What if you could ask your property manager three simple questions and the results would tell you how well your management company is treating your property, and your wallet?
Don’t have a manager? Of course you do. It’s you. So give yourself an honest grade with each question. If you need to shore up, take action to improve, and feel good about sharpening your management skills.
Every so often, as the owner of a management company, I get a question from an owner that causes me to think, “That’s not just a good question, it’s an excellent measure of how well my property management team is performing.” So here are the top three questions that serve as excellent gauges of property management performance, and which you should be asking your property manager:
1) “How fast did you turn my last unit?”
Ask this question – actually ask all three of these questions – in a way that requires a precise answer. After introducing the topic, you want to get more specific by learning dates. You can say something like “Let’s look at what day the last tenant moved out and the date the next tenant moved in.” Then, count the days between.
This is powerful and telling because the answer to this specific question reveals additional measurements. It takes into consideration how fast the manager made necessary repairs. It brings up the issue of how quickly and effectively the property was advertised. And finally, how fast did all your work – the repairs and advertising – pay off in the form of a new tenant’s rent check? If you like, you can also ask them how they arrived at the price at which to market the unit. Did they do a rent survey to see what price other similar units were being marketed at, or just go with what the same rental rate they had in the past?
Feel awkward in pinning down your manager by requesting specific dates? Don’t. Whose asset is this? Yours. Who said they’d be transparent and share all valuable info when they courted your business? Your manager. You’re just following up on what was promised. This is important business. Once I remember saying to a sharp, demanding client: “I’m glad you’re on your game. It forces us to be on ours.”
2) “When was the last time you walked through my property?”
Another indicator of your manager’s caliber is their answer to the following simple question: “When was the last time you – you personally – were at my property?” Sure, when they originally asked for your account, they said they’d visit it regularly. Call either the owner of the company, or the specific manager that handles your property, and ask the specific question: “When was the last time you personally were at my property?” Not your gardener, not a repairman, but you.” If they’ve taken an oath to protect and serve your profits and property, there’s no excuse for them not putting their shoes on your soil, regularly. If you don’t get a real date, it’s time for concern.
Last week, as a favor to a client, I went to view a property that the client was considering buying. When the agent and I walked into the kitchen of the very first unit, we saw the water running for no reason in the kitchen sink. Non-stop. The tenant said one word: “Broken” That was it. An unreported leaking faucet that the tenant didn’t call about, and hundreds of dollars and unconscionable amounts of water were wasted. Only regular interior inspections turn up these and a myriad of other important matters, that can only be detected by marching through units on a systematic basis.
Sharp owners insist that their managers thoroughly inspect the interior and exterior of their property at regular intervals, and the sharpest join in on the inspection process on occasion.
3. “What regular preventative maintenance do you perform?”
Even better yet, in order to drill down and ask this question in a ‘tamper-proof’ manner, ask “What preventative maintenance did you do last on my property?” Nobody can fake this answer. Regular preventative maintenance includes low-cost items such as cleaning rain gutters & downspouts to ensure roofing and stucco aren’t damaged. If your manager has done any preventative maintenance, they can document it by finding the bill on a statement. This confirms your property manager is doing things to prolong the life of your asset.
If your company says “Yes, we actually have a master calendar with all regularly scheduled maintenance for all our properties” and can show it to you, you know you’re in the hands of professionals. Weak managers will say, “We wait to hear about problems.” Think that’s saving you money? That’s like a heart surgeon saying “I wait for you to have a heart attack before I do anything helpful.”
These questions were carefully selected to eliminate the possibility of a one-time fluke or single misstep from skewing the results. That’s worth repeating. None of the 3 questions can have bad results because of a one-time accident, freakish occurrence, or other temporary problem that can be used to explain poor results. Think this through. Either they turned the last unit fast, or they didn’t. Either they’ve inspected the interior of your units recently, or they haven’t. Either they’ve performed important preventative maintenance, or they haven’t. No gray areas here.
If your manager’s answers were just ‘okay’:
If you think your manager is doing a reasonable job, but has room to improve, take the time to meet with them, in person if possible, and tell them what your concerns are. You might want to use the following intro: “I know you have other clients that you manage for. But I have only one manager, managing property that’s precious to me. Entrusting it to you is a big deal for me. How about we establish these three criteria – turns, personal inspections, preventative maintenance – as our ‘management dashboard’? Let’s make it a basis for ongoing reports and communication.” You can tell them “Let’s both mark our calendars to circle back quarterly, (or sooner if need be!) and review just how we’re doing in these areas?” Did they welcome this request, or did you just hear a reluctant sigh?
If your manager’s answers were weak:
If your property manager didn’t do well on these critical management basics, you shouldn’t feel responsible to guide them to better results. If it was three strikes against them, there’s strong reason to consider change. Nobody welcomes change. Replacing managers can feel overwhelming, but on-boarding new properties is easy for strong management companies if they’ve been doing it for years.. Good managers have the elements of a transition boiled down to a science. When interviewing, ask them “How do you handle a transition?” Do they have a systematic way to collect tenant information, and learn about service providers, so that they can hit the ground running? If they can show you that they really do have this process polished, you can be confident you’re moving in the right direction.
Some owners keep poor managers for years, thinking “The devil I know is better than the devil I don’t.” Good management disproves that fast, in the form of improved profits, and a better-maintained property. And the worry of whether your property is managed well or not is transformed into appreciation and relief. It’s exactly that peace of mind and confidence which you deserve, and have been paying for all along.
David Crown is the owner of Los Angeles Property Management Group. He manages all property types, and has led the acquisition of more than 300 investment properties over the past two decades. To contact directly, email him at [email protected] or call 818 646-8151. For general info, visit www.lapmg.com