I’m looking for a property manager for a SFH that I will soon be purchasing. The real estate agent thats working with me suggested this company. I spoke with them and they sent me to this page for pricing http://www.riconn.com/page5.html. I am curious as to what you guys think regarding this type of fee schedule. There is no percentage taken but each and everything that I need from him will cost money. Do you think this will cost me more then a typical management company? I do know that other management services that charge a percentage also charge for services done. Are there any specific questions I should ask him when I meet with him?
He did tell me that I can customize the services that I want from him and what I willdo on my own/use someone else.
I am going to be investing 6 hours away from me. I live in Brooklyn and there is no way I could break into this market (I dont want to either). I, therefore will need a property manager but this one seemed interesting because he doesnt charge a percentage.
When using a typical manager, does the percentage cover most things aside for maintenance and supplies?
The reason is because I would like to build equity for the long term. With a triple net lease I would only be making during the 2 or three years that I would be leasing. Also, I dont know if this is so much of a reason but the area where I will be investing is mostly government subsidized.
I have two different prop mgmt firms I used (one for my Calif prop and one in VA).
My Calif firm is in a small town and a niche market. I pay 10% of monies collected plus a $200 placement fee , but no percentage on that first month (i.e. my properties rent for about $1000/mn so they get $200 the first month instead of $100). They arrange for all repairment, etc. There is no mark-up of those services.
My VA firm charges 8% as I have quite few units with them. There is no placement fee, but they charge a $75/yr advertising fee as they manage about 600 properties and do a lot of advertising in apartment guides, newspapers, etc. Like the other one, there are no addition mark-ups or fees.
I would avoid firms with big placement fees (like one months rent) unless that the std for your area. I’ve had two friends get burned by those kind of deals as they end up with crappy tenants.
The key to the percentage game is it aligns the business interest of you and the prop. mgmt. If no money comes in, then they don’t get paid. Also its to their advantage if they get good tenants as it means less work/hassle for them. When things are running smoothly it might seem that they are doing nothing for easy money, but this is what you want. The day you get a bad tenant (and it will happen if you do this long enough), they will be worth their weight in gold (if they are good). Also, an experience prop. mgmt firm will be able to catch problem tenants early on and avoid big problems like having to evict people (costly and time consuming).
Aside from the cost of this fee based structure you mentioned, there is a more serious issue that the guy/firm is going charge you money to talk with him. You (the landlord) are the CUSTOMER and he is the vendor. Charging your customers to talk to you about your goods/services that you provide is kind of backwards (IMHO).
Very informing! I agree with the percentage thing, and didnt even think of it that way. Also, I like the concept of them not charging much for getting a tenant being that if they get paid to much they will take anyone to make the money…So far it seems that the going rate in the area is anywhere from 8-17%. I am driving up there tomorrow to check out a few properties and to meet with potential management services.
Of topic, if I am buying a property with a long time tenant can I make the sale contingent upon background checks?
I own a property management company and would never charge they way that company does!
To be brief, I charge a % of monthly rent based on services requested, 99% of the time I INCLUDE landscaping and snow removal into the %. My average is 10% monthly rent. Any repairs we can not complete in house are NOT marked up. All receipts are scanned and sent to owners.
My goal is to provide the owner with affordable services, that will allow them to still cash flow, and want to continue investing.