What to ask when hiring a property manager

Whether intentional or accidental, investing in rental properties offers a great way to build wealth. According to Investopedia, investing in real estate can provide steady returns even through the ups and downs of the stock markets.

Still, managing rentals can be time consuming and stressful for owners who might lack the time and expertise. Hiring a professional property manager could be the answer to a successful venture into rental property ownership.

When hiring a property manager, first decide what duties you want them to perform and what duties you’ll handle. Then look for an individual or company with a solid reputation that can meet those requirements.

Here are some important questions to ask.

How does the property manager attract and screen potential tenants?

Ask about the advertising plan and who pays for it. There should also be a solid screening process in place. How long it will take to complete background screenings?
The property manager should also screen the tenant’s income-to-rent ratio, ensuring they can afford to pay rent on time and consistently. 

What items does the tenant lease cover?

Late fees: By law, late fees are capped at the greater of
5 percent or $50 and can’t be charged until the seventh of the month. Does the property management company keep all or part of late fees? 

Lease term: What’s the duration of the lease and does it automatically renew? What notifications are required if either the tenant or landlord want to end the lease? What happens if the lease ends or transitions to month to month?

Utilities: Who pays what?

Occupants: How many people and who are allowed to live in the property?

Pets: Are pets allowed? What are the refundable and
non-refundable deposits or additional pet rent?

Maintenance: Who’s responsible? What’s considered tenant maintenance and what’s owner maintenance? Does someone trouble shoot with the tenant before calling a contractor?  

Security deposits: What deposit is required? What’s the timeline for refunds? What constitutes damage versus normal wear and tear? Are there any standard charges the tenant needs to be aware of — like carpet cleaning? How long does a tenant have to remedy damages before additional collection measures are taken? What are additional collection remedies and who pays those costs?

Insurance: What’s the owner insurance requirements? Is the tenant expected to have liability insurance to cover guests and personal property?

Lead-based paint disclosure: If a home was constructed before 1978, you must provide a lead-based paint disclosure.

How does the property manager handle maintenance?

Someone should remain on call around the clock. Does the property manager have in-house techs? If so, what are their rates? Owners should know what jobs are subcontracted.

What are the communication policies?

Ask what turnaround timeline you should expect on calls and emails. Make sure expectations are in line.

When do owners get paid?

Ask how and when the property manager will disburse funds and what’s the monthly expense cutoff.

A professional property manager should inform you of laws, requirements and other things you haven’t considered. They’re your best strategy for protecting property value, maximizing rental income stream and guarding your time and sanity.