I’m Cody Reeder with Reeder Asset Management. We are a property management company we have offices in Logan, Brigham City, Ogden and Salt Lake City.
I know that you have a lot of choices for property management I appreciate you considering us and I just want to go over some things to maybe ask your property manager. Things that we feel are important as you interview other property management companies.
The first question is, how long has your property management been in business? That question is going to help you understand their level of experience. The next question you might want to know, is how many rental units do they manage? Again, that is going to speak to the level of their experience. And, if they are just a real estate agency that manages 10 units, they might not be around in a year. If something happens to that real estate agent, what happens to your property? You may find real estate agents that give you a cut-rate deal, but if they aren’t going to be around or there are issues, are they really going to help you effectively verses a full size full operational property management company that if one person gores, the whole operation continues to run very smoothly.
Along those lines, how many staff members do they have? If it is a large property management company that’s extremely understaffed, how effective are they going to be at managing your property?
Another question is, what professional organizations do they belong to? A lot of these professional organizations offer vast amounts of continued education which is crucial in our business. The laws, the fair housing laws are constantly changing. Some of the designations can be from what is called NARPM, IRM, the apartment association. There are different and various organizations that are geared toward educating property managers about laws and local laws, property laws and fair housing.
Another question is, what type of properties do they manage? And, is it in line with your type of property? They may have a lot of storage units or commercial office space. And take on residential as a filler. And you are going to want to know that. That their philosophy is in line with your property.
And what if you want to sell your property? Does that property management company require that you sell through them? We feel that you should be able to take it to whatever professional real estate company you have established a relationship with. That is our commitment to not only the owners, but also to the local real estate agents. If they refer someone to us, that when it comes time to sell, we will hand them back to their preferred real estate agent of choice.
I think one of the more important questions to ask a property management company is, are they investors themselves? Because I don’t think that anyone who is not an investor can completely understand what you as an investor is dealing with. What you are feeling, what you are thinking and what you are doing. If the owner of that management company, the manager of that management company has units themselves, they are going to know all those things that you are feeling. And the other reason is that, policies and procedures that management companies that are owned by investors put into place come from the vast years of experience that they have as investors and they know a lot of the things that you look for as an investor, because that’s what they are.
Another follow up question regarding the designations do they have, but also what designations do the staff have? It may very well be that the owner is very well versed in property management, but what about the staff? Do they hold similar designations? Are they real estate agents, are they certified property managers? Do they hold designations with NARPM and UAA? Again, they are various organizations? Each one of these has great continuing education opportunities different designations within each of those organizations.
I think another very important component is, what if I’m not happy with my current service? It’s a very good question for that property management company that you are interviewing. Can I cancel my contract? Are they going to try and tie you into a long-term contract? Our industry has gotten very creative at tying people into long term contracts. You need to have a clear understanding of what your out is if you are not happy with the service you are receiving.
Another good question is, what kind of insurance do they have? You want to make sure that they are properly insured that they have a general liability policy and airs and emissions policies that save you any clerical issues on contracts, or agreements. Anything like that. You want to make sure they have the insurance policies in place to make sure that everyone is covered.
Another thing at the top is getting a clear understanding of all the management fees they charge. Again, our industry has gotten very creative at piling on management fees that range anywhere from mark ups on vendors to statement fees. There’s several dozen fees that property management companies will sneak in there. So again, you want to get a clear understanding of all the fees. Is there a fee for vacancy while my unit is vacant? A lot of the companies that do a flat rate rather than a percentage. But what they don’t tell you is that that flat rate is there every single month whether your unit is vacant or not. And that really kills incentive for them to make sure your unit gets filled. So again, it’s just getting a good understanding of what their process is, what their fees are, how they charge those, when they charge those? Just ask all those questions. Even on mark ups for example a lot of companies will say they don’t mark-up, but they will keep the spread of what a vendor charges and what they charge you. A lot of times vendors will give property management companies discounts because they send them a lot of business and rather than passing that discount along to the owner the management company will keep that spread. So again, there are a lot of questions to ask regarding management fees.
Another important question is, who is doing that inspection for the property management company? Is it the manager that oversees that company, or is it someone else that can give an unbiased opinion? Or an unbiased view of what they see when they go into take the pictures and the video of the periodic inspections?
Another question I’m surprised I have to ask is, do they provide monthly statements? We have worked with some owners that have come from different management companies where they didn’t even give them monthly statement or monthly accounting. Make sure that you can chose the reports you want to see. Whether it’s a cash flow, cash flow trailing or a balance sheet. Whatever report property management companies will have a very sophisticated system that they can give you any number of reports that you would like to get each month.
So, to sum everything up I just wanted to give you some information on what to ask your property management company you are interviewing. And, this only relates to the operation of actual management company. There are still another 80 questions that each merit their own discussion, their own video on how do they do their day to day process? How do they pick tenants, how do they screen, how do they market?
Please give me a call if you have any questions or would like to talk more about it. You can reach us at the number below. Again, my name is Cody Reeder with Reeder Asset Management.
And thank you for watching.