Why do property managers suck?

60 Replies

Not meant to offend the property managers out there - I know the good ones exist. However, a common theme I've seen is how hard it is to find a good, reliable property manager that makes the money you spend on them worth it. So please share your stories of what has made you frustrated with your property manager (or what you're looking for in a good one!)

Failure to follow instructions (using a do not use vendor, allowing pets in a no pet rental, not enforcing lease violations)

Failure to fill units aggressively with qualified tenants or filling units with warm bodies not vetted tenants

Pet peeve: failure to communicate.

@Jen Boyd Here's my thinking as to why they suck... Because all they have to deal with sucks. And for 8% of the rent? No thanks

@Jen Boyd I think many owners do not spend the necessary time vetting their property manager to know more about them other than listening to the PM's elevator pitch. Additionally what I've found useful is creating a "partnership" with my PM. I wholesale deals in my market and when the property closes the PM picks up the new business. I'm also constantly buying which increases the PM's revenue. We have a PM, contractor, HVAC guy and handyman on our immediate team and I'm constantly feeding them all so that they are never hungry enough to take food off the table. Great post. Interested to see other replies. Persist and you will WIN!!!

@Jen Boyd It was funny for me to see this post today. I just sent a nasty-gram to my property manager today about the failure to communicate. I sent him an email on March 27th and gave him until today to respond to a one line question. It was not until he read my email today that I got an email response and a phone call. I aired out that I could not do business with someone who just ignores me, especially since I put three houses with him to manage. I understand that I am not the only customer and I do not expect any more than good communication and good problem solving skills from my manager. I know it is a tough job, otherwise I would do it all myself. 

But I have to agree with @Colleen F. communication is the greatest hurdle between the owners and managers. There will be human error involved on both sides. It is how those errors are dealt with that will separate the poor managers from the good ones. 

To answer your question - Because no one is going to care as much about your property as you do. 

I think there's a critical mass property managers need to hit before it makes sense to do a good job. My guess is someone who has 100 units is going to get prioritized over someone who has 1 unit. 

@Colleen F. Shocking that people would deliberately ignore the lease and/or requests by an owner but I guess it makes sense. How much do you pay these people to ignore you? I find it shocking that property managers would vet bad tenants KNOWING they will have to deal with the repercussions. I guess that is the cycle of bad management - lease up just to get the fee, then have to deal with bad tenants creating more issues that go ignored, and so on and so forth.

@Jason Hirko Good point - the do a lot of the "dirty work" when it comes to dealing with tenants and the every day tasks that the investor doesn't want. But don't you think if they did their jobs well (i.e. vetting good tenants) they'd have less headaches to worry about? 

@Shawn Ackerman - that's a great strategy. Once you find a good "team" to support you, you can focus on the big money maker of your business - the investment piece. Meanwhile, the other members of your team benefit from you as well. A win-win for everyone. How long did it take you to vet your PM and find someone you want to work with long term? Seems like people go through quite a few before finding the right one - or at least one that they deem acceptable.

@Kristopher Hanks - Good timing for this post! It amazes me that property managers can be so bad at communication when their business is wholly based on providing a service and dealing with PEOPLE on both ends - the owner and the tenant. Communication is clearly a key component that is missing here which is shocking. How "hands on" are you? Do you expect the property manager to deal with issues, maintenance, accepting tenants etc. without telling your or are you involved in the decision making?

@Nick C. - I was afraid you'd say that! Certainly true that no one has as much stake in the property as the owner. Regarding the economies of scale you mentioned, I would think that if you only had 1 unit that needed to be managed you'd seek out a smaller manager that wouldn't be deciding whether to spend time on a 100-unit complex or your single family ranch, but someone who had a small portfolio of multiple similar properties to yours instead?

@Jen Boyd I spent 18 months in my market before investing a penny.  Time well spent I must say. Your absolutely correct about the win win.  My philosophy is "when I eat YOU eat".  I constantly remind my team of this and I show them on each closing we do or with each referral I bring them.  See my strategy requires that I keep my finger on the pulse of the city where I invest.  So I'm very active and constantly networking with new and seasoned investors in the market.  This may not work for the passive investor who is simply looking to collect rental income each month.  Glad I could offer my $0.02. 

Wow, maybe i'm in the minority in this conversation but I deal with 3 managers in 2 states and feel that all of them are keystones to my success and consider them more as partners in the plan than just some guy or gal sucking up 10% of my gross. Maybe the problems you are having is not stressing your needs from the start of the relationship.

I appreciate the professionals I work with and value the fact that they do a hell of a job dealing with the day to day issues while I work with the parts of investing I enjoy

Originally posted by :

@Jason Hirko Good point - the do a lot of the "dirty work" when it comes to dealing with tenants and the every day tasks that the investor doesn't want. But don't you think if they did their jobs well (i.e. vetting good tenants) they'd have less headaches to worry about? 

a GREAT tenant stills has sewer lines that back up in the middle of the night....

luck of the draw.. you get a tenant that moves in is clean neat and stays 5 years your PM is a hero.

you invest in what many do these days and that is in heavy rental areas and tenants move around they do damage they don't have checking accounts they are on assistance. the list goes on.

I have had A class properties destroyed by what should have been a great renter.

but I am with @Jason Hirko   for me personally I could not think of a more thankless job.

your dealing with renters who have issues and drama.. and the only time you talk to your owners is when something bad happens.. and your owners think you should jump through 7 hoops for the 80 bucks a month they are paying you.. man  its a tough one..

@Kristopher Hanks   maybe its the first of the month and your PM is dealing with 30 turn overs and maybe 50 property owners e mailed him that day.. .. think of the man power it takes.

@Jay Hinrichs

"luck of the draw.. you get a tenant that moves in is clean neat and stays 5 years your PM is a hero"

That statement is many investors "perception" of how it works

We both know that in my areas of investment it is a thankless job and a good manager is hard to find, keep, and compensate for risks many here do not understand.

worst job I ever had. and I owned a collection agency for 20 years. owners were worse than tenants.

As others have mentioned, it is a thankless job where it is very difficult to make an honest living over the long term. On the other hand, the barriers to entry are low and it is really easy to make a dishonest living in the short term. As a prime example, I had a great property manager ... mom and pop operation ... what happened? They sold their property management business to a large national franchise and the new PMs were crooked as a barrel of snakes, and totally incompetent to boot. Every time things went bad they got paid more, so guess how often things went bad ... 

In fairness, I also think that if you buy quality property in quality neighborhoods then you are more likely to attract quality tenants and make your PMs job (and in turn your life) much easier ... the downside is that these type of properties will not cash flow as much on paper compared to rougher and more depressed areas, but the cash flow is steadier, less management intensive to collect, can actually be achieved in reality, and is more likely to grow over time rather than diminish ... so, make your PMs life easier by buying these type of properties and hopefully they will make your life easier in exchange.

@Jen Boyd  Good morning Jen  - It's disappointing to see your troubles and I get exactly where you are coming from.  Property Manager has a low barrier of entry and in some states, zero licensing.  It makes the good property managers stand out even more.  

I would also ask - from a previous post of mine - Are you a "C" Class Landlord?

https://www.biggerpockets.com/forums/52/topics/402...

In the property management industry managing single family and multi family homes, we have classifications for Landlords that is never put on paper and probably never talked about.

This has probably never been published before, so here goes something new.... If you are a Landlord, you may want to read this and see what classification YOU would fall into. If the description fits you - wear it.

If you are subjective about your dealings with your Property Manager, it could help foster a better relationship between you and your property manager getting you better service.

Class "A" Landlord:

  1. Hires a Property Manager and is glad to pay their fees understanding that they provide a valuable service assisting them in growing an asset.
  2. Appreciates their systems, procedures, tools, and level of separation they provide from their tenants. They understand their job is often difficult being the punching bag for both sides of a management transaction that can last for years.
  3. Allows them the flexibility to make tough decisions in a pinch on their behalf. (Spending $505 dollars for an AC repair in July when their spending limit is $500)
  4. Understands that the Property Manager is not responsible for everything that goes on with the home - to include the weather and the marketplace.
  5. Is easy to get in touch with and responds well to phone calls, emails, and even texts.
  6. Realizes that by having a property manager and paying $20/hour (example) - it allows them to find bigger deals and more investments making $2,000/hour for their time.
  7. These folks are full time, possibly part time investors that have enough capital to back up their investments and truly understand that what they put out in management fees is far outweighed by appreciation and tax breaks. Simple depreciation is a monster and is often overlooked by a lesser class landlord.

Class "B" Landlord:

  1. Reluctantly hires a Property Manager after some minor effort to shop for the cheapest property manager they can find.
  2. Second guesses all repair items and laments about not having any money to cover large repairs.
  3. Often classified as "Reluctant Landlords" for never planning on having a rental home, but being thrust into the realm of owning one by an unexpected relocation.
  4. Wants two bids for every job in the effort to save $20.00 - not caring if the tenant goes without AC or hot water for several days.
  5. Does not understand basic accounting and needs constant explanation for what the income / expense statement means.
  6. Is difficult to reach often not responding same day for urgent matters.
  7. These folks are often reluctant landlords, first time landlords, and intermediate landlords away for a year or two then moving back into their home.

Class "C" Landlord:

  1. Grudgingly hires a Property Manager because their CPA told them to do so.
  2. Shops high and low for the cheapest property manager in town - then asks them for a discount because they are an "investor"..... with their two homes.
  3. Is abusive to the property management staff requiring constant communication and taking the attitude "Don't you know who I am?".
  4. Introduces themselves to the tenant behind the Property Managers back - telling the tenant they can call them anytime if the Property Manager does not immediately answer their every need. (This creates a Mommy / Daddy issue. The PM says "NO - You can't pay your rent late this month"....then the tenant runs to the Landlord telling them the PM said "We are evicting you AND taking away your birthday")
  5. Wants three bids for EVERY repair - no matter the inconvenience to the tenant - no matter the headache to the property manager...all with the effort to save $5.00. (Sounds dramatic - but this is true!!! - seen it many times before!)
  6. Blames the Property Manager for wind, hail, storms, tornadoes, winter storms, freezing pipes, foundation movement, dead grass, etc... Essentially, nothing is ever beyond anyone's control - it's always the PM's fault. This is a deeper reflection of that type of person never taking accountability for anything.
  7. Wants to sue everybody for....everything. Tenant did not water the grass last week, can we hire an attorney and sue them? You did not answer the phone on a Saturday, if you don't call me back and I will seek vengeance on you with my attorney!
  8. Leaves negative reviews on line about a property manager. Hides behind Google and Yelp to feel better about their cyber bullying. If the landlord truly had a real issue - almost all property management companies are governed by several entities to include the state. Threatening to leave a negative review if you don't get your way is blackmail and extortion. Same tactic the mafia has used for years....no different. If the Landlord has a real issue with the property manager - point 7 above may be needed. Leaving negative reviews on public forums is not productive for anyone.
  9. Is impossible to reach via phone / email. Then they respond at 10:00PM on a Saturday and is upset no one is available to speak with them at the time they finally call back.
  10. Will not reduce asking price in rent. If a home is vacant - with good marketing photos (and video) - and is being advertised fully.....here is a hint: IT'S THE ASKING PRICE! There are two things that rent homes - Price and Condition....and Price can make up for everything. The Landlord not willing to reduce their asking price at any cost is a flat out moron. If you want to do the math - assume your property rents for $1,000 a month. But, you aren't getting it. What do you lose every month that the home is not rented? That's right - $1,000. What do you lose every month if the home rents for $950? Well done - $50 / month or $600 a year. Which would you choose?
  11. Wants to do their own repairs. We have seen time and time again owners taking 6 months to do their own make ready repairs spending several thousand dollars MORE to do it and losing 4-5 months in possible rent. I have seen the total swing to be $10,000 with several investors....all one can do is shake their heads at them.
  12. These folks are often first time investors, overly dramatic reluctant landlords, emotionally attached to their homes and in often cases have a "I'm smarter and better than anyone else in the entire universe and I can do it all" attitude.

Ask yourself - which type of Landlord are you?

Most get into the business as a secondary income that seems easy.  The deeper they get, the more they realize how much time and effort it takes.  Then they realize that the client is paying them less than a cell phone bill per month.  The amount of units it takes to make this into a real business along with the stomach, the knowledge, the ability to build systems to support a good product are all hard to come by.  The barrier to entry is low and so is the success rate.

Great info. Now, what is the best way to find a good property manager?

To begin with, we're retired real estate investors, with a property we owned since 1983. Right now the market rent is around $2,600 to $2,800 according to Zillow. Tax and insurance run about $800/month. Mortgage is paid off. So it's a nice retirement income. This is one of the remaining properties we want to keep. 

Several years ago, I suffered a stroke, I've recovered somewhat, but not fully. We wife acted as the PM of the property, though there's not much to do. We had one tenant there for 10 years, and another for 11 years, and some don't even bother us doing repairs. In fact, the one that was there 12 years, we make it a habit to at least go by once a year. she would go by, bring photo of our kids, and the tenant's wife would go through photos of grand kids, and they both enjoy coffee and cake at the house. I realize we shouldn't be so cozy with our tenants, but what could you do. 

About 20 years ago, I interviewed some PM's, because I wanted to get more into real estate, I own a number of rentals, and unexpected management problems only pops up at the most inconvenient times. I remember interviewing one on site, or putting it differently, he interviewed me. He ask me how many calls I usually get a year for the property, and I said less than 6. He asked if I use a landscaper, and I said yes. Ask how I handle plumbing problems, I said I used a plumber whom I trust, he comes by, checks out the problem, fixes it, and sends me the bill. I don't have to personally visit. His answer: "Then for the life of me, why would you pay someone $1,800 a year to take less than 6 phone calls"? I asked, who are your clients? He said "older people, widows, folks who moved to Florida, call me back when you're old and sick".

Well, we'e now old and sick.

Recently, my wife recovered from pesticide poisoning, then had a bout of shingles, and we just happen to have a vacancy. She couldn't go out shopping for a few weeks, and we had to sign up for Fresh Direct to have groceries delivered. Unfortunately, there is no Fresh Direct that can handle my real estate.

I tried Zillow to search for who is advertising rentals in my area. Then, I got the names of brokerages and PM's, and see if I could find comments about them on the internet. On various websites, such as Yelp, people would respond that so and so is terrible, doesn't return calls etc. All negative comments. So I thinking to myself, I guess when they do a good job, no one goes on Yelp to rave about them.

My wife says, if worst comes to worst, we sell the place. She's OK if I could find a PM eventually. There's no rush, we just rented the place this past week. The only thing is, for such a easy to manage property, a few calls a year, we have no problems paying 10%, there should be someone out there willing and able??

Based on the numbers, isn't the place is a keeper if I find a good PM??

Hard work + dealing with residents + dealing with contractors + dealing with us + low barrier to entry = challenging industry

Extensive vetting is important, including reference checks, documentation review, referrals and you can still end up with challenges.  Below are ones I have experienced over the past year with 2 PMs (on my 3rd now):

Lack of rent due date enforcement (communication, fees)

Lack of consistent (or no) eviction filing after late rent

Lack of communication with owner on late rents and the game plan

Taking weeks to make-ready units (increases vacancy)

Not inspecting to ensure that maintenance was correctly done on the turn (and showing units repeatedly with the incomplete work)

Paying all contractor/vendor invoices blindly with no inspections

Units not ready when vendors show up (painting, flooring, etc.) - no key/lock box, maintenance not finished, utilities not on

No system for ensuring that maintenance was completed as requested (other than resident calling them a week or two later to complain)

Late monthly settlement of balance due to the owner

Improper screening of residents leading to lease breaks and abnormal turnover

Increasing rents without consulting the owner (yes, that actually happened on 8 of my units)

Lack of contractor depth leading to maintenance delays, downtime on turns and higher costs

Longer vacancy period during resident transitions

Not showing units quickly when contacted

Not refreshing ads

Not having a good pulse on market rental rates or small items that could help a unit rent faster or for more

Growing pains that many small businesses face

Inexperienced staff with little or no supervision (owner too busy)

No system/process to sell renters insurance

Not actively working with a collection agency

Out of all of these, the biggest challenges are/were (1) improper management of contractors and maintenance (2) basic rent collection and systems/processes around due dates and (3) improper screening.

The two PMs I used were very hard working and honest people...just lacked proper processes and people.  I am optimistic that I will find a good one, maybe have to hire an employee instead, or sell and invest passively...time will tell.  It's just part of the process and a very big one at that.

@Brad Larsen   SUPERB post and 1000% accurate..

I have said many times failure of landlords a lot of times is simply because the owner is not, should not  be a landlord they are their own worse enemy these folks think they want rentals but are no way equipped to own them.. they sabotage there PM at every turn their expectations of how things should run are so far off base.

A few examples I have seen that stand out.  When I was having to foreclose on my landlord borrowers.

1. Tree is hanging over house.. Long term tenant.. Tenant is afraid tree will fall into home. Tree removal quoated at 800.00 Landlord says they don't have the money... Tenant moves that day. Landlord now has a vacant and can't Pay me the lender I end up owning the house and removing the tree LOL.. I was standing on site watching this one play out.. Not only was the PM talking to the owner I was talking to her in LA as the lender and my collateral was about to be severely damaged.

Tennant in this case ( walked through home) was neat and clean.. not a lot of possession like you will see with a lot of working class tenants.. took her and her kids all of 60 minutes to pack and move to someone elses home.

2. Kid stands on oven door and breaks it.. Landlord won't pay says its tenants fault.. ( that's obvious) Landlord won't pay.. Again Tenant moves house is vacant landlord can't pay I foreclose.

It takes a certain personality to be a landlord and worry warts and those that really have no clue how life long renters live and maintain a home get in trouble buying rentals.  Burnt out landlord syndrome is alive and well in C class real estate or under this is were 50% of your inventory comes from / Half because of crappy tenant and have because of crappy landlord .

@Frank Chin

Is the guy who refused your business 20 years ago still around? 

Can you identify some REIA groups in your area, and if you are not in a condition to attend meetings, get on their mailing lists or call/email the organizers and ask for recommendations? You'll still want to interview the PM before making a decision. You've done it before, but this site can provide you with some good questions to ask if you need a refresher.

It's such a thankless job, are they simply underpaid? Do the good ones charge more? Or do they not need to, because they collect higher rents and end up with more money already?

Bottom line is that a PM is a contractor and regardless of the trade/business good contractors are very difficult to find. Plenty of reasons for this, many already posted. It falls on those hiring to due their due diligence in selecting any contractor.

Good professional PMs will earn their money doing the thankless job that investors lack the skill set to perform. Many PMs also fail due to the same lack of skill set.

Also keep in mind that PMs like landscape companies pop up all the time because so may believe it is a low cost simple job for the unskilled to perform. Longevity is the key to selecting a good PM company.

Actually do the job and see why. I mean that for 6mo. to a year, be your own property manager. E ven paying yourself on your own rentals this is not a job most people can handle. Why do you think everyone complains about them? Because they only want to collect the rents and not deal with the tenants. Finding a property mang. who cares is about as hard as finding the needle in the hay stack.

As some others alluded to there can be a conflict of interest when it comes to property managers. Depending on how the contract is set up they could make more money when things go wrong then when things go right. For example sometimes if a tenant pays late the PM gets to keep 100% of the late fee. Things like that incentivize the PM to make your life more difficult.

@Brad Larsen , that post is SO GREAT. We deal with all types in our PM side of the business. Well put.

@Frank Chin , a great place to start is NARPM.org. It's the national association for residential property managers and they have a Search Directories button at the top. Click on Property Managers and search just the city your property is in, and click like 10 miles for the radius box, and it will list PMs in that area. You can click on each one in the search results and see who they are. Some of them have PM certifications which increases their business credibility. Good luck!

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