Hi All,
We’re in the process of closing on our first rental property and are looking for any tips in identifying worthwhile property managers? During the first few months I intend to be somewhat hands-on but after we have the place in acceptable condition I want to have someone else manage it so I can spend my time looking for our next place. Does anyone have a list of questions they would ask when contacting propspective Property Management companies?
Thanks,
-Jeff
Anybody?
have you looked back through the old posts? this topic has been covered extensively in the past
Yeah, I have but either the search engine isn’t picking them up or they’ve been purged. Have a direct link?
I’ve used a property manager even for a home that was within driving distance from my primary residence. To me… it was worth every penny, more so if the home had been out of state.
For one set rate a good property manager will advertise, screen the renters, collect deposits, collect rent, send the handyman in for repairs, monitor the exterior with drive-bys and do the legal-work for evictions and charge it against the renter’s deposit. Don’t settle for any property manager that hasn’t got all these services included in their contract with you.
With a good PM you could realistically only visit your property maybe once a year, if that, since you can’t enter the property except for repairs when it’s being occupied. Just be careful about PM’s who push heavily for Section 8 housing subsidized renters. With the Govt. paying most or all of the rent it’s almost a sure bet the people living in it will not take much ownership in caring for your home. The PM will say it’s a guaranteed check each month, which it is. But unless you get a Section 8 Renter whose appreciative they have a roof over their head… bet on their unemployed and recently paroled relatives coming to crash at your rented out crib.
Stick with pre-screened, background-checked renters who have good credit and steady employment, good referrals and the PM option should work out just find for you until you’re ready to take possession or sell the property.
Jeff,
I’d suggest looking in the mirror. Paying a property manager 10 percent of the gross rent usually equates to giving away about 30 percent of your profit! Moreover, being hands-on for the first few months and then turning it over to a PM is a poor plan. You do all the work and then when things are going well, pay someone 30 percent of your profit to do almost nothing. With SFH, there is VERY little to do once a tenant is in the property. I rarely hear from SFH tenants - averaging maybe once every three months. Is that worth 30 percent of the profit?
Mike
Hi Mike and Enrico,
Thanks for your responses. For me I think a property manager will be worth my while since I have 3 young kids and a full-time day job so I could really use a good property manager to take care of things for me so I’m not the one getting the call when a faucet is leaking or something. The place that we’re picking up is a 4-unit older property and each unit is in need of at least some degree of repair. Plus I live in Canada and the house we’re buying is in the U.S. (still only 1.5 hour drive though) so I’d prefer to have someone closer to the property watching over it. It also frees me up to look for my next one instead of spending my time doing repairs.
This property has a good cashflow and should net over $10K/year so for the $$$, I do think it will be worth to have a PM. I just hope I can find a good one which is why I’m in the forum looking for tips. 
-Jeff
well that makes some sense then if it is a 4-plex and 1.5 hours away. If you have just a SFH that is 2 blocks away, then it doesnt make sense to have a PM unless you have multiple properties
I’d only use a Certified Property Manager because I’ve liked the level of professionalism from the managers who have attained the certification.
The other way is perhaps to ask investors from your local investors club. See who they use.
Regarding fees, I got all the services I mentioned before at only 8% of the Gross Rent. Another thing to keep in mind is that, here in the US, that fee you pay the PM is tax-deductible as well as the repairs. My PM gave me an updated report every month. In December I simply kept that report for my taxes since it listed the full year’s repairs, income and PM fees paid.
Just to reiterate, if/when an eviction has to happen… the PM takes care of all that so I don’t have to start making runs to the court for filiings, get papers served, etc.
Finally, on a personal note… I just HATE being the bad guy and it’s worth it to me to pay someone else to do it. I see it as simply part of the cost of doing business. I managed another property myself and after a few years the tenants feel like “you’ll understand” if they’re an extra week late with the rent because they had some financial problems. Or “because you’re such a good landlord” they’ll start nitpicking for items the wife wants like new curtains, different tile in the bathroom, different color carpet, etc.
We took good care of our tenants for almost three years. We helped them qualify for lunch programs for their kids, didn’t increase their rent for two years (which was already 20% below the area average) and when we planned to sell we gave them four month’s notice in advance. They procrastinated down to the very last week and when I went to do some repairs one of their kids came up to me and said, “My Poppi says you are kicking us out of our house, how come you’re doing that to us?” That’s the thanks we got just before they left with no forwarding address, cancelled their cell-phone number and stuck us with their last month’s rent and utilities which had in our name since they had a hard time qualifying for the deposits.
I’d much rather use a PM and keep my distance. Something to consider.
if you got one house around the corner then it not a big deal, but I’ve got 6 houses plus like a lot of other folks have a full-time job and a family. I spent my limited time managing the PM; not playing phone tag with tenants and all the other games that go on.
Note, it is impossible to tell how “good” or “bad” tenants will be. Even with that said, good tenants can take up a lot of time. Moreover, WHEN you get a bad tenant (and it will happen), that’s where you get your value. Not only dealing with the problem, but preventing you from accidently doing some thing that seems logical, but is in fact illegal. Tenant-landlord law is not rocket science, but is it is volumous in most states and constantly evolving.
That’s some thoughts based on 6 yr. experience.
MB
Great advice here – as always.
My properties are all local and my kids are almost at college stage. I manage my own properties as my profession. It doesn’t take that much time in all honesty. Initially there is some time investment teaching your tenants the lease they signed LOL.
Anyway my post is really about a post above. Hating to be the bad guy: I agree, that is zero fun. Here is what I do and it works so well it cracks me up. I am the “Property Manager,” hired by the investors to manage their property. This removes all the difficult decisions from you – it’s out of your hands, it’s the owner’s decision.
I’ve really been faithful to this and trust me it works.
Take care all and happy investing.
Tami
What prevents the tenant from trying to find out who the owner is, and seeing that it is you?
Do you hold the properties in a trust?
ALL
Tami brings up a great point that gets to one of the main problems of do-it-yourself Prop. mgmt…people try to leverage the personal relationship side. I do something similar in that I do some of my own maintenance, but have a prop. mgmt firm in place as well. So, they have explicit instruction to say “someone will come to fix your XYZ” and when I show up, I say “Hi, I’m here to fix your XYZ”. In many cases they never know I’m the owner. of course, over time some of them figure it out and if they try to start in about this or that, I just “Go talk to ABC Real estate, they are the prop. mgers.” I just repeat this over and over.
As for tenants discovering who is the real owner, most do not know how to do this and even the ones that do, most are too lazy to do so. At worst, even if they find out you are on title, it still not eliminiate the possiblility that you have “investors” in the background.
Your “investors” could be your wife, your cousin or your dog for that matter. My dog is my office assistant. He is terrible at filing and sleeps on the job a lot. ;D
If your business is properly set up, the tenants can NOT find out who owns the property (without a court order). Put your property into an entity (preferably an LLC) and have someone else be the “Agent”. Your name doesn’t need to show up anywhere. In addition, the LLC actually and legally owns the property. The LLC even has its own Taxpayer Identification Number. Therefore, when you tell the tenants that you don’t own the property, you are telling the truth! You may have an interest in the LLC, but that’s another story. As Tami said, you are just the property manager!
Mike