If you’re a residential property investor preparing to hire a property manager, you should absolutely ask these six un-frequently asked questions. Even if you have a manager you’ve already hired, call them and ask these six things to ensure you’ve effectively vetted the company handling your rental assets. After all, your property manager is the liaison between you and your tenants and can often directly affect your bottom line. The six questions to ask when conducting your due diligence on property managers are below
- Are they a licensed real estate agent in Colorado?
The state of Colorado requires a property manager also be a licensed real estate agent. Surprisingly, there are a lot of managers practicing without this licensing. If caught, you may potentially take on the liability for their lack of compliance. The easiest way to check if they are properly licensed is to visit https://apps.colorado.gov/dre/licensing/lookup/licenselookup.aspx Also check under “Disciplinary Actions” to ensure the firm is compliant and have not had negative action taken against them.
- Do they have errors and omissions (E&O) insurance? And with a property management endorsement?
Again, this is required by the state of Colorado. The endorsement is an additional add-on for property management coverage. Ask the company to see this! You want to make sure they have a high coverage limit, as well as discrimination coverage. Also look to ensure it’s a current policy.
- Do they have business liability insurance?
This covers claims made by the tenant either against you or the property manager. You want a manager that has high coverage and a liability umbrella policy.
- Do they have workman’s comp insurance?
Property management firms should absolutely have this. It covers the firm if anything happens to an employee and avoids major losses from being sued.
- How are their Google ratings?
Google the company and look at their rating and reviews. Property managers are not able to control these reviews to it’s a great way to get a feel for how the property management conducts business.
- How is their Better Business Bureau rating?
Like Google reviews, this is an easy online search. Enter in the company name and see what their rating is. You want to work with a company that maintains an A+ status.
While conducting this additional due diligence on a prospective property management firm can be time-consuming upfront, it is well worth the effort. Your
property manager will have the keys to your investment property’s front door so it's vital that you partner with a quality firm. The team at Grace
Property Management is here to help! If you have any questions, give us a call at 303-255-1990. You can download and view our current Errors & Omission Insurance policy plus workman compensation insurance plus property management business liability insurance here.
QUESTION: I’m a Thornton rental property owner with a handful of investment properties. I can't decide if I should hire out or continue self-managing.
ANSWER: While it can be tough to decide, there a lot of quality Colorado firms. By vetting firms with these questions, you will have a better understanding of if outsourcing is the right choice and if you've found a firm to partner with.