Top 5 Questions to Ask Before Selecting a Management Company for Multifamily Properties
Updated: May 9
When seeking out the right property management company, it’s typical of an owner to ask a standard set of questions. These often cover bottom-line financial results, standard practices and procedures, and overall expectations. While those are all great questions, there are other queries that can be much more strategic, informative, and conducive to generating results for your business.
I’ve learned that there are telling indicators that don’t always match top-line discussion points but will significantly impact your bottom line. Below are my top five questions to add to your list when interviewing a potential management company you are considering enlisting to support your business.
Strategic Questions for Selecting a Management Company
1. What is your employee turnover rate?
Understanding the employee turnover rate of a management company is crucial as it impacts the culture and effectiveness of the property level teams. High turnover could indicate issues with employee engagement and culture, which can ultimately affect the performance of the properties being managed.
2. How much has the company invested in training and mentorship?
An investment in training and mentorship programs reflects a commitment to employee development, engagement, and productivity. Strong training and mentorship programs can lead to better problem-solving abilities and a more empowered and capable workforce.
3. How are you using big data?
Inquiring about how the management company utilizes big data can provide insight into their ability to effectively analyze and leverage data to drive better business outcomes, such as identifying trends, optimizing unit occupancy, and maximizing revenue opportunities.
4. How long have your partnerships with suppliers and vendors lasted in place?
Stable and long-term partnerships with suppliers and vendors can lead to cost savings, timely responses, and efficiency in property management operations. Understanding the stability of these relationships is important for assessing the management company's ability to leverage partnerships for the benefit of property owners.
5. How are you integrating resources?
Understanding how the management company integrates resources and empowers the site team to provide great customer service can speak to their approach to maximizing resident satisfaction and retention rates, as well as their overall commitment to driving results for property owners.
Bottom Line
Choosing the right management company for your multifamily properties is essential for both the financial success and long-term growth of your investment. By asking these questions and thoroughly evaluating your options, you can make an informed decision that aligns with your goals and values. Remember to treat your property manager well and practice the golden rule: appreciation and respect can lead to a fruitful partnership that benefits both parties and contributes to a better world.
FAQ
Q: How do I select a multifamily property manager?
A: To select a multifamily property manager, interview a variety of managers, use an objective evaluation system, meet them in person, evaluate their systems and software, inquire about their marketing and tenant screening methods, check references, conduct background checks, assess their repair procedures, consider timeliness and legal matters, practice selectivity, and budget appropriately for property management fees.
Q: How much should I spend on a property manager?
A: Off-site property management firms typically charge between 6% and 12% of collected rent, while corporate managers typically charge 3% to 4% of monthly revenues plus staff costs. Additional fees may be charged for special services. It's important not to negotiate excessively to ensure your property manager remains motivated and dedicated to your investment.
Q: How can a great property manager contribute to the growth of my portfolio?
A: A great property manager can help grow your portfolio by providing insights and information on acquisition opportunities, landlords preparing to sell, and other potential investment prospects. By treating your property manager well and establishing a mutually beneficial relationship, they are more likely to share valuable information and contribute to the growth of your investment endeavors.
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