Property Management from a Property Manager’s Perspective

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There has been much written on BiggerPockets recently about property management – Do you use a professional property manager? Should you use a professional property manager? What do they do? Are they worth it?

I’d like to discuss who we are as property managers, what property managers should offer, and why I think property management services can be of huge benefit to real estate investors.

Our company grew into the property management area of real estate quite organically. We started like most investors with only one property, then grew in four years to about 56 properties. At that time, I was fed up with managing both properties and tenants and began looking for someone to take over the day to day of our rentals. After interviewing a number of professional management companies, I was not satisfied with any of them. Their response times or the way they communicated back to me was enough for me to eliminate them quickly! After all, the way they handled me was going to be the way they would handle my clients going forward.

So after months of searching, we finally decided to open our own property management company which required hiring real estate agents to run it. The advantage would be that we could then, with real estate agents on staff, also manage properties we did not own. Because we’d been managing our own properties for years, we already had multiple systems and controls in place.

Some of our Property Management Services include:

  • Keeping up with state and federal regulations to maintain compliance and updated paperwork.
  • Providing 24 hour marketing of vacant properties through our web pages plus an additional hundreds we connect with.
  • Supplying rental applications and all other documents necessary to meet the state Landlord/Tenant Laws.
  • Thoroughly screen all prospective tenants.
  • Fully account for all deposits.
  • Maintain all collected rent and deposits in a client’s trust account, subject to periodic auditing by the state Real Estate Commission.
  • Re-key each property with each new tenant.
  • Change air filters and provide free filters for tenants.
  • Handle all tenant problems.
  • Obtain repair bids and notify owners prior to any excessive expenses regarding their property.
  • Ensure all required maintenance is done in a timely manner.
  • Manage properties efficiently and cost-effectively with leading edge software.
  • Provide fully computerized and detailed monthly statements accounting for all income and disbursements.
  • Direct deposit monthly payments into owner’s bank account.
  • Disburse all tenant deposit refunds and supply required documentation.
  • Swiftly and efficiently handle non-pays all the way through the eviction and lock-out process as necessary.

When searching for a property management company, things to look for include:

  1. Quick response time to your phone calls and emails. – How they treat you is how they will be treating your customers.
  2. Professional websites. Yes, image and professionalism matter.
  3. The ability to take and make payments online. Even if your tenants are not able to make online payments, as a property owner, you should be able to view your property reports and receive payments online.
  4. Preferably, someone who also manages their own properties. – We know what you want as an investor and, because we take care of our own properties, we know how to take care of yours. People have expressed concern that we might give the most time and effort to our personal properties. For us, this is certainly not the case for a number of reasons including that when someone calls to view a property, they are interested in size, location, and price. Steering them to another property location, size and/or price is not an option. And because we manage hundreds of rental properties, too much time and effort would be involved to keep track of which ones we own and which ones we don’t!

What’s the advantage to you, the investor?

You don’t have to handle the myriad of things that go on daily with property management. I have a property owner right now who wants weekly updates on her vacant property. No, we don’t offer this service and she truly wouldn’t want to be bothered with all the capitulation that ends up accomplishing nothing. But, answering her emails has really made me realize all the tiny, continual communications we have when marketing for tenants, showing the property, taking applications and application fees, screening prospects, collecting deposits and first month’s rents, signing contracts, changing locks, accounting for and disbursing funds, and then answering all the first month’s calls as the tenant becomes accustomed to their new home.

None of this makes money for you, the investor. A good property management company will free up your time to find and negotiate new deals which is where your real income lies.

No, do not sign up with just any property management team; interview and try them out. Give them only one or two properties to manage until you’re sure they give you the treatment and results you’re looking for. There are a lot of property management companies available and you may have to kiss a lot of frogs to find the one that is right for you, but at some point, getting rid of tenant and doing your own property management should be a big boost to your bottom line.

Ok, let me know what you think!
Photo: james.thompson

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About Author

Karen Rittenhouse has been investing in real estate full time since January 2005. In that time, she has purchased hundreds of single family properties, opened a full-service real estate company, a property management company, a coaching/training business, and written three books on real estate.

36 Comments

  1. Hey Karen,

    I don’t have any rentals yet, but I plan to. I’ve known several landlords in my life, some who used management and some who self-managed. In some cases I’ve been the tenant, in others just a friend of the investor.

    The common theme/complaint I hear (and see as a tenant), is dedication to the tenant and owner. I just don’t understand how many of the property management companies stay in business…they have poor communication, mismanagement of investors funds, poor vacancy marketing, etc.

    I think in ANY business, you have to put yourself in the place of the customers and make sure you’re running your business in a way that’s gonna make their life easier, not harder. I appreciate people like you who really try do to it right, and once I start acquiring rentals, I hope to find a management company as conscientious (I’m sure I spelled that wrong) as yours at covering all the bases.

    Word of mouth plays a HUGE roll when you do it right too.

    • karen rittenhouse

      You’re so right, Shane.

      And, in this business, as in probably ALL businesses, the most valuable client is the one you already have. You absolutely must respect and care for your tenants. They are the ones, after all, paying your bills.

      Thanks for taking the time to comment.

  2. Andy Teasley on

    AMEN AMEN AMEN!!!

    My property manager has saved numerous tenant lives through the years and I don’t know how she can stand her job. I know I don’t want it and the houses I have purchased from owner operator landlords have taught me that everyone ought to use one.

    For a mere 7% of rents COLLECTED her team finds tenants, shows units, screens tenants, collects rents, pays mortgages and utilities, answers stupid calls along with the important ones from our tenants. Deals with evicting the dead beats and calls me for any repairs.

    Since we are in aquisition and rehab mode now my team is available to handle repairs so they handle them. An important factor when choosing a property manager is asking what service vendors they are using, if the A/C guy and plumber are the names you hear on the radio every day, then she isn’t working very hard to save you money. You want repair proffessionals you’ve never heard of because their rates and quality is so good that the property management companies extremely busy and they aren’t looking for more work

    Andy Teasley

  3. karen rittenhouse

    Andy:
    Thanks for adding the heads-up about a maintenance team. We went through subs for years before finally hiring someone in-house that was available at our beck and call and also works for the prices we want. Yes, a very important feature to check out in a property management company is their maintenance team.

    Thanks for taking the time to write!

  4. This like one of the best articles I read. I am in process buying my first duplex and look forward to building up to a substantial amount like 60 : ) Thank you very much for expertise

  5. What are the planning process of starting property management company? I would like to get into it in the long run

    • karen rittenhouse

      Hi Jordan:
      The best part of the planning is to study property management and begin managing and learning from your own.

      To manage for other people, properties you do not own, you must be a licensed real estate agent. My husband and I are not, so we hired real estate agents to work for us when we started the property management company.

      As with every area of the real estate business, best to start small and grow into all of the nuances!

      Thanks for your question.

  6. Karen-

    That’s a great guide for folks to use when looking for a property manager. Most of the folks I know that have a lot of properties have done exactly what you have done; opened their own management company. Since you have to pay someone a percentage to manage your property, why not pay it to yourself. You will be in the best position possible. You don’t have to do it yourself, but you have complete control over the folks that do. Great information.

    Sharon

  7. Property managers are a necessity for me and my business. It reduced my day to day involvement with property issues by 90%. That said, I have to manage my managers. I am one of those owners who talks to them nearly weekly on average. I am very specific on what i want for my properties and how I want issues taken care of. I have fired many PM’s over the years (myself included) for not meeting my expectation. I have lost thousands of dollars due to my poor PM selections. A good PM is worth every penny and then some. A bad PM can cost you your business.

    Jason

  8. Property managers can absolutely save a rental owner time and stress. And because of their training in how to comply with the Fair Housing Act, state landlord/tenant laws, local rental housing requirements, the Service Member Civil Relief Act, and other laws and regulations, they may actually save rental owners some money. The number one complaint I hear from investment property owners who self-manage, is that they underestimated the amount of time that would be required to run the property (and that includes getting up do date on all the laws and regulations, as well as dealing with late night emergency repairs and finding good tenants). Finding a great property management company solves that problem.

  9. Karen,

    You’ve compiled a clean, no-nonsense list of the value a PM brings to the table. Thank you for taking the time to compile it into a post.

    What additional overhead have you absorbed as a result of opening your own property management company vs. a partnership with someone? When running numbers on an investment property, this must pencil out differently than paying out a straight percentage for services. I’m sure this decision has saved you a multitude of headaches, so I’d be interested to hear your comments on the pros and cons of the extra expense vs. peace of mind.

    • karen rittenhouse

      Page:
      For me personally, I got rid of all the headaches of property management because I hired and trained others to manage my properties so I don’t have to.

      I can promise you, the time saved now that we don’t have to manage properties ourselves is worth far more than the 10% monthly management fee. We have freed ourselves up to expand our business through income producing activities rather than worrying about vacancies or repairs (which are definitely not income producing activities).

      And, because we are now paid to manage for other owners, we have not incurred any extra expense having a property management company. It pays for itself. Our figures show that it takes about 125 properties to cover overhead for a full-service company.

      Does that answer your question?

  10. Karen,

    You’ve compiled a clean, no-nonsense list of the value a PM brings to the table. Thank you for taking the time to compile it into a post, it’s a great resource.

    What additional overhead have you absorbed as a result of opening your own property management company vs. a partnership with someone? When running numbers on an investment property, this must pencil out differently than paying out a straight percentage for services. I’m sure this decision has saved you a multitude of headaches, so I’d be interested to hear your comments on the pros and cons of the extra expense vs. peace of mind.

  11. Chris Clothier

    Karen –

    Very nice article. I see your comments often ont he open forums on BiggerPockets and I think you do an excellent job of explaining the benefits of property management to a group of investors that often leans heavily toward “do-it-yourself”. In your article, I pulled one paragraph:

    “So after months of searching, we finally decided to open our own property management company which required hiring real estate agents to run it. The advantage would be that we could then, with real estate agents on staff, also manage properties we did not own. Because we’d been managing our own properties for years, we already had multiple systems and controls in place.”

    This is our exact story here in Memphis and we have since duplicated it in Dallas. If you have a desire to build a business that is both needed and in an industry lacking quality, you can build a successful and thriving company. I really liked reading your article and look forward to more to come.

    All the best – Chris

    • karen rittenhouse

      Thank you, Chris, for such a positive response!

      I am amazed with what all that you’re doing. I can’t imagine being in multiple states. Most days, I prefer not to leave the house! You are my hero!

      Thanks for taking the time to comment.

  12. I have been thru 3 pm’s in less than a year. Its become difficult to find a good one who will deal in the types of properties that we are dealing with. 20+ y/o 4plexes with less than quality tenants. And still have headaches. Repairs always get reported promptly, but man, when I want to hear whether rent has been collected on the 6th it is like pulling teeth.

    • Andy Teasley on

      I expect a mid month statement to be emailed around the 10th to verify rents and mortgage payments. A simple email of the spread sheet should be no problem.

      I have three 20+ year old 4 plexs too.

        • Andy Teasley on

          Karen,

          To quote the great Clint Eastwood “a man has to know his limitations”. I am great at finding the gems in the rough, seeing the “good bones” and looking past the smell. I am also good at pushing my team production up and driving their costs down. You will never meet anyone who can out buy building supplies and I am good at selling owners on why taking my small offer or payment sceme but, I hate book work! I am doing good just getting my own home mortgage mailed each month.

          Since all of my payments are to small lender/investors and hard money folks, I don’t think I would ever get 30 days late since my phone would ring anout the 25th (all of my mortgages are due on the 15th and mailed as soon as the tenants get the funds in).

          Another quote to end “Trust but verify” from you know who.

          Andy

    • Troy: Ugh….

      I hate that for you. We have an online system where owners can see their accounts and a laid out payment structure. Owners know the date checks go out if we’re paid by the 5th. If we aren’t, they know that because they don’t receive checks on the first payment date!
      If we receive payment before we get to eviction court, owners receive their check on another date. If we go to court and receive possession, owners are notified at that time that their tenant has been evicted. This keeps our need for constant in person communications down. With hundreds of properties, constant phone call or email for owner updates is almost impossible. Our system takes care of 95% of that need.

      I suggest you talk to people at your local landlord association meetings. The best way to find a good company is referrals.

      And, different management companies tend to handle different types of rental properties. We do not handle low end, but we do have companies in different areas of our city that we refer to. We do not even manage our own low end properties… whole different ball game.

  13. Hey Karen! Great article. You know how big of an advocate I am of using property managers (good ones) and I’ve always appreciated your take on things from the PM side. I wish you were a manager around some of my properties! I’d love to work with you. I do wish more managers had the business tact that you seem to have, because I believe it to be true that most in this field don’t. Can’t imagine why so many people are turned off from property management!

    I think it’s safe to say there is a big difference in property managers who are just in it for the business and those who are in it because they understand investing and value it. You certainly fall into the latter! Much the ones I prefer.

  14. karen rittenhouse

    Thanks, Ali, for the positive comment.

    I wish I could manage your properties! Investors make the best owners – they understand the difficulties of dealing with tenants and maintenance issues that single homeowners just don’t want to accept….!

  15. You might not take action. You might lose interest in things quickly. You might be lazy. You might be one of those people who says you’re willing to do what we say, but when you’re shown what needs to be done, you simply don’t do it or do something completely different.

  16. Winston Risser on

    Thanks Karen,

    I just finished reading all your blog post about the relationship between homeowner and property manager. To be honest it has been extremely helpful. I currently have a property manager and love the service and professionalism they offer. However I was always wondering what a property manager expects out of me. I like how you say just let us manage the property and look for deals because that is really where you make your money as an investor.
    A lot of helpful tips. My property manger should thank you .

  17. Thanks Rittenhouse for your kind information about property management and it is really nice post. For property management, you require professional property manager who should experts in their area of interests. Hiring a good property management company or online, may become good deal for you.

    • Hi Dana:
      We use Appfolio. It is cloud based and we wanted a system we didn’t have to upload to our computers. We can access our Appfolio account from anywhere.
      And, it was one of only a few that the North Carolina Real Estate Commission approved.

      Thanks for asking!

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