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Forums » Landlord & Rental Property Questions » what does your property management company do for you?

what does your property management company do for you?

37 posts by 18 users

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part of the appeal for going into real estate investing / landlording is to create passive income. to make enough in order to make it matter, i will need to possibly have 20 properties at some point. It seems to me as though I would be back at square one though, having to " manage" all the property. My thought is to get a property management company, in hopes of having to do ... well ... as close to nothing as possible :)

what can/should i expect from a property management company? I am thinking about possibly 75k homes.



Multi-family Investor · Bellefonte, Pennsylvania


My property manager does absoutly everything for me. He always screens the tenants completely and make sure all the tenant request are responded to promptly. My property manager is me.....

That being said, let me tell you about some properties that I have looked at recently that the owner employs a local property management company.

This property had 8 total units.
[list]
2 were vacant
1 had a tenant that was the creepiest guy I have ever met, his place was filthy
3 had tenants I would rent to
1 I had to hold my nose when I walked in the apartment. When I got the the bedroom I almost vomited from the smell.
And the last one was an obvious drug dealer complete with the video surveillance system of people coming up the walkway and standing at his door.
[/list:u]

There were many repairs that needed done and none of the units were up to code with the new wireless smoke detectors that was passed into ordinance January of this year.

For me I will never hire a property manager to manage my properties for me. When I get to the point where it's more than I can do then I will employee someone to do the management for me that way I still have control over the system that is used to find tenants and keep tenants.



Real Estate Investor · Mountain View, California


I agree with Michael on this one though as a long-distance investor, I have no choice. Unfortunately, what I *expect* from a property manager and what I *actually get* from a property manager has tended to diverge greatly. I won't go into details of my multiple bad experiences but if you can do it yourself, that's ideal. My only good property manager is a friend that I went to school with - not sure if it's guilt or friendship or because it's not his real job but I wish that people who did this for a living could give the same service that my friend has.



Real Estate Investor · Ohio


My thought is to get a property management company, in hopes of having to do ... well ... as close to nothing as possible :)

I'd take all your money to Vegas and put it one spin of the wheel. With an attitude like the above, you've got no chance of succeeding in the rental business.

Good Luck (in Vegas),

Mike




why, because i want to minimize my workload? No, I don't believe so. Sure, I understand I will need to do stuff, but I don't want to trade time for money either. As a business owner for 8 years, I understand the value of passive income ... which is why I want to get into landlording.



Real Estate Investor · Ohio


Sure, I understand I will need to do stuff, but I don't want to trade time for money either.

You've been watching too many infomercials. EVERY successful business owner trades time for money. In fact, as entrepreneurs become more successful, they work harder and harder. Look at Donald Trump or T Boone Pickens, how many hours do you think they work each week?

As a business owner for 8 years, I understand the value of passive income ... which is why I want to get into landlording.

If you've been a business owner for the past 8 years, then you should understand the reality of running a business. The rental business is no different than any other business.

Mike



Real Estate Investor · Chicago, Illinois


I know TBone may have answered this question but I didn't know if this is how everyone manages from a distance. I am still young and will be coming home after school next year and is where I want to start investing. I eventually will want to move from Chicago so would the smartest thing to do be finding a friend whom you can trust and pay them well?

Just a thought I have been pondering for a while.



Commercial Real Estate Broker · Memphis, Tennessee


My goal in our management business is to reach the point where we manage every aspect of the real estate investments for our clients. Right now they are still deciding which properties to buy and where.

Obviously, that is not for several of the people on the board here. But, there are a number of people that want to invest in real estate. Not all of them have the time or the ability to be in our market.

The hardest properties to manage are the ones where the owner still wants to be involved in the management. We had people that want to do the repairs as they don't want to pay the fees, but they would take too long and we would have upset tenants.



Property Manager · Honolulu, HI


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?



Real Estate Investor · Mountain View, California


I hoped you would respond BeachBum and honestly from all that I've seen from you, I'd love to have you as a property manager. If I ever invest in Hawaii, I'll look you up. For anyone who's interested, I'll give some detail on what I look for in a property manager and I try to be pretty thorough before hiring someone but obviously, I'm still not good enough at it.

I want:
o Phone calls and emails returned within 1 day, both for myself and tenants/potential tenants.
o Flexibility to show my unit when it is vacant. Every hour a potential tenant has to wait to see my property is an hour they have available to go view someone else's and people won't wait long before moving on.
o Maintenance/repairs taken care of in a timely manner - properly done at a fair price.
o Somebody who understands the regional rental market - what price will draw tenants, if incentives are needed to draw tenants, etc. I shouldn't be the one recommending the rental rate.
o Somebody who knows how to market my property.
o Somebody familiar with the local laws and willing to promptly enforce them.
o Somebody who can screen potential tenants appropriately including financial checks and criminal checks.

Now, let's look at my first property manager in AZ:
o Terrible at returning phone calls. I had potential tenants complain to me that they really wanted to see the property but the PM didn't bother returning their calls.
o Of my 3 tenants during her tenure, I found 2 via Craig's List while living 750 miles away. She had no concept how to market the property.
o Required my hand holding for all maintenance. I had to get involved with any and everything but I'm not sure why. I want someone who tells me what needs to be done, they get it taken care of, and all I have to do is write a check.
o On the positive side, they were well versed in local law and ensured that rent was paid on time or else legal proceedings would begin. They also were very good at doing the screening to keep out people that couldn't afford my property.
o Btw, I interviewed at least 20 PM's prior to hiring this one so I didn't just jump into it nor did I choose the cheapest. My only regret is that it took me almost 3 years to fire her. Hopefully I've learned my lesson and will address the next PM outlined below in a much more timely fashion.

Now, let's look at my property manager in IN:
o Slightly less terrible at communication but still not very good.
o Pathetically weak and I'm at fault for letting her be and not being crystal clear with her on my expectations. As a result, it took me directly calling a local lawyer to get eviction proceedings underway as she couldn't even get a proper " Pay or Quit" notice posted for me. I will never let that happen again.
o She neglected to tell me that it was her husband's contracting firm doing all my maintenance and the prices do not please me. His prices may or may not be fair but they seem high and it's a major conflict of interest that I don't like.
o Again, I've seen no marketing ability and the only tenant placed since I've taken ownership is from my own Craig's List ad. She is showing no better skill with my now vacant 2nd unit.
o Despite my continued requests, it took her a full 6 months(!) to give me a single statement showing inflow and outflow. It only came after a very direct discussion and I just don't get it. Does she really believe someone can run a business without knowing the financials - I had no idea what was spent on some of the maintenance.
o Incredibly slow at getting my units ready to rent. Should I really need to wait 2 weeks for painters when half of the area is unemployed?

Anyway, hopefully this is helpful for some. As many have said, it's very tough to find someone good. My friend in AZ has been great but to someone's question, I don't know that I would recommend that route as the best way to go. It worked for me but could be a recipe to destroy a relationship if things don't work out. I'm still trying to figure out what to do about my IN property. She's not good but it's a small town so my options are limited.



Real Estate Consultant · Florida


It give you great leverage and maximization that can focus your great strengths without interruption.Property managers provide client with a product known as shelter.In other words, as a property manager, you’re supplying tenants with a place to live in exchange for the payment of rent. Although property management doesn’t seem that complex, you can avoid the many mistakes unprepared property managers make by knowing what you’re getting into. It can also give you leverage and maximization that can focus your great strengths without interruption.



Residential Real Estate Agent · Long Beach, California


I am facing the task of hiring a property management company because we are moving overseas. I'm dreading the task because I really doubt I can find someone who cares as much as my husband and I do about our properties, which we have self managed for about 8 years now.
We have a very trusted, responsible friend who seems eager to take on the task for 6% but he has no experience--we would be walking him through anything beyond collecting rents and move-in/move out of tenants. Or do we pay 6-8% to a property management company that we may have to hound from half way across the world to rent our properties out in a timely manner? We really can't have someone who drops the ball after a few months while we are away. What would you do in our shoes?



Real Estate Investor · Baltimore, Maryland


Here is the bottom line...

No one will pay attention to your investment like you will!

Regardless of how much you pay them.

My wife Vicky and I taught ourselves how to become great property managers. We learned a lot in a very short period of time and managed to avoid any major mis-steps.

Somewhere around our 70th unit, we decided to see if we could start to off-load some of our portfolio to a property manager.

Our approach was simple... we interviewed about a dozen PMs. Everyone of them were known to me as I owned a local real estate investment association at the time in Baltimore. So I was already aware of what they were capable of doing.

After narrowing the field down to two candidates we gave them each one 6 unit building and put them in competition with each other... and they knew that the winner was going to get most of our portfolio.

The PM who I thought would do the best for us, they were managing around 300 properties at the time, managed to take a 6 unit building with 5 tenants and manage that building so that in a 6 week period we were down to 1 tenant. I fired him on the spot on the 6th week. (and got to work upside managing my own building).

The other PM faired much better taking a vacant 6 unit building and getting it leased up within a 5 week period... with reasonably good tenants.

We slowly started to move more of our portfolio to this PM... but within 3 months she started to head south... fast.

By the 5th month we were lucky to get our rent checks as prescribed.

We ended up taking back all of the properties she was managing and continued managing them until we sold them all in 06. Lucky call.

Bottom line... finding a good PM, one who will put your interests in front of their profit, is kind of like finding chickens with lips.



Real Estate Investor · Garland, Texas


Peter, what do you think of hiring a PM as your employee to give you greater control over them?

How much time does it take you to manage 70 units?


Jon Klaus, SellPropertyFast
E-Mail: [email protected]
Telephone: 214-929-6545
Website: http://www.facebook.com/Buttermilks


Real Estate Investor · Phoenix, Arizona


Perhaps I have been the only lucky one with a property manager. When we (family) bought a 20-unit building in N. Cal about ten years back, we found a very good property manager and she has been better than we had expected and perhaps better than we ourselves might have been. Her daughter-in-law has taken over now and has been doing a fabulous job for about a year. We are quite impressed with the way they are managing the property. But the property managers who were managing it before we bought the building were quite bad, so I can easily see how many of you have had bad experiences.

I must also say that we did not stumble upon this good property manager by luck. We did a fair amount of due diligence, including:

1. We checked out all the apartment buildings in the area and found ones that we felt were well-managed.
2. We spoke to the tenants in those buildings and asked questions about the management.
3. We pretended to be prospective tenants and tested the manager's responsiveness.
4. We then shortlisted three managers and asked them for owner referrals. We spoke to the owners about the managers - efficiency, cost control, trustworthiness, etc.

After all that, we narrowed it down to this one management company owned by a wonderful woman who has been outstanding, and now her d-i-l is also doing an outstanding job.

I do not think it is possible to select a good property manager simply by interviewing them. You have to do a lot more work.

The manager takes 7% of gross rents as her fees. She is very frugal with expenses, keeps vacancies low and is good at increasing rents. Our property is close to the top end of the market for its class and location.

The bottom line is that perhaps property managers are like brokers. Most might be lousy, but the good ones are there and are worth every penny.

BTW, I have one particular requirement for my employees (even in my other businesses) when I need someone to be prompt, dependable and trustworthy: I only hire women for such positions. I realize this is not a politically correct thing to say. And I am sure there are bad apples among women. But I have hired perhaps a couple of hundred people over the last fifteen years and I can say that women, on the whole, have been far more responsible and trustworthy than men for middle-management and administrative positions.



Real Estate Investor · Phoenix, Arizona


Originally posted by Vikram C.:

BTW, I have one particular requirement for my employees (even in my other businesses) when I need someone to be prompt, dependable and trustworthy: I only hire women for such positions. I realize this is not a politically correct thing to say. And I am sure there are bad apples among women. But I have hired perhaps a couple of hundred people over the last fifteen years and I can say that women, on the whole, have been far more responsible and trustworthy than men for middle-management and administrative positions.

Be careful what you say on a public forum, this may be grounds for a discrimination suit for any of your past male applicants.

As a property manager, I hear the horror stories all the time, and I've taken over several properties with terrible property management. These places are in bad shape, no maintenance, no responsiveness, etc.

We do treat the properties we manage like our own, since some of them are our own, and they are all treated the same.

You should expect to be provided:
Quality tenants in a reasonable amount of time
Upkeep of the property, and responsiveness to complaints.
Quick cleaning, rehab, and rerenting of vacant units
Evictions as quick as the law allows for deadbeat tenants
Detailed accounting and records

The fees are negotiable. We provide services for 10% or $50 a unit, whichever is more. We do negotiate with owners who have multiple properties, or high-income properties. Our fees include ALL advertising costs, cleaning costs between tenants, and applicant screening costs. The only out-of-pocket expenses for our owners is maintenance.



Real Estate Investor · Baltimore, Maryland


Jon,

Hiring an employee is exactly what we did.

My wife is extremely systems oriented and it was fairly easy, once we found the right person, to train them into our system.

As we made this transition, my wife, who did most of the property management was able to cut back time from full-time to about half-time.

So... hiring an employee while a huge hassle in some peoples mind, and it can be, was the solution for us.



Real Estate Investor · Baltimore, Maryland


One other thing...

The single family rentals that I own now are managed by a PM. The big difference is that I found this person, provided him with all of our systems, documentation, and processes/procedures, and then trained him to be a PM in this business and he is doing fairly well at it.



· OR


If you want to be hands-off, may I suggest you go into better quality commercial real estate and lease out your buildings triple net.

Residential rentals require someone to pay close attention. It's difficult to find any management company that will pay that much attention.

I know that there are good management companies out there. They are not all bad, but my own experiences with management companies were awful. The rentals close to properties we own that are managed by management companies are often serious neighborhood problems, with no response to complaints made to the management companies by neighbors.

Two management companies locally have had employees embezzle all the rents and deposits. That doesn't give me much confidence in thier management ability, if they can't even manage their own employees.

I speak to tenants often who complain that they can't get anything fixed by their management company.

Local apartment buildings (many different ones) are often in the news for crimes, drugs, and fires. I know they aren't owner-managed, so their management is NOT doing a good job of controlling the tenants.

I am irritated that they refuse to give me any information on my applicants. Usually the phone is answerred by someone who is totally ignorant (friendly, but don't know the answers to even basic questions, like is the property in question one of theirs?)

To tell you the truth, I would not even think of managing someone else's rentals for a 10% fee. It's too much work and too much hassle for too little money. So that might be the problem with many management companies: they aren't getting paid enough to put up with all the ****. Then they discover they get their fee whether they do the work or not.



Real Estate Investor · San Bernardino, California


I've done PM off and on for the past 20 years, I'm back doing it gain but this time a little differently Joined a broker & set up a PM business. We charge 8% with a minimum of $98.00/mo.. That works for properties that are in tip top shape with great tenants. I put he tenants in place. The properties that need a lot of attention pay the 8% plus an hourly fee that was suggested by the owner ( 22 properties).
He knew that I could not turn his properties around with out putting in a lot of time and effort to do so. My time lone averages about 200 hours per property to get rehab done and that means being on site minimum of 7 hours/day. I have a construction background so I know how to do the work and how to supervise the labor.
Most of his tenants have rented from him for years, so he requested I keep them but get things in order and in force policies.
I move tenants to another property to rehab the one they are in and then back.
It is a lot of work but well worth it to both the owner & myself. The tenants willingly pay more rent and keep the places up much better. After doing just 2 rehabs with owner notified daily & inspecting occasionally, he now requests I not bother him with all the details just get it done and tell him when I need more funds. I keep a very tight hold on the budget but if it goes over because of unavoidably problems I don't have to cut corners to do it right.
I or my trained assistant visit each property at least once a month. Some every two weeks. I manage all properties as if they were my own and all my owners appreciate this. I screen my owners just as well as I do the tenants because I do not have time for owners who will not allow repairs to be made or properties brought up to code.

If you want your properties managed correctly and taken care of as you would then determine what the property needs and pay a fair price to have it managed properly. Meet the PM at your property and go over everything together, make sure he/she has an understanding of construction and repairs. A PM that knows how to do the work is going to save you money over one that just knows how to collect rents. I feel a female is better at looking at a property and managing it then a male because most women see the whole picture. They tend to look at it as if they were going to live there. Organized and prompt amount getting work done.

If your property is turn key with a great tenant 6-8% is fair but when it is not work out a deal with the PM that makes managing it worth while.





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