Finding the right investors and would-be clients is an important task for a successful property manager. And continuing to build your portfolio with more clients can be a chore, but once you have the tools of the trade down, you may find that some of the owners knocking on your door are not a good fit.
A good owner-manager relationship is the key to ensuring that everything runs smoothly for everyone involved. Because of this, there is a surplus of information out there for owners about how to ensure that they find a great property manager, and–similarly–when to fire a bad property manager. However, just as a bad property manager can spell disaster for tenants and the renting process, having a bad owner can cause undue stress to a property manager.
Sometimes personalities don’t mesh, or owners are unwilling to cater to your management style. How do you know when it’s time to dissolve a manager-owner relationship? You already know how to find and screen for the best tenants, and you also likely know how to evict a tenant if the relationship turns sour, but what about some helpful tips on how to help property managers to choose the right owners and their properties for your portfolios?
How to Interview Owners for Your Portfolio:
Whether you are starting a new property management business or looking to add to your portfolio you might be tempted to take on any and all properties to manage, however that is not always a good idea.
It is important to set your standards on what you would consider “acceptable” for your business and to maintain the status of a reputable management company. While it can be tempting to say yes to every new owner, now might the time to practice saying no, when you can tell an owner won’t be a good fit with you and your business.
A client whose needs and desires do not match your business practices will create unnecessary friction and time loss. Even for those starting out and searching for new clients, your time may be better served by using it to find clients with which you get along well. For this reason, it can be important to interview owners before adding their properties to your management portfolio.
Preliminary Questions You May Want to Ask:
- Why is the owner seeking management services?
- What are their expectations?
- Do they want full management services or tenant placement only?
- How would they like to handle repairs/ maintenance?
- What are their expectations of what the tenants’ responsibility vs. their responsibility?
- How would they like you to handle yard care?
- Tenant Responsibility? Vs. Hire yard care?
- How would they like you to handle rental income?
- When would they like to receive their owner disbursement? Does it fit into your system on when/how you pay owners?
- Does the owner have a current mortgage? If so do they feel they can make the payment in the event they are not receiving a rent payment?
Interviewing Your Prospective Property Management Clients:
If you are satisfied with your prospect’s answers to the preliminary screening questions, there are ways to dig even deeper before adding an owner’s property to your management portfolio.
Do a walkthrough inspection with the owner so you can note things that might need to be done prior to renting. If there is already a tenant, the walkthrough will give you an overall view of the current condition and an overall feel on how well this tenant is taking care of the property.
Finding out if this type of property fits into your portfolio, and if it represents the overall condition of your company can be key. When meeting with your potential new owner as you begin discussing the property, find answers to the following questions:
- If there is a tenant what is their payment history?
- Is the house being transferred from another management company?
- Did the owner fire the previous property manager, or vice-versa? Why is the owner changing management?
- Is this the first time they are offering this home as a rental and was this their primary residence?
- Keep in mind that some people who have only one rental tend to be a little more attached and sentimental the those who are investors–particularly if the rental is their former place of residence.
- Is the home located in a HOA?
- If so request a copy of the HOA rules and specifically, find out their regulations in regards to tenancy.
- Where does your owner reside?
- Is it in your business practices to accept out of state or international owners?
Finalizing The Agreement
Remember, an owner who is doing their due diligence will likely want to interview you as well. During this process, it can be a good idea to glean a sense of their overall financial health. Their financial goals and their current financial situation will have a direct impact on how they handle repairs, mortgages, and other expenses.
If nothing so far has raised any red flags, it’s time to agree upon and negotiate management fees. Give the owners a copy of your lease agreement, management agreement and other state required forms to complete. If they have any questions or disagreements, truly evaluate if it would be best practice to negotiate on the issue.
How to Fire an Owner:
Unfortunately, there will be times when an owner and a property management team do not work well together. Tenants can suffer in these instances, and so can your management team.
Indicators That It’s Time to Fire an Owner:
- There is no mutual respect between you and your client.
- After attempts to meet and resolve any issues, your relationship is not improving.
- The clients have a sentimental connection with the property, and that is impeding your ability to manage it properly.
- When you are managing owners’ personal property some clients have such an emotional connection, that it is difficult for them to turn it over to a property manager. (This is most common especially if it was their first home or family inheritance.) You need to be sensitive to their feelings but not allow them to jeopardize what you know is best practice, legal, or meets your standards of business.
- Overarching personality indifferences.
- Business owners tend to neglect their own personal experiences all in favor of making more money, but at times it is just not worth jeopardizing your personal and business health.
Client relationships are tricky especially when you are the owner of your business and you’re trying to build your portfolio. It’s easy to assume that when there are clients that you might not get along with, you need to try to make the relationship work. Speaking with troublesome owners is the first step to resolving an issue. Trying to work out your differences to save the relationship and retain the business should always be your first step. If you still find yourself stressing over managing their properties or working with this particular client, it might be time to move on and encourage the owner to find another manager who can better serve their needs.