Whether you’re renting out one floor of your brownstone or you own a bunch of rental properties, it can all amount to a lot of work.
If you don’t want the hassles of chasing down rent and keeping up with repairs, hiring a good property manager can really help.
Property managers are paid to manage the day-to-day aspects of rental homes. Hire the right people, and they can make owning rental properties a breeze.
Property managers are an even bigger asset to rental-home owners these days, as we deal with the uncertainties of the COVID-19 pandemic.
“Choosing a great property manager is the single best thing an investor can do for the success of their rental portfolio, so it’s worth it to spend the time and effort upfront to avoid headaches later,” says Eric Hughes, founder and CEO of Rental Income Advisors and owner of 16 rental properties in Memphis, TN.
However, not all property managers are great—which means that it’s vital to keep regular tabs on their work, to make sure your rental property isn’t getting run off the rails.
To help you suss that out, here are four questions worth asking your property manager today.
1. What measures are you taking to keep tenants safe and informed during COVID-19?
Property management has been deemed an essential service during the pandemic, meaning that property managers have mostly maintained their usual functions.
But they should also be encouraged during these unprecedented times to develop a plan and stay in close communication with tenants, says Kellie Tollifson, president of the National Association of Residential Property Managers and executive vice president of operations and managing broker at T-Square Properties in the Seattle area.
For instance, tenants might appreciate an email informing them that the lobby is being cleaned more often to lower their exposure risk, or you might ask your property manager to post a sign in the lobby asking for neighbors to ride the elevator separately rather than together.
Since tenants who feel safe and cared for are more likely to stick around, find out how your property manager is working to lower their risks of contracting the coronavirus. Here are a few questions to ask:
- Have you changed how you handle repairs and rent collection?
- Have you spoken to my tenant(s) lately?
- Does your staff wear protective equipment, such as masks and gloves, when interacting with tenants and others?
- How will showings be held for vacant properties?
- Are you stepping up cleaning procedures after a tenant moves out?
You can also ask your property manager to keep you up to date on changes to landlord-tenant law, such as statewide rent moratoriums and eviction freezes.
2. How will you communicate the status of rental payments?
Many property managers give owners access to an online portal that lists the rent payments collected and any expenses, such as repairs, Tollifson says. The information may be updated in real time, weekly, or monthly. If a portal isn’t available, find out how often statements are provided.
Review each statement carefully and regularly, to make sure rents are being collected, how much any repairs and other expenses are costing, whether there are any unexpected charges, and that you’re receiving the correct payments from the property manager.
Hughes checks his owner portal a few times a week and emails his property management company if something doesn’t look right.
“I might have questions about a range of topics: a repair charge, uncollected rent, or the status of a lease renewal,” he says.
3. How will you keep me apprised of repairs?
Another question to nail down with your property manager is the policy on repairs. Most repairs are still being made, especially in the case of emergencies, like a leak or broken air conditioner. Just make sure.
Hughes suggests asking for proof that a repair was made, such as before and after photos.
Another question is how much freedom property managers have to pay for those repairs. For example, one good rule of thumb to keep things moving smoothly is to pre-authorize property managers to make repairs and conduct maintenance up to a certain price (such as $400), but to contact you if the cost exceeds that threshold.
“There’s definitely a lot of trust in the relationship,” Tollifson says.
4. Are any of my tenants struggling to pay rent?
Millions of Americans have lost their jobs because of the pandemic, and many may be struggling to pay their rent. Helping landlords navigate these situations is an important property management task—now more than ever.
According to a recent NARPM survey of its members, about 70% of property managers reported that nearly all of their tenants had paid their June rent in full and on time. In other words, nearly a third of tenants are having trouble making rent.
So if your own tenants are struggling, what is your property manager doing about it?
To find out, ask your property manager if tenants are being offered payment plans or another arrangement—and if not, establish a procedure you’re happy with, such as 50% of the rent payments for a period of three months, to be paid back at the end of that term.
You can also ask if your property managers are proceeding with any evictions; you can always ask for an eviction delay if you feel it’s the right thing to do.
So, do you need a new property manager?
If you have ongoing issues with your property manager, it may be time to find a new one.
After all, property management is a major cost of running your property. Property managers are commonly paid a percentage of the monthly rent, usually around 10%, and may have additional fees for lease renewals or other services.
Hughes said he recently switched management companies after experiencing several problems.
“Their communication was frequently poor and delayed, and I had a hard time getting clear, factual answers to questions, particularly with respect to maintenance work,” he says of his previous property management company.
He often had to ask for refunds for unexplained charges, he says.
“It was clear at that point that their disorganization and incompetence could cost me real money.”
Hughes’s new property management company is better organized, more responsive, and more accurate, he says. Most surprising, while about half of rent payments were late each month with the old company, since the switch, tenants have been paying on time.
“It was like flipping a light switch,” Hughes says. “I don’t know exactly how they do it, but clearly the new property manager has a more effective team. This shows just how important it is to select a good property manager.”