CATEGORY 3: FINANCIAL
Without a doubt you should be in alignment with your financial figures, which is why you need to ask your property manager about their fees and other financial questions. #5 What are your management fees and are they based on a percentage of the rents collected or are they based on scheduled rents? #6 What are your tenant placement fees? The difference between collected vs scheduled rents is essentially incentive vs indefinite. The first one, collected, bases the fee off a percentage of the rents collected so the property manager only gets paid if you get paid. They have a little more motivation to collect rents in this position. If the fee is based on scheduled rents, the more common practice, the property manager receives their fee whether or not rent is collected. Similarly, the tenant placement fee varies throughout the industry. Some charge one half of one month’s rent, others charge a little more based on a monthly percentage. Other property managers (that we don’t use) charge a full one month’s rent. As you are analyzing your deals, you will be building these numbers and amounts in, so it is helpful to know when deciding on one property manager vs another.
CATEGORY 4: OPERATIONS
As the investor, you will not be the one talking to your tenants and handling day-to-day upkeep of the property. As your property manager, they should have a system in place for any accidents, predicaments, or repairs that come up. #7 How are maintenance requests handled? What is the process? #8 What happens if there is an emergency at the property? What if something happens in the middle of the night or on a weekend? What does the process look like? One of the biggest things that will create turnover for your tenants is when the landlord doesn’t take care of the property. So, ask your property manager, “When the tenant calls and has an issue, what is the process of getting it taken care of?” The second thing you want to ask about is how they handle emergencies, such as hurricane, fire, flood, POLAR VORTEX (been there, done that) and what is the standing procedure for those scenarios?
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