Renting your house to a tenant or family can be stressful.
You can avoid many headaches by hiring a property manager to handle everything from paperwork to maintenance. Whether you are new to the real estate game or a veteran at renting out your properties, there are specific questions to ask a property manager before trusting them with your assets.
The following questions are some of the most common and important questions that you should be asking your property manager.
How Soon Will My Place be Rented?
This is one of the most common questions asked by a homeowner new to renting out their property. You want to know how long until you can start making some money! It depends on how fast we can get it fully marketed. This means placing pictures, descriptions, and any other information necessary to get the house on the Internet and in front of people searching for their next home.
After it is one hundred percent marketed, you can typically expect to start receiving rent in as little as five weeks! Of course, this depends on the experience and reputation of the property management team you choose. Choosing the right company to handle your house can result in a fast and professional rental agreement.
How Much Money Can I Charge For Rent?
How much money you can make is probably one of the more exciting parts of renting your house. It would be best if you always talked to a potential property manager about how they find the market rent for your house. It’s crucial to find your correct market rate to minimize any losses while marketing your home for a tenant.
It takes some time and research to find the best market rate, but these three tips can help you decide how much to charge for rent.
- Use zillow.com or trulia.com. These sites are popular and will be referenced by future tenants when they are searching for a home. This gives you a starting point on determining the rental rate you will be charging for your house.
- Look at property management sites. Seeing what property managers are charging for similar houses to you in the same city can give you a great deal of information on how much you can expect to make from your home.
- Inquire about houses in your neighborhood. The prices houses are renting for in your area is the last way we recommend finding the correct market rate for renting your house. Search for houses in your community and call or look online for the rates! If you have an average house in a community charging way above average rent prices, more than likely, your house will be vacant for a long time.
These strategies are just a few ways to find a fair market price for your house. The price point you choose can significantly impact the tenants you attract (or don’t). Ask for a price too high, and people may not even respond to the ad. Place the price too low, and the tenants you find applying might not be able to pass the credit or background check. Do your research, and don’t forget to ask your property managers how they will help you determine the right price.
How Do You Find the Right Tenants?
Without acquiring tenants, you will never make any money off of your rental property. We spend a great deal of time answering questions regarding tenants. A part of property management is the initial attraction of possible tenants to the house. This requires marketing. A management company’s marketing ability will determine how much money you can make off of your property. What is the point in putting your house up for rent if nobody is going to know about it?
Second, asking your property manager how they handle underwriting and screening is essential. How we keep from renting to the wrong tenant is just as important as acquiring the right ones. There are five items we take into consideration while screening candidates for your property:
- Credit score
The credit score required to rent a property is usually based on the rental rate. For example, if rent is over $800, a credit score of at least 580 may be required. If it is under $800, the score can be 520 and still be acceptable. - Ability to pay rent on time
Income is critical when determining how a possible tenant plans to pay rent. The tenant should have a gross income of at least three times the amount of rate. This is an important metric. If it is more than this, you are much less likely to have rent-related issues with this tenant. - Rent verification and history of payments
We would want to talk to a potential tenant’s previous landlords. Finding out if they paid rent on time and took care of the house gives us a good idea of how they will be in the future. - Work history and current working status
Making sure a tenant has a good work history and is currently working will help avoid payment issues. - Criminal background check
Violent criminal backgrounds can lead to many other problems when it comes to renting. We want to avoid any situations that could cause significant problems for the homeowner.
The underwriting and screening process is the first step when sifting through applicants. A fair process can prevent late payments, evictions, and many other tenant-related problems. This leads to a couple of other questions you should ask while looking to hire a property manager.
What is your eviction rate?
A high eviction rate means the property managers are attracting the wrong clients. While it does happen, evictions should rarely occur. They can cause weeks or even months of no income for a property owner. It would help if you always asked about the property manager’s eviction rate.
What is your vacancy rate?
Many things can cause a high vacancy rate but usually are caused by poor management. Great property managers should be able to fill a high percentage of their vacant houses, which means more money in your pocket.
What is your collection rate?
Asking about the collection rate is very important. If a company can fill the houses but not collect the rent, they waste a lot of energy and will have to evict the non-payers eventually. Why would you hire someone to manage your listing if they can’t collect money from tenants?
Collecting rent can sometimes be one of the challenging parts of managing properties. That being said, evernest have around a 98% collection rate on tenants we place in homes. Our successful collections rate is very dependent on our thorough tenant screening process and our disciplined collections process.
What is the average length of tenancy?
The national average tenancy is three years, so anything above that is good. People that live in their homes for more extended periods tend to take better care of them. Also, less vacancy equals more money.
A homeowner often wants to know if they can have a say in who rents their home, and the answer is no. Fair Housing Laws do not allow owners or property managers to take any of the following actions based on race, color, national origin, religion, sex, familial status, or handicap:
- Refuse to rent or sell housing
- Refuse to negotiate for housing
- Make housing unavailable
- Deny a dwelling
- Set different terms, conditions, or privileges for sale or rental of a dwelling
- Provide various housing services or facilities
- Falsely deny that housing is available for inspection, sale, or rental
- For-profit, persuade owners to sell or rent (blockbusting) or
- Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to housing sale or rental.
One of the most common requests from a homeowner is that we only rent their home to a family. Of course, we cannot do; not only can we not discriminate against people based on their familial status, but we cannot ask whether they are married or have children!
Fair housing laws are a serious issue, and we have a zero-tolerance policy here at evernest. If you should accidentally break one of these laws, you could land yourself in a messy lawsuit. For your safety, either strictly adhere to these regulations or let a professional property manager handle finding a tenant and the tenant screening process for your home. However, you can determine if you will allow pets into your house.
What Happens if the Tenant Tears Up My House?
Even when a homeowner is moving out and deciding to rent their home, they may have raised kids in their home or had other great memories from their time living there. The last thing they want is for a tenant to cause damage to their home. So, what happens if they do?
Of course, the first line of defense is the security deposit. When a tenant signs a lease with evernest, we collect a security deposit upfront equal to one month’s rent and hold it in an escrow account until the tenant’s lease is up or terminated.
Upon tenant move-out, a property manager will visit the home and perform a move-out inspection. During this inspection, he is looking for any damages caused throughout the tenant’s stay.
We determine what tenant-related damage is and what is considered general wear and tear. Our maintenance team works up an estimate on the repairs. We charge any tenant-related damage to the security deposit. Occasionally, the damages to the home are more costly than the initial security deposit.
In this case, evernest will charge the tenant for any additional damage upon move out. If the tenant does not pay, we pass it off to collections.
How Do You Handle Maintenance?
After a tenant is in the house, maintenance requests will begin rolling into the office. It may be the only time you hear from most tenants. When you hire a property manager, you should be hiring a professional to take all of your property’s potential problems out of your hands. It seems like most of the issues always happen on the weekends or late at night. Property management is not a 9-5 business. You want someone who is effectively set up with systems and processes to handle things that happen in the middle of the night or on holidays, especially emergencies.
Other questions you may want to ask regarding maintenance:
- How long has your company been working with your current maintenance providers?
- Are they employees or third-party contractors?
- Can you provide me proof that all maintenance providers are licensed and insured?
How a property manager handles maintenance can be the difference between a good and bad relationship with a tenant.
Hiring a Property Manager in Birmingham
Birmingham has many opportunities in low, middle, and upper-class real estate. This, coupled with a stable local economy, are the reasons investors from around the globe have targeted Birmingham as a solid investment opportunity.
Now that we have answered questions about property management, Birmingham homeowners probably wonder what’s the next step. If you have any other questions on finding the right property manager, what you should ask, and how you should proceed, please take the time to contact us at evernest. We would love to answer any more of your questions and take care of your property management in Birmingham.
We hope this helps!