What to Ask Before Hiring a Property Manager: A Financial Responsibility Checklist
When you hire a property management company, you're entrusting them with far more than just your property. You're handing over control of your rental income, reserve funds, security deposits—and in many cases, authorizing them to write checks on your behalf. That level of responsibility demands trust, transparency, and accountability.
Before signing with any management company, it’s crucial to ask the right questions. Below is a checklist of key areas to review during the interview process.
1. Payment to Owner
Questions to Ask:
What day of the month do you send payments to owners?
Is the payment for the current month, or is it held back a month?
Do you offer direct deposit?
💡 Tip: Your rental income should be in your bank account collecting interest—not sitting in the property manager's account. Direct deposit is faster, safer, and more convenient.
2. Taxes
Questions to Ask:
Will you provide an IRS Form 1099 and a profit and loss summary for tax season?
Can you advise on what property-related expenses are tax-deductible?
Having organized tax documentation from your manager can save you time and money come filing season.
3. Accounting
Questions to Ask:
How do you track income and expenses?
Do you keep detailed records and documentation?
You’ll want a manager who provides clear, comprehensive financial records to protect your investment and simplify bookkeeping.
4. Reporting
Questions to Ask:
How often are financial reports sent out?
Can I access reports online?
May I see a sample report?
Regular, accessible reporting builds transparency and helps you monitor the health of your investment.
5. Security Deposits
Security deposits can be a legal landmine if not handled correctly. Mismanagement could cost you the ability to deduct for damages—or worse, land you in court.
Questions to Ask:
How are security deposits handled?
How much is typically collected?
Do you accept personal checks? What happens if the check bounces?
When are refunds issued?
What is your policy on deposit deductions?
How often do you end up in small claims court over deposit disputes?
💡 Best Practice: Deposits should be collected via cash, money order, or cashier's check—not personal checks.
6. Miscellaneous Financial Practices
Questions to Ask:
Do you make payments on my behalf (mortgage, insurance, HOA dues, etc.)?
Are you authorized to sign checks? What safeguards are in place?
How quickly do you pay vendors?
How do you prevent co-mingling of funds between properties?
Make sure strong internal controls exist to prevent fraud and financial mismanagement.
Final Thoughts
Given the serious fiscal responsibility that property managers carry, it's not enough to assume they’re qualified—you need to verify it. Asking the right questions upfront can prevent financial headaches later and ensure you're working with a trustworthy partner.
Choose a property manager who values accountability as much as you value your investment.
