Managing property manager
Hi all
I'm sure I'm not the first person to deal with this issue and hoping for some advice from all the great experience on BP. I'm a SFR buy and hold investor who is very remote from my properties and so I retain a professional property manager. This manager is very competent but I have two issues:
- our contract is structured as a percentage of gross rent plus a leasing fee, which I understand is fairly typical. However, the PM also runs a maintenance company and uses this company to handle any maintenance needs that arise, which are then billed to me of course. Not sure that the rates aren't competitive, but the issue is that the PM will obviously be incentivised to keep these amounts (number of callouts and price per callout) as high as possible while I'd obviously prefer the reverse. It's made a significant negative difference to my returns, and conversely is where I believe the pm makes the majority of their revenues from me rather than from management fees. How do you deal with this? I've suggested a pm fee to be a percentage of net rent, but pm has no interest and I understand this isn't standard in any case
- along similar lines, when a tenant moves out and leaves property trashed (beyond what security deposit will cover), pm has little incentive to recover these funds and so I'm often left out of pocket again - with the repair costs in the pm's pocket
Thanks in advance!