Hey guys. Someday I hope to be the one answering questions instead of asking them. Anyway, I keep going back & forth about using a propert management Co. for my future multifams. I realize that I’ll have to do it when it gets too much. I also feel that getting them on my team from the beginning will be beneficial in my education on things to be aware of with these properties. Another reason is that I may not have the time needed to care for them on a daily basis. In my area They get 10% of the rents. It can get costly, but they supposedly take away much of the headaches. Are you guys Pro or Against Prop. Manag. Co.? Thanx
I started my own management company to manage all of my properties. This way I was able to set the ground rules and train people within my management company to handle my properties properly. This also allowed me to start managing other peoples properties.
I personally HATE managing properties. But I also hate giving my money away when I have the means of not doing so. In the long run it was cheaper for me to have my own management company with 3 people working it. One guy is the maintenance guy who I gave a company cell to. He is on call 24/7. The second person is the person to markets for renters, shows the property, and signs the leases. They also handle all of the section 8 responsibilities. This is the most important person. Then the third person is myself. I over see everything and only step in when either of the first two need help, have questions, or otherwise are unable to resolve a situation.
I also buy my rental properties 5 at a time so I have volume.
But for some, it’s just easier to pay another company to do it. In the end, it comes down to how involved you want to be.
You will get very experienced rental property investors on each side of this question.
I personally outsource management and always have, even with my very first property. I don’t get bogged down in the details of day to day operations, don’t have to be an expert in landlord/tenant law, don’t have to go to court to file evictions and don’t have to deal with the maintenance issues at all times of the day or night.
I pay the prevailing rate for the local areas in which I am invested. If I have multiple properties under management with the same company, I always ask for a discount in the management fee. Having professional management allows me to invest in areas outside my backyard, too.
The manage-it-yourself proponents will tell you that you learn the landlord business quicker and better if you do it yourself. You have better control over the tenant screening, and over the quality of repairs. For those that are a little handy, minor repairs don’t have to be contracted out, saving you money for both maintenance and management fees.
Is there a well-defined process/methodology for selecting the right property management company to manage your property? And how do you identify or filter out the bad ones?
I think the average cost is between 10% and 20% of monthly net plus half month rent for each new tenant they sign a contract with.
As for selecting a management company. I would probably look for someone who currently manages the same inventory as I. That is, I wouldn’t want a management company who does mostly commercial buildings to manage my residential properties. I would look for someone who primarily manages other residential properties.
I would also make sure they had the proper staff for management. What is their policy for handling tenant relations? Are they a full service management company or partial?
Anyone have any other questions that should be asked?
You should get a good idea as to whether or not the company seems organized and capable when you speak with them. I don’t have a list of questions, but I would say you should ask any question you may have. Even if you think its a stupid question. By you contacting a property management company it is expected that you don’t know everything there is to know about property management, unless you tell them you’re a guru and just don’t have the time. So any question you may have is valid and should be addressed properly. If they avoid or ‘dance around’ your question without addressing it directly then they might not be someone you want to trust with your financial investment(s). Confident straight forward answers is what I like.
I also like to know they have a good organization system in place. They should be happy to show you examples of what they have or at least let you know what software they use. If they don’t use some sort of property management software then I wouldn’t use them.
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Well, that’s just it…the proper answer is whatever make you happy. Personally, I would be happy if their response was along the same lines of how I would personally handle my tenant relations. Key points like:
Addressing tenant issues in timely manner, like within 24 to 48 ours.
Having a maintenance guy available 24/7 for emergencies and weekends, and 9 to 5ish on weekdays.
Tenant application process which includes screening. If they put anyone who pays the deposit in that could be trouble.
In the end you need to be comfortable with the company that is responsible for your investment making money.
A full service management company means they will do anything and everything required with property management. A partial service management company may only find and place tenants but will not collect rent or address any problems. Which you go with depends on your desired level of involvement…how hands on do you want to be?
I would say the most important thing to look for in a property management company is what your profit will be if you use them. You want someone who you can trust to do what they are supposed to do so you can focus your attention on other investments, while collecting the profit from the investments you have managed. If the management companies system, organization, policies, or lack there of will in turn cause you to make less than your maximum profit potential I would find someone else.