80 Questions to Consider When Interviewing Your Next Property Manager – Part 2 of 4

shake handsAs a self-managing landlord I pride myself on being able to manage my properties myself. Unfortunately, self-managing is not for everyone for various reasons whether it’s not your thing OR you are not in a position to do so, or anything in between. Even myself, the self-proclaimed self-manager will someday use a property manager.

Over the years I have learned that not every property manager is made equal. Therefore your job as the owner, is to find a property manager to find that amazing property manager who will make your house into an amazing asset not a financial liability.

As a self-managing property manager my lease is my bible that has 38 addendums and is 16 plus pages long (http://www.reluctantlandlord.net/create-a-rock-solid-lease/). Your property manager should be treated the same way. You, the owner, are ultimately the one who has to answer for all that happens with your investment, so you need to make sure you are hiring right manager. You can do this by properly vetting your manager.

Here are the next 20 questions to ask yourself when you are vetting your property manager. To view the first 20 questions covered in Part 1, click here. 

Author’s Note: Many of these questions can be solved by examining the lease/property management contract first. Personally, I would want a copy of the property management contract before my first interview so I could put together all my questions from that BEFORE I talk to the property management. This way, you are not asking questions that are answered in the contract AND you can follow up directly from the contract. Remember: it doesn’t matter what they say, it comes down to what is in writing, i.e your contract.

  1. Do you offer a reverse military clause? As an empire builder who buys homes that my family will live in too, I find it is important that we always have the option to move back into our home. Therefore, we include a reverse military clause in our lease. However, some companies will not allow this clause so it is important to know the property management company’s policy.
  2. Do you have a rental deductible? I am a huge believer in tenants having skin in the game so that they do not call over senseless items and repairs that cost money and cause headaches. These repairs can eat you alive and do some serious damage to your bottom line.
  3. Do you have lease language that requires the tenant to pay for any damage they cause that is not wear and tear? If you break it you buy it. I charge my tenants for anything they break. I would ask my management company if they do the same thing.
  4. Do you troubleshoot with your tenants when they call for repairs? One of the things I have done to help reduce service calls is to troubleshoot with my tenants. I ask them if they tried the breaker, put a new light bulb in the socket, etc., so I would want to know if the property management company will try to troubleshoot or if it will end up being something silly if the tenants are required to pay the service call.
  5. Do you do site unseen leases? If yes, do you have a special addendum? I know some places won’t rent sight unseen which is a huge disadvantage in military areas. This has caused problems for me and others in the past so I have fixed this issue by having a provision in the lease.
  6. Who pays for pest control? As discussed here I don’t include pest control. So make sure to go over who is responsible.
  7. Do they do as/is appliances? I put any appliances I don’t want to replace as “as is” in the lease.
  8. How much notice do you require at the end? I require my tenants to provide 60 days’ notice but other companies and areas have different rules.
  9. Is the lease automatically renewable? I personally don’t like automatically renewable leases, as you could forget and end up in trouble. That being said, I know some places do, so make sure you follow up on this to see if you property management company offers this service.
  10. What is your renewal policy? You want to know if they renew everyone or if people with specific dings against them are not renewed.
  11. Do you charge for renewals? Some companies charge a renewal fee to the owners if the tenant stays.
  12. Do you do a market evaluation at every renewal? I am a believer in raising the rent every time a renewal comes up. So I would want a market evaluation and recommendation to raise rates if needed.
  13. How do you determine to raise the rent or keep it the same? Will you raise rates on good tenants? Is there a reason you wouldn’t raise the rent even if the market called for it? This is important since some people do not believe in raising the rates.
  14. What does the monthly fee include? Make sure you know exactly what you are paying for. Some places are more full service than others. Every agency has different standards and goals. I know some agency who do professional photos and others charge for it, so get them to go through what it includes.
  15. Do you have any additional charges or fees (pet, placement, maintenance, etc.)? What does my monthly charge not cover? You want to look at a contract closely and ask specifically. Some companies charge a flat price that includes everything. At other companies the monthly price is lower, but they nickel and dime you on additional fees.
  16. Who keeps the fees that the tenants pay? You want to know who keeps the late fees, pet fees, etc. This can cause a LOT of issues so review the answer to this question closely. If your tenant pays you late and the management company retains the fees and you were expecting to be compensated this can cause a lot of financial frustration.
  17. How is the money dispersed? Many property management firms only send checks, so this is a very important question.
  18. When is the money dispersed? Most mortgages are due the 15th. Make sure you receive your checks in time to pay your mortgage.
  19. What is your advertising strategy? (Places advertised, professional photos, etc.)? Every company has a different marketing plan. Some companies take professional photos and others do not.
  20. What rental price do you recommend? You want to know what they think it will rent for and why. Some companies will overprice the rent because charging higher monthly rent will mean the company gets paid more if they charge a percentage of monthly rent. Others will underprice the rental so that it is get rented out faster. Make sure it is priced right.

While this list seems very long and complex, many of these things will be answered in the lease and property management document/contract. This is not supposed to be a complete list, but rather a starting point to begin your interview and selection of the best property management. Be sure to read Part 3 next week for 20 additional questions you should be asking your property manager.

Happy Property Manager Hunt!

ElizabethBio: Elizabeth is an entrepreneur who is turning her love of rental properties into a work-from-home positions that she self manages anywhere in the world. Follow her at Reluctant Landlord. Looking for a jump start to writing your perfect lease? Check out her book, The Everything Lease Addendum: How To for Landlords. It includes all 37 addenda with wordings and the explanations. Elizabeth hopes her passion for turning her ulcer inducing moments into a solid lease helps you learn these lessons vicariously and not through the trials and pains she experienced.

Elf on the Shelf Joins Bev Roberts Rentals

Day 13

Bev Roberts Rentals is happy to announce the arrival of two new leasing agents direct from the North Pole! John is placing a sign in the yard to market the rental property and Rookie is on her iPhone scheduling showing appointments with CSS. With their magical touch, they should get this home rented in no time!

80 Questions to Consider When Interviewing Your Next Property Manager – Part 1 of 4

shake handsAs a self-managing landlord I pride myself on being able to manage my properties myself. Unfortunately, self-managing is not for everyone for various reasons whether it’s not your thing OR you are not in a position to do so, or anything in between. Even myself, the self-proclaimed self-manager will someday use a property manager.

Over the years I have learned that not every property manager is made equal. Therefore your job as the owner, is to find a property manager to find that amazing property manager who will make your house into an amazing asset not a financial liability.

As a self-managing property manager my lease is my bible that has 38 addendums and is 16 plus pages long. Your property manager should be treated the same way. You, the owner, are ultimately the one who has to answer for all that happens with your investment, so you need to make sure you are hiring right manager. You can do this by properly vetting your manager.

Here are the first 20 questions to ask yourself when you are vetting your property manager.

Author’s Note: Many of these questions can be solved by examining the lease/property management contract first. Personally, I would want a copy of the property management contract before my first interview so I could put together all my questions from that BEFORE I talk to the property management. This way, you are not asking questions that are answered in the contract AND you can follow up directly from the contract. Remember: it doesn’t matter what they say, it comes down to what is in writing, i.e your contract.

  1. Will I have one specific property manager? Who will be my property manager? You want to know who will be your specific property manager and know their name. I am all about accountability. You want to know and meet your property manager not just the marketing director or whoever is in charge of new business.
  2. Who is the head of the office? You want to know the broker in case something goes wrong. Brokers have property managers who work under his or her license, so ultimately it is the head broker who runs the show.
  3. How long have you been a property manager? The length of time is important to know. That being said, a hungry newbie who wants to learn, in my experience, is often times better than the most advanced person because they care.
  4. How many units do you manage? For me, this is more food for thought. There are benefits to a large office and also to a small office, the key is to know which one you are getting into and to make sure you are comfortable with the pros and cons.
  5. What is the average length that clients stay with you? You want a property manager who is in it for the long haul. While you might not always get a truthful answer that can be substantiated, it is good food for thought.
  6. Do you just manage or do you sell too? Most places do both. That being said it is good to know to assess people’s motivations and goals. You want a company that still prioritizes property management even if it doesn’t make as much income as selling.
  7. What do you offer that sets you apart from other companies? You want them to sell themselves, to tell you how they are different than other companies. Remember, this is an interview for both parties.
  8. What do you expect from me as the owner? What is their expectation about your involvement? Some people want to be very micromanaged and others do not. It is important to know the exact expectations that the property manager will have of you.
  9. How often do you communicate with the home owners?This is very important, since communication is key. It is really important to know for what issues you will be notified, how quickly you will be notified, and in what way you will be notified.
  10. Do you provide the owner’s information to the tenant? Some people hire property managers so they do not have to give their information to tenants. If you’re one of these people, be sure to communicate this early on.
  11. Do you have a policy about landlords contacting the tenants? Some management companies will not allow landlords to contact the tenants in the house.
  12. Do you have a requirement for your property management clients to use you? Do you charge if the tenant decides to buy the house? Many property contracts require the landlord to pay fees if the tenant decides to buy or they sell. Make sure you check this clause closely.
  13. How often do you reach out to the owners? Can you give me examples of how and when you would communicate various problems? Communication is a very big concern and complaint. The last thing you want is to be learning everything on your monthly statement. The best way to have clear expectations is to understand when a property manager will notify you and when they will not.
  14. What is your turnaround time on phone calls and emails from owners? Some of the biggest complaints I see from property owners is that they do not hear back or receive phone calls from property managers quickly enough. This is why you want to know what to expect and how long it will take to hear back from your property manager.
  15. What is your monthly charge? Every management company calculates their fees differently. Some charge 10% and that includes everything. Others charge 6% and add extra fees, so make sure you read the fine print.
  16. Who is the lease between? In some cases the owner is on the lease. In other cases it is the management company that will be on the lease.
  17. Do you provide a copy of the lease to the owner and when?One of the biggest issues I see is the owners not receiving a copy of the lease, so they are not able to verify when questions and issues arise with their property manager.
  18. How long is the lease? Some property managers only do a month-to-month lease, others do a one year, and some do multiple years. Personally, I do a month-to-month lease. Here is an article I wrote about month-to-month leases versus a one year lease.
  19. Do you charge extra for month-to-month leases? I charge $300 more per month for my month-to-month lease. It is important to know what their policy is and who gets the fees.
  20. Do you include a break-out clause in the lease? I have a lot of tenants try to break their lease. For me, this clause has been a lifesaver. Here is my policy for my break lease clause.

While this list seems very long and complex, many of these things will be answered in the lease and property management document/contract. This is not supposed to be a complete list, but rather a starting point to begin your interview and selection of the best property management. Be sure to read Part 2 next week for 20 additional questions you should be asking your property manager.

ElizabethBio: Elizabeth is an entrepreneur who is turning her love of rental properties into a work-from-home positions that she self manages anywhere in the world. Follow her at Reluctant Landlord. Looking for a jump start to writing your perfect lease? Check out her book, The Everything Lease Addendum: How To for Landlords. It includes all 37 addenda with wordings and the explanations. Elizabeth hopes her passion for turning her ulcer inducing moments into a solid lease helps you learn these lessons vicariously and not through the trials and pains she experienced.

A Landlord’s Guide To Tackling Tenant Troubles

contractAs much as you try not to take in any hugely irresponsible tenants into your property, it’s unlikely that your tenants will always be a breeze to manage.

Even if you try to take extra care to screen potential tenants before locking them into a lease, you never really know who you’re inviting into your property, and problems are bound to arise from time to time.

As a housing manager, you won’t always have a smooth time managing your tenants–here’s how to navigate four common tenant-landlord issues as they arise (and how to prevent them from becoming issues in the first place).

Tenant Issue #1: Your tenants are destroying your house.

Solution: If your tenants are literally destroying your house (scratching up the walls, clogging up sinks and bathtubs, recklessly closing blinds so they fall out, etc.) you’ll surely need to intervene. There’s no question about it–you own the property in which your tenants live, therefore those tenants need to respect the space they’re paying to use.

To prevent a bunch of stress over property maltreatment, have your new tenants give a security deposit before they move in. A security deposit acts as protection which covers “removal of abandoned personal property and any damages that are not normal wear and tear” and acts as a safety net in case something in your property needs significant repairs.

Landlord contents insurance is also a good idea if you’re renting your place out fully or partially furnished, as it ensures that your furniture is covered if lost or damaged in any way.

Tenant Issue #2: Your tenants are disobeying your rules.

Solution: Take pet ownership, for example. Many tenants establish a no-pets rule in order to minimize the chance of damages occurring to their property, among other reasons, and you may have explained this to your tenants from the start. However, some tenants might try tosneak a pet into the property and take extra care to hide the fact that they’ve got an animal.

It’s pretty easy to tell if your tenants are disobeying the no-pets rule–is there a litter box in the property? Do you think you saw a few chew toys when you came over to collect the rent? If so, confront your tenants and let them know they need to either house their animal elsewhere, or work out some type of agreement with you about conditions that must be met in order for the pet to stay.

Many landlords are flexible enough that if their tenants demonstrate they can keep their pets under control, the rule can bend/adjust for them–however, a tenant who tries to hide anything from their landlord may be one to watch out for.

Tenant Issue #3: Tenants are getting into shady activity.

Solution: Does it seem like your tenants are low-key running a weed distribution site out of your home, or engaging in some other type of illegal activity involving your property? There are numerous telltale signs that let you know your tenants might be into some questionable practices or weird business that could warrant an investigation.

If you suddenly see a lot of cars parked on the street that aren’t normally there outside your property, or if you observe a lot of people entering and leaving your property on a frequent basis for brief amounts of time, you may be right to wonder if your tenants are up to anything illegal (for example, drug dealing).

Be on the lookout for unusual objects or paraphernalia lying around in your interactions with tenants, and if suspicious activity continues, confront your tenants about it. The last thing you want is for sketchy activity to escalate so much that city police intervene and get you in trouble before you had the chance to address the situation.

Tenant Issue #4: Tenants are inconsistent with paying their rent.

Solution: Credit checks can be a good idea at times when assessing the financial stability of a potential tenant, but if you’ve got a current tenant who’s been having trouble paying the rent on time, communicate with them about what’s going on.

It’s always a good idea to understand that your tenants are human and may be going through a hard time (such as unexpected loss of employment or a family emergency), so have a conversation with them to find out what is keeping them from paying rent on time.

Many landlords are a lot more understanding than others about rent issues, and many are successful in working out a rent agreement that works with their tenants (such as adjusting the payment schedule) so before writing your tenants off as chronically unreliable, try to work with them to negotiate a system for paying rent including how much and when it can/should be paid.

While managing tenants can be challenging, housing managers should remember that there’s usually a reason for a tenant’s irresponsibility–stand your ground, but also be real with your tenants and get to know them well enough to be able to comfortably communicate about housing policies and protocols.

Source: rent.uloop.com

How to Write a Great Lease When Self Managing

Author’s Note: I am nothing other than an experienced-aka-jaded landlord. I am not a lawyer or anything certified. This is not legal advice. Always check your state and local laws as regulations can differ.

As a landlord of 7 single family homes, soon to be 8, the lease is my bible. It is my key to success and the reason why I can self manage my houses anywhere. I have signed leases on a ferry between Finland and Russia in the Baltic sea. I have managed a Break Lease Fee on my last day in Abu Dhabi and through the trip back. I have handled countless repairs and other issues all over the US and through every Murphy’s Law moment that exists.

The reason for my success has been my lease. As the pillar of my single family rental success, I even wrote an entire book with my 37 addenda to help others write a great lease. It is sizable and able to scale up from a single family bible to a multi family lease bible too!

Below are the 37 Addendum that I include in my lease:

  1. Appliances included with the Rental
  2. Month to Month
  3. Direct Deposit
  4. Late Fees
  5. Pet Fees14588889_s
  6. Utilities
  7. Assignment and Subletting
  8. No Smoking
  9. Maintenance
  10. Entry By Landlord
  11. Extended Absence By Tenant
  12. Termination on Sale of Premises
  13. Lease Termination Provision for Military Personnel
  14. Tenant Assumes Responsibility for Maintenance
  15. Battery Operated Device(s)
  16. Filters
  17. Steam Cleaning Carpets
  18. Professional Cleaning
  19. Landscaping
  20. HOA
  21. Keys, Garages/Gateshands with house and keys
  22. Damages
  23. Renter’s Insurance
  24. Break Lease Option (Buy Out)
  25. Alterations
  26. Pest Control
  27. Home Businesses
  28. Attic Storage
  29. Renting Site Unseen
  30. Appliance Maintenance
  31. Fees/Violations
  32. Duct Cleaning
  33. Plumbing
  34. Changing Locks
  35. Play Structures, Trampoline, Pools and Other Large Outdoor Equipment
  36. Roommate
  37. As-Is Appliances

The key to my addendums for single family homes has been to create a clear and concise rulebook. The same will be my goal for multi-family homes. You will need to edit/add/delete if your units are laid out as apartments or townhomes. I have learned the hard way if an issue comes up and it is not covered in your lease, then you are SOL unless it is covered by local, state, or federal law.

When scaling up my single family leases I plan on creating addendums to address these additional issues that would come with a multi-family home:

  • Noise – I will establish a quiet hour with expectations and a financial penalty if not followed.
  • Parking – I will address parking and expectations regarding guest parking.
  • Trash – I will address where trash is to be placed.
  • Laundry – If there is a common laundry I would address rules and regulations on use and financial penalties for misuse.
  • Pets – Importance of cleaning up after them with a fine if residents don’t immediately clean up. This too would have a fine.
  • Use – If I paid water, trash or if the location had prized parking, etc., I would be ultra strict on who can use the premises. The last thing you want is all of your tenant’s friends/family bring over their laundry to wash it at your house or have randoms using your dumpsters.

3 Lease Tips

  1. Always have a fine: I have learned the hard way so I impose a fine in my lease when it is legal. It is important to follow your local and federal laws here but imposing fines allows direct punishment. Otherwise, our only option is to evict! Eviction is a costly, sometimes lengthy process and who knows if the tenants will continue to pay rent once notice to evict has been served. On the other hand, If you have a fine, you can charge them money and still let them stay in the home.
  2. Always Review the Lease with Your Tenants: The point of my bible is to have an operating agreement where each side, both the tenant and the landlord, agree. Therefore, I review it in detail. I set aside an hour to go over everything with tenants.
  3. Leave the Lease Blank: My lease is blank. I have my tenants fill in a blank lease. This way their handwriting is throughout the entire lease. It allows there to be no misunderstandings or later– “I didn’t know that…”

Being a property manager has its up and down moments. For me the goal is to maximize my financial benefit while making real estate as passive as possible. That is possible through a strict all encompassing lease. It prevents the “Can we talk about x?” It is right there in the tenant’s own handwriting.

Don’t forget the KEY!!! This is the golden ticket:

YOU MUST HOLD THEIR FEET TO THE FIRE

It doesn’t matter how great a lease is if you do not enforce it and hold their feet to the fire. I always follow my lease and it makes things much easier. The only times I have had regrettable consequences were the times were I did not follow my lease to the fullest extent.

ElizabethBio: Elizabeth is an entrepreneur who is turning her love of rental properties into a work-from-home positions that she self manages anywhere in the world. Follow her at Reluctant Landlord. Looking for a jump start to writing your perfect lease? Check out her book, The Everything Lease Addendum: How To for Landlords. It includes all 37 addenda with wordings and the explanations. Elizabeth hopes her passion for turning her ulcer inducing moments into a solid lease helps you learn these lessons vicariously and not through the trials and pains she experienced.