🗣 A lot is changing in the world of Asset Management and property Management. We are no longer in a space of ease and golden cap rate compression ROI waterfalls. With the expansion in place, increased insurance overhead, exaggerated interest rates, and the recapture of the great resignation, Asset Management is the most important part of your investment team. Sourcing a property management company during these times can be hard. For the last three years, it really didn’t matter who was running the show. The cap rate compression was still bringing above average ROI returns. After Covid, the great resignation hit, a massive hire took place and companies, no matter the industry, started to see a change in the operational performances of the business. Training was sub par. Top level executives were working remote, or should I say it, got lazy. Before we knew it, cash flows started decreasing. It is time to rethink how we are structuring our investments.
Before retaining a multifamily property management team, there are several important questions you should ask to ensure they are the right fit for your needs. Here are some top questions to consider:
- What is your experience in managing multifamily properties?
- Assess their experience level and track record in managing properties similar to yours.
- What services do you offer as part of your property management package?
- Understand the range of services they provide, such as rent collection, maintenance, tenant screening, lease enforcement, accounting, etc.
- How do you market and attract quality tenants for multifamily properties?
- Inquire about their tenant screening process, marketing strategies, and how they ensure a low vacancy rate.
- How do you handle maintenance and repairs?
- Understand their approach to handling maintenance requests, their network of contractors, and their response time for repairs.
- How do you handle rent collection and late payments?
- Ask about their procedures for rent collection, handling late payments, and their strategies for minimizing delinquencies.
- How do you communicate with property owners and tenants?
- Inquire about their communication methods, frequency of updates, and how they handle tenant inquiries and complaints.
- What is your approach to property inspections?
- Understand how frequently they conduct inspections, what they look for, and how they document the condition of the property.
- How do you handle tenant turnover and lease renewals?
- Ask about their strategies for minimizing tenant turnover, lease renewal processes, and how they handle lease negotiations.
- What is your fee structure and contract terms?
- Discuss their management fees, any additional charges, and the terms of their contract to ensure they align with your budget and requirements.
- Can you provide references from current or previous clients?
- Request references to speak with other property owners who have worked with the management team to get feedback on their experience.
- What is your Insurance Umbrella?
- Understand what their coverage entails for employees and operations/losses
- What is your fee structure?
- Including Capital oversights and employee payroll
- What is your largest multi-family asset and how long have you managed assets 150+ doors?
- PM companies need to have experience pre-covid for effective operational strategies
- Does their asset class trend match your PPM objective
- What is your hierarchy setup and what eyes will be reviewing your property?
- Discuss maintenance oversight and regional supervision
- What are your Risk Management initiatives?
- Are there monthly check-ins, audits, preventative measures and how is it tracked and logged
- How often do you perform operational audits
- Ask for an example of the audit matrix
- Who is your legal firm, preferred software used and your preferred tenant lease?
- What are your strengths and weaknesses in the market?
- What are the expected RPM site visit schedules?
- How many doors does the RPM oversee? Determine if they are spread thin so your asset isn’t forgotten about.
- What is the typical budget turn around schedule and who prepares it?
By asking these questions, you can gain a better understanding of the multifamily property management team’s capabilities, expertise, and whether they are a good fit for your specific property management needs. If you have a large enough portfolio, have the property management team pitch their SWOT of your asset and/or portfolio. This is a great way to meet the team and the players involved.