Ask the right questions when picking a property manager

Investment real estate owners will be happier if they do this analysis
By Colin Conway

The two primary goals of investment real estate owners should be to protect their assets and increase net operating income. If you plan to select a property-management company to help you achieve those goals, and to handle the day-to-day oversight of your property or properties, there are some questions that would be good for you to consider.
*What is your plan for the property? Whether you plan to hold your asset long term or to sell it within a couple of years might impact your choice of management companies. You might change your goal, of course, but talk to the prospective company about how it can help you reach your current objective. Prepping an asset for sale or managing it long term aren’t mutually exclusive. However, a strategy should be discussed and steps taken to ensure you have the best support for your plan. Managing day to day isn’t the same as managing with a vision.
*Does the size of the property-management company matter? I don’t believe the size of the company makes a difference in the quality of service. Small or large shops can provide quality management. However, if your current or future group of assets extends beyond the local geographical area, you might want to consider a larger company that has market coverage matching your portfolio.
*What is the specialty of your prospective management company? Each type of asset will have its specific needs, and not all companies specialize in the type of property you own. Some companies can provide a full-service menu of management services, but others might not. For example, a company might provide exceptional service in multifamily property management, but be outside of its area of expertise in handling a retail strip center. Ask for a list of similar properties that your prospective management company is currently overseeing and take a look at them.
*What level of involvement do you want? If you desire minimal involvement in decision making, make that clear to your prospective management company; similarly, if you want to be hands on, make that known as well. Decide early on how much involvement you want. Your management company should be able to tailor an arrangement that fits your preferences. This will help your relationship get off on the right foot and, hopefully, continue to build for years to come.
*How much decision-making power will you give the management company? Property managers make decisions daily to help support your goals. There usually is a cost to those decisions. You can limit or expand the property manager’s ability to respond by defining a maximum dollar amount per expenditure. Make sure to define this limit in the property-management agreement.
*How does the management company handle after-hours emergencies? Hiring a management company means you should get 24-hour coverage for your property. If your property manager goes on vacation, how does the response get covered? What happens on evenings, weekends, and holidays? Ask the prospective company how it responds to after-hours emergencies.
*Who will manage your asset? Before selecting a property-management company, find out who will be assigned to your property. You’ll work directly with a property manager, so take the time to interview that person. Don’t just look for technical knowledge, but find out if you like how that person responds to you and your concerns. If you like the company, but didn’t connect with its proposed property manager, ask if you can work with someone else. You’ll want to find someone you enjoy working with so you can build a long-term business relationship.
*Ask for references on the property manager as well. More than likely these references will be clients who are highly satisfied with the property manager, but take the time to talk to them, anyway. Find out why that particular client enjoys working with that manager. Researching references could provide you with insight such as how the manager responded to a real emergency situation, cut expenses, or increased occupancy.
Colin Conway is a commercial property manager and sales and leasing agent with NAI Black, of Spokane.

Researching references could provide you with some valuable insight.

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