student rentals, for example?
-What processes and tools do they use to manage their properties?
-Do they use automated property management software? Ask them to show you a sample report.
-How do they manage growth in their business?
-What is their knowledge of the area?
-How many inspections do they do each year?
-Do they coordinate maintenance and repairs?
-Do they provide regular updates on the property and how often?
-What is their preferred communication style? E-mail? Phone?
-What items do they charge ‘extra’ for? Regular visits to the property shouldn’t incur extra charges.
-How have they dealt with a typical repair that was required?
-Do they own rental properties? This may create a conflict of interest. Just imagine that the property manager and you both have a vacancy at the same time, whose property do you think the property manager will try to fill first?
-Can they provide references that can support their work?
-Ask them if they are planning to raise their fees in the near future, as this will affect your monthly cash-flow.
Simmi Wadhera was named Newcomer of the Year at the Top Investor Awards at the Toronto Real Estate Forum.