So, you’ve decided that property management is the way to go for your investment property. Perhaps this is because you live far from the property, don’t have the time, or lack experience yourself and want a professional on the job. I’ll share my experiencewith a word to be sure every item on this checklist is covered before committing!

Communications

By some reports, the number one complaint that property owners have about property management companies is lack of communication. Make this a top priority, not an afterthought.

• How quickly are phone calls returned by someone who can address your issue?
• Is there a monthly or bi-monthly reporting of visual property inspections?
• Can the reference property owners verify that these communications do actually occur?

Fees

Do your best to be sure there will be no financial surprises. Property management is an expensive bite out of your returns, and unexpected charges can change your planned financial results.

• Leasing fee– What does the company charge to market the property, take and screen applications, write contracts, and install renters? How does the rental term affect the fee?

• Flat fee of one month’s rent for every year’s lease
• Percentage of the rent every month
• An alternative arrangement
• Re-leasing fee– If the tenant wants to roll over the current lease or go month-to-month, does the management company re-negotiate the rate? Is there another fee for this?
• Monthly management fee– Remember that this is in addition to the leasing fee and the costs of repairs and maintenance, all of which flow through to you. Frequently, this is a percentage of the monthly rent, and in most cases you should not pay for vacant periods.
• Other charges– Beware this area of costs! This is a primary source of financial pain for some property owners.
  • On top of the management fee, is there a service fee for each tenant call? The right answer is no.
  • Do you approve repair charges before they are incurred? You don’t want delays in tenant service, but you also don’t want unpleasant and/or unnecessary surprises, either.

References – Referrals – Ratings

• Does the company have a BBB rating? Do they have any complaints? If so, how were they resolved?
• Are there any open complaints with the Department of Real Estate?
• Do other owner-clients give them praise or just an “ok”?

Experience

• I prefer a company that has at least 60 homes under management, but no more than 500 homes.
• I also prefer a local company, not one managing a geographic area that is too large such as all of the Phoenix metro area.

Repairs- This is not the same thing as maintenance! Repairs are typically unanticipated incidents.

• Do tenants first call the full-service management company, or do you handle tenant calls first?
• What level of cost requires your authorization? A ballpark is $300 or more.
• Who does the repairs? Are vendors and sub-contractors actually in-house departments of the property management business? If so, beware of overpaying at both the management and the service levels for each service.
• Do tenants pay for service calls? Is that in the lease?
• Are you allowed to have a home warranty to cover costs?

Maintenance

• What maintenance services are provided, on what schedule, and at what cost?
• As with repairs, are maintenance providers really in-house departments with profits being charged by both the management company and the service provider?

Each of these points is important to understand fully with each property management company you are considering. Beware of any company that is reluctant to provide this information. There are no guarantees, but this is a guide for finding a company that is honest and provides quality services.

What’s the most important thing you want from a property manager?

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