Landlording & Rental Properties

I’ve Been Self-Managing for 10 Years: Here’s How I’m Interviewing My 1st Property Management Company [Video!]

Expertise: Real Estate Investing Basics, Real Estate Deal Analysis & Advice, Mortgages & Creative Financing, Landlording & Rental Properties, Business Management, Personal Development, Flipping Houses, Commercial Real Estate
152 Articles Written
interview-property-management

Hey there, BP! So believe it or not, I’ve been in business for 10 years and never had to hire a property manager. We have been able to do that by keeping it close to home with investments inside of a 30-minute radius of our office. We’ve made a strategic decision to move forward this way and have done well with it. As a result, we have learned firsthand what works and what doesn’t, mostly because we did what doesn’t work in the beginning!

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Related: 80 Smart Questions to Ask BEFORE Hiring Your Next Property Management Company

That being said, we are expanding our portfolio to areas where managing ourselves is not possible. We currently have a 49-unit building under contract located two hours from our office. We are really excited about the opportunity, but it puts a task on our plate for the first time — having to hire a property manager. As we’ve done it for so long ourselves, we have a pretty good idea what it takes to manage real estate.

In today’s video, I talk about an interview I had with a potential property manager for our new purchase. I share some important questions I asked and what I learned from their answers.

So we are still interviewing, and I’d love some feedback on this. What did I miss? What are YOUR most important factors to consider from a property manager? For those of you out there that have a successful management company running your rentals, what do they do well? Any management horror stories?

I look forward to your comments!

Matt Faircloth, co-founder and president of the DeRosa Group, is a seasoned real estate investor. The DeRosa Group, based in historic Trenton, New Jersey, is a developer and owner of commercial and residential property with a mission to “transform lives through real estate." Matt, along with his wife Liz, started investing in real estate in 2004 with the purchase of a duplex outside of Philadelphia with a $30,000 private loan. They founded DeRosa Group in 2005 and have since grown the company to owning and managing over 370 units of residential and commercial assets throughout the east coast. DeRosa has completed over $30 million in real estate transactions involving private capital including fix and flips, single family home rentals, mixed use buildings, apartment buildings, office buildings, and tax lien investments. Matt Faircloth is the author of Raising Private Capital, has been featured on the BiggerPockets Podcast, and regularly contributes to BiggerPockets’s Facebook Live sessions and educational webinars.

    Don Johnston from Chula Vista, California
    Replied over 3 years ago
    Great video for a newbie like me. I’ve been around the block a few times but just never the REI block. Good list of questions that I would never have thought to ask…well, I would have asked how much they charge. Thank you for sharing your knowledge.
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Don, Glad you enjoyed it!! Matt
    Brian Karlow Rental Property Investor from Algonquin, IL (Chicago suburbs)
    Replied over 3 years ago
    As always, great video Matt. I really appreciate your direct, straightforward approach on how you deliver your message. Congrats on the new deal! Have a great weekend! Brian
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Brian, Thanks for the kind words! We are really excited about the deal and will be sending out more Posts on it as we go. Matt
    Naomi Pinger Real Estate Agent from Olympia, WA
    Replied over 3 years ago
    Hi Don, Thank you for your very informative information. Good to know.
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Naomi, Glad you enjoyed it!! Thanks for the comment. Matt
    Zach P. Investor from Port Saint Lucie, Florida
    Replied over 3 years ago
    Great video Matt. Thanks for posting this video especially for those of us like me who do not have time to manage my properties on my own. Good stuff! Zach
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Zach, Thanks for the comment. I was hoping to create some value for investors like yourself that don’t have the time to self manage. It sounds like it did that for you, I appreciate the very! Matt
    Austin Walters Real Estate Agent from Blue Springs, Missouri
    Replied over 3 years ago
    Hey Matt, Thanks a ton for this information, very great questions and well thought-out points.
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Thanks Austin! I’m glad you liked it! I hope you are able to apply the questions in your business. Matt
    Chet Snyder Investor from San Jacinto, California
    Replied over 3 years ago
    Matt.. Great video. A couple things I would have liked you to have addressed. One is the typical fees these property management companies charge ( Is it standard in the industry for 10% of the rents going toward fees?) Second… In line with preventative maintenance. I would like a walk property inspection once a month. Is this too much to ask? You mentioned 3-4 employees per 240 units as the right amount…. it seems not enough to thoroughly watch out for ones property. Tenants do all sorts of things like rebuild VW engines in living room (had this happen) and have unauthorized guests or pets. Great job… and very generous of you to share. Thank you… Chet
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Chetan, Great questions! Let me take a stab at it… Fees – for smaller projects like SFH’s and duplexes expect to pay 10% or more for management. This particular PM normally charages 8% and we are going to try and get the work for less, hopefully between 5 and 6%. Any property manager is going to charge additional for leasing, evictions and maintenance which should be in your negotiations also. Preventative maintenance inspections- once a month is heavy, I don’t think any manager will agree to that and in my experience it’s not necessary. We do pm walks at least once every 9 months. You will also find that your maintenance tech will be on site for some reason at least once a quarter like to change the furnace filter. If they see a rebuilt VW engine in the living room I’m sure you will find out links! I thought the same thing about this particular managers number of employees to units. On further inspection he told me that the 3 staff was only leasing agents and office staff. He outsources all the maintenance work to sub contractors. Thanks for the comment! Matt
    Donna Wendell from Orlando, Florida
    Replied over 3 years ago
    Thank you for taking the time to post this. I have an offer acceptable on my first investment property, one single-family home and even if I don’t hire a PM, the notes you provided will help me to know some of the many things I should consider when managing it myself. Donna
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Donna, First off, congrats on your offer being accepted! You must be excited and probably nervous at the same time! Know that if you ran your numbers well, the deal will work out! Of you can swing it, I highly recommend that you do the management yourself on your first deal. You will get to know what it takes to manage the asset first and and won’t get dupped by a manager in the future. Good luck!! Matt
    Jerry W. Investor from Thermopolis, Wyoming
    Replied over 3 years ago
    Matt, Great video. Thank you for taking the time to share that information with us. I manage my own SFRs, but have management set up for apartments.
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Jerry, Thanks for the comment. I think that’s a good blend. I have not met that many good managers of single families but there are plenty that will handle a complex. If I can ask, what are you paying your apartment complex management company? This came up on a prior comment so I thought it would be a good point of discussion. Matt
    Brandon Gentile Real Estate Agent/Investor from Clarkston, Michigan
    Replied over 3 years ago
    Love the video. Wish people would do more of this style in general. Keep it up! My Realty team is starting to do videos now. It is the present and the future. Thanks for sharing your knowledge Matt!
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hi Brandon, Thanks for the comment! I’m glad you love the videos, we are enjoying creating them. Any requests for upcoming subjects? We need more material! Matt
    Levi T. Rental Property Investor from Northern Virginia
    Replied over 3 years ago
    Good point on the maintenance market up. What was the agent’s lease renewal fee, if any? I’v found most companies will try and collect $200 or 50% of one months rents just to renew leases, which I’ve never liked, and normally try to take out of the agreement. Did you also work on the leasing fee? I’ve seen managers double their money with that alone. Personally I would never pay a manager for doing court summons, that’s why I pay them to be a property manager, it’s part of management, minus court cost. Totally agree on the late fees, let them charge an admin fee for giving notice to the tenant to pay rent, you keep the late fee, they get the admin fee. Good video BTW!
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Thanks for the comment Levi! Their contract calls for 25% of the rent for a lease renewal, which I don’t like. I can pay a fee for leasing a vacancy, no problem. For our renewals that we manage, it’s very little time investment – we just print a one-page renewal and mail it to the tenants. They mail it back, off we go. I made them a counter-offer – 5% management fee of collected rents, but an increase to 6.5% if the building is fully leased and all rents are collected inside of 30 days. I am hoping we can work something out like that because it will incentivise to run the building at a high standard. Also if we can beat our proforma vacancy rate of 5% we make more money and are happy to pass some of this along to the manager. Matt
    Jennifer King from Bellevue, Washington
    Replied over 3 years ago
    Newbie here considering rental properties for my future investments. Thanks for this practical video, and best wishes finding a great management company for the apartments!
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hey Jennifer, Thanks for the comment and the well wishes! I really appreciate it! Matt
    Douglas Ayers from Houston, Texas
    Replied over 3 years ago
    Great info, thanks.
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Hi Douglas, Thank you for watching! Matt
    Nick Maniscalco Investor from Staten Island, New York
    Replied over 3 years ago
    Thanks Matt for sharing. Great post. Can’t wait for the next one!
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Thanks Nick! I’m glad you enjoyed it. Stay tuned for more and check out our YouTube page for other videos!
    Nick Maniscalco Investor from Staten Island, New York
    Replied over 3 years ago
    Thanks Matt. Will do! I’ll come over and introduce myself if I see you tomorrow at the morning event in West Trenton.
    Karl B. Rental Property Investor from Los Angeles, CA
    Replied over 3 years ago
    Amazingly good video. Definitely some vital information I have never considered regarding PM companies!
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied over 3 years ago
    Thanks Karl! I’m glad you liked it. Matt
    David B. Investor from Columbus, Ohio
    Replied about 3 years ago
    Thank you for all of the information. I am sorting through various PM’s right now. I’ve never hired one before so this is very helpful.
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied almost 3 years ago
    Hey David – Best of Luck with your search!
    Peter Garaway Rental Property Investor from Moscow, ID
    Replied almost 3 years ago
    Thanks for putting this together Matt! Great questions! It’s also nice to watching a video after reading text for countless hours 🙂 Happy Holidays! Peter
    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied almost 3 years ago
    Hey Peter, Thanks – glad you enjoyed it! Happy Holidays to you also! Matt
    Ben McMahon Specialist from San Diego CA
    Replied over 2 years ago
    Hey Matt, How is your management company working out? I see this video is a few months old. Also, how does your in-house management company make money or at least pay the bills? Is that how you expect an outside management company to succeed? I am actually in a similar boat. I have a PM division of my investment company. I also have a construction and brokerage department. I say department, but really its just one person assigned to each with an office manager for the whole thing. I decided this year to separate them into individual companies to make sure that they are all profitable. Turns out that its pretty tough to make money in PM unless you charge fees, or have a lot of volume. Your thoughts are greatly appreciated.