Property Management 2.0

Today we move forward with our exploration of potential interview questions that a real estate investor or landlord should ask property management company candidates.  The original blog post for this series can be found here:  How to Interview and Hire the Right Property Management Company for Your Apartment Building

We have put together a list of 12 questions to consider asking during interviews with PMs – questions #5 and #6 are below:

Property Management Company Interview Question #5

Does the property management company send out monthly income statements and financial reports?  What do these reports look like and how are they delivered? Can the company send over a sample of the rent roll, income/expense statement and balance sheet for review?

The ideal property management firm will send its clients a monthly (NOT quarterly) set of reports that are easy to read and do not require a degree in accounting to figure out how much money was brought in and spent.  In our opinion, these reports should be sent as PDFs via email as this medium is much Greener, efficient and faster.

Property Management Company Interview Question #6

How does the property management company handle evictions? What are the costs to evict a deadbeat tenant?  Does the property management company charge extra admin time to coordinate the eviction activities between the lawyer, courts, process server and delinquent tenant?

Most property management companies will have a relationship with a local landlord attorney who specializes in tenant evictions.  Find out the name of the firm that the property manager uses and find out the success rate it has for its eviction cases.  The last thing that you ever want is for an eviction case to go to court with an incompetent legal council…

That is all for now – have a prosperous and profitable week!  _Trevor (Disclosure: I am partner of First Light Property Management, Inc)

Links:

Property Management Interview Questions (1 & 2)

Property Management Interview Questions (3 & 4)

Here at Property Management 2.0, we are always providing our perspective on property management; apartment leasing, apartment marketing, etc.  This week we thought it would be interesting to hear from a writer who is not directly related to the investment property industry and find out his take on what he looks for in a management company. _Trevor

What to Look for in a Property Management Company in Los Angeles (or any other city, for that matter)

Managing your company’s property can be quite stressful. Not all property management companies can offer you optimum services, especially if you are based in Los Angeles. Look for a Property Management Company which can promise you the following features:

Resolving Maintenance Issues:

An ideal property management firm would have the ability to resolve every imaginable maintenance issue. It would use a variety of independent contractors that would provide you and your property quality work at suitable rates and speedy turnaround. Another benefit to this is that they would use their own experts to handle all issues.

Leasing out:

Qualified tenants are sought by a proper Property Management Company to lease your investment property. Best market rents are ascertained by first conducting rent surveys in any suitable area. Your ideal property management company will market vacancies by whatever means that are effective. These include print media, online classifieds and classified ads.  The property itself should also be made attractive by adding eye catching signs and banners. Lists of interested or potential tenants who call is kept and are followed up through calls or emails later on.

Collecting Rent:

A good property management company gives little leverage on rental collections. Rents should be collected on the first of every month. If there is delay in payments then late fees are demanded and legal action is also pursued in case of non-payment.

Record-keeping:

All finances in-flows and out-flows in a competent property management company are tracked by the computerized system capable of providing all the reporting needed for tax compliance. All requested expenses are disbursed in timely fashion and rents are recorded in detail.

Reporting:

Monthly management reports should be sent on a specific date of the month. The current leasing activities and other details should be included in the report.

Others:

A good property management company should understand that your income property involves much more than a simple investment. Whether your income properties range from single family homes, offices, buildings, commercial properties, shopping plazas, condominiums to large multi-unit apartment complexes the company should be there to serve you.

A good firm approaches property management as a business that generates income. Its aim should be to keep your income high and your expenses low. With such a company, the owners of properties should have the peace of mind that their property is taken care in the best way. To this end, a property management company should maintain a high standard of accountability and reliability.

Guest post by:  John Adams, DOW-PRINTING

Website:    www.dowprinting.com – it’s a printing website that Provides Online Business Cards Printing, Brochure Printing, Flyers Printing, Sticker Printing and other printing services online.

Please welcome once again First Light Property Management’s resident Green Expert as she solves the mystery of the “Blue Star” and what it means to the Green Movement.  Class is now in session…  _Trevor

For those relatively new to the “Green” movement and interested in learning more about what can be done to conserve energy and to slow down the detrimental effects of global warming, the EPA (Environmental Protection Agency) is a great place to begin.  Even for seasoned “Greenies”, the EPA provides a tremendous amount of tools and resources to help you make wise decisions as a consumer.  In an effort to conserve energy, the government created the “Energy Star” program which is operated by the U.S. Dept of Energy and the EPA.  The EPA bestows the “Energy Star” label to products that meet their strict energy saving specifications (click here for the full breakdown of how a product earns the Energy Star logo). This logo was created in an effort to make it easier for consumers to identify energy efficient products.  It may cost more initially to buy items with the coveted Blue Star, but in the long run you will be saving money as well as energy.  It really is worth it.  If you see this label on any appliance or product that you’ve purchased, know that you are helping to saving the planet, one step at a time.

Per the EPA, by making better choices, “Americans, with the help of Energy Star, saved enough energy in 2010 alone to avoid greenhouse gas emissions equivalent to those from 33 million cars — all while saving nearly $18 billion on their utility bills.”

Has your property management company considered using Energy Star products its apartment units and laundry rooms?

Yours in Green,

Rhoda

This week we continue with our suggested list of questions to ask while interviewing property management company candidates for your property.  The original blog post can be found here:  How to Interview and Hire the Right Property Management Company for Your Apartment Building

We have put together a list of 12 questions to consider asking during the interview process with PM companies – questions #3 and #4 are below:

Property Management Company Interview Question #3

What is the term of the contracts between the property management firm and its’ clients?  Are there any early termination penalties or fees?  What type of notice must be given in order to dissolve the relationship?

In the event that the contractual relationship with the property manager does not work out, it is best to know up front what exactly it will take to walk away from the agreement.  Remember: as with all contracts, everything is absolutely negotiable.  If the termination clause is unreasonable, let the property management company know and try to settle upon terms that are agreeable to both parties.

Property Management Company Interview Question #4

Does the property management firm have its’ own in-house maintenance crew? Or does it contract out all maintenance and repairs?

If the maintenance crew is in-house, what does the property management company charge per hour for repairs?  Does it mark-up materials?

If the maintenance is contracted out, does the property management company mark-up the invoices from the contractors or charge any type of fee?  How are the outsourced contractors screened and selected?

The purpose of this line of questioning is to ensure that any hidden or embedded maintenance costs are disclosed from the beginning so that there are no surprises when the first monthly statement arrives.  Furthermore, if the property managers are hiring third party vendors to service and maintain the investment property, it is advisable to find out if licensed, bonded and insured contractors are being hired.

Have a great week,

Trevor

Property Management Interview Questions #1 and #2

How does a property owner hire a property management company to manage an apartment building? The answer is: VERY CAREFULLY!  An excellent property management firm can be the biggest assets that an investment property has.  On the other hand, an inadequate property management can be the absolute bane of the investment property’s bottom line. A savvy investor knows that one must choose wisely and research well before a contract is signed.

So how does a property owner find, screen and ultimately select a quality property management company?  To begin, we recommend putting together a list of 5 or 6 management firms who operate in the area that the investment property is located.  Half of this list should be comprised of companies who were referred by a friend or colleague; and the other half should include property management companies with the best customer or tenant reviews on Yahoo! Local and Google Places.  A diverse prospect pool will enable the Owner to see the many different attitudes and approaches that are available in the apartment management community

Once a list has been constructed, it is time to conduct phone interviews of each company.  We have put together a list of 12 questions to consider during the interview process, which will be posted in sets of (2) over the next few weeks.

Property Management Company Interview Question #1

What does the property management company charge for management services?  Is there a leasing fee? Is there a start-up fee?  Does the company have a per unit minimum dollar amount?

Property managers generally charge a monthly fee of gross or scheduled monthly income and may have additional administrative charges, travel time, advertising costs, postage and shipping cost tacked on.  Each management company’s fee schedule will vary, depending on the city and state.

Shameless marketing plug:   Generally, First Light Property Management DOES NOT charge our clients for anything except a flat monthly percentage fee.  Beware of a property management company that nickel-and-dimes you to death.

Property Management Company Interview Question #2

This one is more of a test than a question:

When you first call the property management company to discuss its’ services, does a LIVE, pleasant, person answer the phone?  If a decision maker of the company is not available, does that person politely take your message?  Or do you reach an automated system or voice mail box?

Communication with your future property manager is of the utmost importance.  If you, as a new customer, cannot reach the company now – how will you be treated when you have an urgent question or issue?

Additionally, the chosen management company must be responsive in a manner of the client’s preference (e.g. email, telephone, fax, snail-mail).  An Owner should find a management company that is flexible and communicates in the way that is most comfortable. Some Owners have more needs and requirements than others – be sure to be upfront and tell the property management company about your expectations early on.

Happy Hunting!  _Trevor

We are pleased to announce First Light Property Management Inc.’s inclusion in a recent article for the Lowes Commercial Services website, www.LowesForPros.com.  Trevor Henson, Partner and COO, was interviewed by writer, Kelly Haglar, as an expert source into the reasons why a property management company, landlord or apartment owner should update their onsite laundry facilities. The article outlines the following five tips to help create a more efficient and profitable laundry room:

1. Purchase high quality now, save on maintenance costs later.
2. Get help with the update.
3. Find the right ratio [of laundry machines to number of tenants].
4. Add more efficient lighting and ventilation.
5. Improve security and access

We encourage you to check out the full article which can be found by following this link: “Why You Should Update Your Laundry Facilities”.

Interested in reading more about how to improve the Net Operating Income (NOI) for an apartment building or investment property?  Here is a link to a previous Property Management 2.0 post on the subject: “Property management and dirty laundry: How to increase NOI with outsourced laundry machines”