Clearly a number of regulars here have had bad experiences with PMs. I would ask, exactly what was the backgrond and qualifications of their PM, and what was the primary source of their income...sales or PM?
As a Realtor(R) and PM, I have observed many licensees that were poor PMs. In every case, sales was their primary income, and they had no significant construction or operations related background.
No doubt, there are PM's that focus on PM that do not excel also, but investors should perform their own due diligence when seeking a PM. Unfortunately, 8 times out of 10, the only questions I am asked are " How much can you rent it for?" and " How quickly?" . And, of course, " what's the fee?" . Rarely are owners willing to come in and sit down to review the management agreement, or even meet at the property. They are, inevitably, in " crisis" mode, looking for a miracle.
I have one on my desk right now...owner on East coast; his old tenant vacating early, and handing me the keys. Nice building, good amenities...the carpet is worn and stained, but the owner just wants it cleaned and rented, ASAP. It will probably rent for $200 less than other units in the building, and will no doubt attract a tenant with low standards. The downward spiral begins.
There is a fundamental truth about " Quality" . All parties need to understand what it is. You need to define it, and agree to it. I can assure you that MikeOh's idea of " good management" is different from yours, which is different from mine, which is different from Josh's, etc. Everybody had different priorities and needs. The fact is many investors wouldn't know good management if they stepped on it. You need to discuss your idea of " good" with your PM, and if you both agree, you will have a good experience.
It is also clear that many experienced investors here do not spend a lot of time on management. I would ask, how long did you spend learning things RE related? Decisions and everything else takes longer when you don't already know the answers and solutions. Shooting from the hip can be very costly.
Taking the time to find an experienced, qualified property manager, and taking the time to discuss issues and strategize openly and honestly about your goals and needs WILL pay off in the long run. We have had many long term clients...some as long as 20+ years. Some buy and sell through us, some do not. Some do their own maintenance, some only come to inspect their properties once in five years. And yes, we occasionally will cancel or refuse a contract. To be fair, I have also had owners cancel our contract a few times as well. Not all personalities mesh perfectly...
Keep in mind, an active, licensed, professional has something very real to lose if they screw up and/or commit a crime. " Friends" , neighbors, handymen and others that " watch out" for you have nothing to lose. Who do you really want responsible for your largest asset and cash stream?
Edited Jun 26 2010, 05:24