Questions Foreign Service Homeowners Should Ask
Curious about how to interview a property manager? Northern Virginia Realtor Carolyn Connell knows a little something about the professional property management needs of Foreign Service homeowners. She not only specializes in Foreign Service relocations–she has experienced a few herself. Here’s what Carolyn had to say about the special needs of Foreign Service families who decide to rent out their home while overseas. This information is also relevant to government and military personnel and families!
Because they are far away, they need to know that their home is in good hands. Just like any other property management customer, they are counting on the property manager to screen the tenants well and find good people, to check on the home regularly, and to let them know promptly if anything is amiss. They count on them having excellent contractors for repairs. They need to feel their interests are protected, that the walk-through inspections are thorough. They want to come back to a home that is in substantially the same condition as it was when they left it, reasonable wear and tear excepted. Regular communication is important
What Kind of Professional Property Management Do Foreign Service Families Need?
If you’re relocating overseas, you will need a firm that does the following:
- focuses exclusively on residential management and preferably does not do real estate sales.
- maintains a vibrant network of local real estate agents eager to show their properties.
- has a comprehensive stable of responsive and cost-effective repair vendors who are able to resolve the various issues that may arise. (More on this below.)
Finding an excellent professional property management company takes time–and you should prepare yourself by interviewing several firms, armed with the following key questions. These are the same questions any homeowner should ask–but they’re particularly important for landlords who are going to be in different countries and time zones. You’ll need to rely on your property manager. You do not, for example, want to find out after your relocation that your PM didn’t do a proper initial tenant screening. The consequences could include going for many months without income from your property–and dealing with an eviction from the other side of the world.
I have included WJD’s answers to the questions, so that you can learn more about our services.
1. How do you screen prospective tenants?
Systematic, thorough tenant screening is critical for guaranteeing your rental income and protecting your home. When a property management firm screens prospective renters, they should do the following in every single instance:
- Obtain a thorough credit history.
- Obtain an equally thorough background check, especially any record of criminal convictions, civil judgments or sex offenses.
- Get an up-to-date rental history which should include landlord references and an eviction history if applicable.
- Verify their employment with special attention paid to their debt to income ratio.
Note: Some management companies allow applicants to supply their own credit history. Make sure any firm you consider does the research independently!
At WJD Management, we use a thorough screening process for every rental application we receive. It includes industry best practices, as well as premium software applications, to vet prospective renters for our clients. Our process is legally compliant, systematic, comprehensive, and effective. We analyze their income and their debt to see if their ratio is within an acceptable range, much the same way a lender would do. How do we know it’s effective? Though we have 400+ properties in our management portfolio, we have never had to actually evict a tenant. Which brings me to the second important question you should ask a property manager.
2. How many times have you had to evict a tenant?
Evictions are expensive, and the process takes a long time. If a PM firm refers to having extensive experience with evictions, that should be your signal that something is very wrong. Either their screening methods are deeply flawed or they are ignoring the problems that their screens reveal. (Sometimes PMs will move too quickly to fill vacancies and disregard evidence that a tenant is not qualified.)
WJD Management is proud to cite its record of 0 evictions in the past 30+ years. We have of course had to terminate a few leases for various reasons, but these tenants have all left of their own accord. We have never had to actually put a tenant “out on the street”.
Many prospective clients are surprised to hear that, assuming that we must routinely deal with at least a certain percentage of evictions, due to the volume of rentals we manage. However, our screening process is tested, and it works well to protect our clients.
3. Do you have longstanding relationships with vendors across all home services specialty areas?
When you choose to work with a management company that has established relationships with an elite group of tried-and-true contractors, you (and your tenants!) will get a higher level of service across the board. Work requests will get faster responses, and repairs will happen much more economically and efficiently. Very often, because of the loyalty they show vendors, management companies can get (and pass along to their clients) volume discounts
WJD Management has acquired an enviable stable of home services specialists over the years. We have formed lasting and valuable relationships with licensed and insured contractors who offer quality services at competitive rates. We receive volume discounts from many of our vendors, and we pass these savings directly to our clients. And the overwhelming majority of our vendors are smaller, family-owned shops that actually care about the quality of their work.
4. How quickly do you pay owners?
Know the timing of your cashflow.
- How and when will you get your rental proceeds?
- Does the professional property management firm mail checks to clients or use direct deposit?
- Will you have access to an online portal to check payment status?
WJD Management remits payment of rents received on the 6th of each month regardless of whether that date falls on a weekend or holiday. We deposit funds electronically into the client’s preferred account. Our online portal gives owners the ability to review all transactions from the start of their account with us right up to the present day. They can also see a year to date income and expense summary as well as annual summaries for every previous year.
5. Do you report regularly and thoroughly to homeowners? Do you provide easy online access?
Find out whether the property management company has a system of regular communication/reporting to its owners.
- How will you get the information you need about your rental?
- How’s everything going at the property?
- What maintenance requests, if any, have been submitted during the course of the month?
- How are receipts and reports of income and expenses being recorded and filed?
- Will you have electronic access (preferably through a secure online portal), so that you don’t have to rely on hard copies and overseas mailings?
- How easy will they be to reach if you have questions about any of that reporting?
- Do they maintain regular office hours, with a dedicated admin staff?
- In general, Will they make it easy for you to get your hands on any information that’s important to you.
WJD Management upholds a policy of full, regular reporting to clients–as well as secure owner access through a dedicated online portal. We want to make it as easy as possible for all our clients to access the information they need about their property–and especially for our clients who are stationed overseas, we want to make sure that information is readily available in electronic form.
6. Is the lease you use fully legally compliant?
Ask the professional property management companies you interview whether their leases have been developed (and vetted by a real estate attorney) so as to be fully legally compliant. As the owner of the property, you’ll be the one who’ll have to pay the consequences for non-compliance. Additionally, confirm that the company is aware of and observes all federal, state, and local fair housing laws.
WJD Management has developed a lease that complies fully with all federal, state and local laws. Moreover, we maintain an active membership in the National Association of Residential Property Managers, which keeps us apprised as these laws change. Our lease reflects our up-to-date knowledge of landlord-tenant laws, and it is reviewed at regular intervals by our attorney. We are fully compliant with all fair housing laws.
7. Do you provide contractor services at cost?
Markup of contractor’s invoices is widely practiced in our area, and it can take a big bite out of your bottom line and could even prevent you from having positive cashflow. Find out what the property manager’s policy is regarding repairs they arrange on your behalf. If a company applies a markup to its contractors’ charges, that markup might be as much as 10 percent, which could really add up when a system like a furnace or heat pump needs to be replaced. Be especially cautious if the firm has their own in-house maintenance crew, this is something that should be fully disclosed.
WJD Management is a fee-for-service entity, and we believe that it would be a substantial conflict of interest to tie our own revenue to higher contractor expenses. Our monthly management fee covers all our services in this regard, we do not mark up our contractors’ invoices. Quite the opposite, we actually pass on the savings we get from our preferred vendors to our owners. Our job is to help maximize our clients’ rental income, not to nickel and dime them.
8. How will you determine the market price for my home?
Will the professional property management firm do a market analysis based on the experience of their own staff members?Or will they rely on individuals outside of their firm to provide that information? Do they have access to the private MRIS (MLS) database and will they perform a comprehensive examination of the information contained therein or is their assessment merely educated guesswork?
WJD Management uses a tested process for gathering true comps and performing an accurate rental market analysis for each of the properties we manage. As a licensed brokerage, we maintain a subscription to the MRIS and draw upon that data to compile a rental market analysis that we believe is the best and most strategic in our region. For a look at what goes into our process, see this article.
9. Do you provide 24/7 emergency service?
If your hot water heater bursts in the middle of the night, will the property management firm get the appropriate contractor out to the property right away? It’s critical that you get immediate responses to emergency requests, regardless of whether it’s a holiday or the dead of night. Instant emergency responses protect your home and keep your tenants comfortable and happy.
WJD Management has procedures in place to handle emergencies at all hours quickly and professionally. Contractors across all service areas are on call at all times to address water-related issues, heating emergencies orany other after-hours problems that may arise. In the event of refrigerator or air conditioning failure, WJD has portable units that we can deliver to the property at a nominal cost until the problem can be resolved.
10. Will I be required to sign a separate Listing Agreement when you need to find a tenant?
Many area professional property management entities do not list the homes they manage when they need to find a tenant. One reason for this may be the fact that they are part of a larger organization and as such do not have licensed Brokers or Realtors on staff. Or the entity itself may be unlicensed and as such, legally unable to list property in the MLS. Whatever the case may be, the bottom line is that the rental market analysis, the rental listing, the promotion of that listing, in fact the entire marketing process will be in the hands of someone who may or may not be familiar with your home. Someone who may or may not know anything about the rental market in your home’s location.Someone who is most likely a sales agent and who may have little or no experience in the rental venue.
WJD Management’s broker is the exclusive listing agent for all of the homes in our professionally managed inventory. He has intimate knowledge of all of our homes features and nuances as well as a thorough knowledge of the rental market conditions in their locations.
11. Do you sell real estate as well as manage properties?
If the professional property management firm you interview has an affiliated real estate sales arm, you need to ask some tough questions.
- Will they require you to use one of their agents if you decide to sell?
- What if the tenant decides they’d like to buy the property and you’re eager to pursue that course? Will you be bound to the use the management company and give them the commission?
- Is the real expertise of this PM firm in management or sales? The answer to this question will determine not only the quality of the service you get–it’ll determine the choices that may or not be available to you later as a seller.
WJD Management is a licensed real estate brokerage that does NOT have a sales arm. That means that property management is all we do–we do not use our rental properties as a means to future sales as many of our competitors do, and therefore, we have no conflict of interest in that regard.
12. How will you advertise my property?
Have the company walk you through its entire marketing plan from start to finish. Ask if they install yard signs where permitted. See if their marketing includes a virtual tour. Assuming they will use the MLS when they list your home, find out which other internet sites they are going to feature your home on.
WJD Management uses the larger post-style real estate yard signs (where permitted). We also shoot virtual tours of our homes when possible and these are featured on the MRIS listing as well as on the various sites which that database is able to export to. In addition, through our subscription with Listhub, our listings appear on over 900 real estate-related websites including Zillow, Trulia and Craigslist