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<\/p>\nOh, property management — such a love\/hate concept. On one hand, I absolutely love you because you are the reason I don\u2019t have to spend any time (or brain power) on my real estate investments. On the other hand, you really test my sanity sometimes!<\/p>\n
If you have invested outside of your local area or you live close to your investments but prefer someone with more expertise or interest takes care of your properties, you are probably pretty familiar with the concept of property management. Even more, you probably have stories to tell!<\/p>\n
For any of you newbies out there who might not be familiar\u00a0with property management, it actually is a great concept. Hiring a property manager (PM) to take care of your rental property investment basically allows you to not have to be the landlord. The PM will find and place tenants in your property, they will collect the rent each month and disburse it to you, they will take repair calls and coordinate getting whatever it is fixed, they will take action against your tenant for non-payment or other issues and handle the eviction process if necessary, and the list goes on. Basically, they do it all.<\/p>\n
Sounds great, right? Well, yes, it is great. I have a PM for all of my rental properties, mostly because they aren\u2019t local to me, but also because I have absolutely zero interest in landlording a property or ever dealing with a tenant.<\/p>\n
So what\u2019s the downside?<\/p>\n
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You knew there had to be a downside coming. And no, the downside is not that they charge you a monthly fee for their services. I think that fee is well worth it and justified, and I\u2019m happy to pay it.<\/p>\n
The downside about property management, to me, is that it can be very tough to find a good PM<\/em>.<\/p>\n Why is it so hard? Well, the reality is that property management is the lowest paid role in just about the entire real estate industry. This is a problem for two reasons: It doesn\u2019t typically attract the highest quality of folks who want to work it (due to the low pay), and it opens up the temptation for PMs to try to find sneaky ways of charging you more money so they can get paid more. The latter can be talked about more in the context of dealing with bad PMs, so let\u2019s focus on the issue of the people who become PMs and how to work with that.<\/p>\n Related:<\/strong> Investors: Believe Me, You CAN\u2019T Afford Property Management. Here\u2019s Why.<\/a><\/em><\/p>\n I think I can venture to say that the majority of PMs out there are not that great. A little later, I will expand on some more details about that in terms of how it may or may not affect your investment property, but first I want to give you some basic signs to be aware of to know what kind of manager you are dealing with.<\/p>\n Related:<\/strong> Premium Property Management Really IS Worth it: Here\u2019s What it Can Do For You<\/a><\/em> Your property manager will make or break your investment property!<\/em><\/p>\n Because of this, don\u2019t ever keep a horrible PM on your property. At worst, have an OK\u00a0one. How do you find a phenomenal one? You just have to keep looking until you find one. Asking around on BiggerPockets is a perfect way to start, and ask any other investors you know in the area who they use and like, start calling around to all property managers\/companies you can find and start asking questions, etc. The first time I shopped for a PM, it literally took me one year to find a phenomenal one.<\/p>\n What if you are on the fence about whether your PM is good or not? How do you know when to fire him?<\/p>\n Nobody likes working with a bad PM. It\u2019s beyond frustrating. But should you consider firing one, no matter what? Not necessarily.<\/p>\n I always say, there are two types of bad property managers:<\/p>\n I\u2019ll be the first person to tell you that a PM who sucks at communicating is one of the most frustrating things on the planet (unless you just aren\u2019t concerned with your property). But if the money is still coming in and nothing excessive is going out, I don\u2019t recommend rushing off right away to fire him and hire a new one. That does not mean you can\u2019t or shouldn\u2019t start shopping around for a new one, but you don\u2019t have to do anything crazy right away.<\/p>\n One risk to consider that I have experienced with my properties is for some reason if you switch PMs in the middle of a tenant’s lease, the tenant may be tempted to believe they don\u2019t have to pay rent any longer. PM switches have cost me tenants in the past. Although that may be more prevalent with certain qualities of tenants and won\u2019t always happen, be wary.<\/p>\n For the PMs who just suck at communicating, it is up to you when to get rid of them if you decide to. As long as the money is still good, consider tolerating the communication levels. However, in my experience, a PM with horrible communication ends\u00a0up costing me money every single time. Think about it — if they don\u2019t care about you, why would they care about your property?<\/p>\n Now, if a PM is costing you a lot of money, that\u2019s a whole other story!<\/p>\n No questions asked,\u00a0If your property manager starts costing you money or shows signs of costing you money, fire him immediately!<\/em><\/p>\n This is where I have gone wrong one too many times on my properties. I\u2019m a total sucker, and I believe my PM when he tells me everything will be fine and it\u2019s all getting fixed. I\u2019m zero for about 10 with that promise. Never once has a PM of mine, when things started looking bleak and he promised it to all get fixed, ever gotten things fixed or not cost me a ton of money.<\/p>\n Whatever you do, don\u2019t wait to fire a bad property manager who is costing you money! He will only continue to cost you more the longer you wait, and that is just more time for the tenant or property to go downhill, meaning more recovery costs.<\/p>\n I\u2019m going to give you some basic tips to remember when you are working with or considering working with property managers. Also check out “Surviving the Hell We Call Property Management<\/a>” for more details on the ins and outs and risks of property management.<\/p>\n You are their boss. You own the property; you are their boss. Don\u2019t forget this! This doesn\u2019t mean be a jerk and boss them around constantly or\u00a0micro-manage them and tell them how to do their job, but it does mean they work for you, and they should ensure you are happy (unless you are being unreasonable). If you are not happy, they don\u2019t perform, or they jerk you or your property around, FIRE THEM.<\/p>\nGood Property Management or Bad Property Management?<\/h2>\n
Phenomenal Property Manager (Also Known as My Dream PM):<\/h3>\n
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<\/p>\nJust OK\u00a0Property Manager:<\/h3>\n
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Horrible Property Manager:<\/h3>\n
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\nI\u2019m here to tell you:<\/p>\nTwo Different Types of Bad Property Managers<\/h2>\n
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<\/p>\nWhen to Fire a Property Manager<\/h2>\n
Things to Know About Working with Property Managers<\/h2>\n
Now, some lasting tips for you:<\/h3>\n
Remember, PMs work for YOU.<\/h3>\n