@Mike Dymski just to play devils advocate here.. how on earth can a PM make any money with the job description you just laid out :) there is no way they would be paying you to work how can they have the man power to do all this for 80 or 90 a month plus a lease fee.. which half the time the leasing agent gets the fee or at least half of it.
your heading in the right direction those of my clients that do this for a living all have brought management in house.
and its also why Turnkey companies have it in house.. other than a very few the management is non profit and the turn key is were they make a living .. one gets to about 1000 doors and you can start to make enough to justify it.. and or have enough cash flow to properly staff.
but lets say you have a normal month with 10 to 15 turn overs how are you going to manage all that your asking for on all those homes.. pretty tough
Kim Younkin, Paul B.
Thanks, I'll do that. I didn't know where to start.
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Hey @Jay Hinrichs I value your opinion. Below are a couple of expectations that may quantify items. Let me know if any of them are unreasonable. This will get tougher to address over a post and I am more flexible than these will appear when core functionality is working.
Rent due on the 1st, late after the 5th, eviction filing on the 10th (or something similar as long as it is consistent)
Resident screening to include prior eviction, criminal background, prior landlord, credit and appropriate income/rent level
Management of maintenance and contractor depth to handle their portfolio
Renovated units turned within 5 business days (industry standard is 3)
Un-renovated units turned within 10 business days (SLA with PM based on the limited level of work that is being done...flooring, paint, lighting)
Vacancies filled within one of month of resident move out (SLA with PM as well)
I am running out of time to post today; so, I just quickly typed up the items above. My prior PMs have struggled with the basic functions and unfortunately my family has had to step in when contractors were paid for work not completed, units in prime locations were vacant for three months, 25% of rents were not collected during the month due to improper communication with residents...I could go on.
I am paying $45/hr for in-house maintenance now plus 15% markup on 3rd party vendors in addition to the management fee; so, compensation has not been problematic.
@Mike Dymski agree in a perfect world this should work.. but you have 3rd party man power you cannot control when someone does not show up. your time lines are just not reality unfortunately.
even my guys that own 200 plus units and self manage can't get it done with that type of efficiency .
everyone wish's they could but its simply not reality.. and especially if you have section 8 inspections added in.
@Mike Dymski although I will say in our current rental environment here in Portlandia which is basically 1% vacancy and little to no section 8 and 50 applicants all 700 plus ficos per home LOL you can get pretty close to what you wish
@Jay Hinrichs thanks for the feedback and I will continue to work with my new PM on our service level time frames.
This is an apartment complex too versus SFRs spread out.
2 local maintenance guys who immediately respond to calls (new PM is using in-house maintenance profit center)
3rd party vendors have been great...large regional companies who provide service with 24 hour notice.
No section 8
Vacancy is very low in my market as well
Not looking for perfection and have a lot of management inefficiency built in to financials. Just want to be able to keep the property long term.
@Mike Dymski OK apartments are totally different I am talking SFR's .. managing SFR vs apartments is apples to Iceberg lettuce..
my clients and or friends that have bigger units here in PDX enjoy completely different level of service first off.. they have what I call true professional managers IE company with 6 thousand doors in 3 or 4 states. Owner of company is pretty hands on and quite successful himself .
on site manager turnover teams in place etc etc.. given this your time lines for a multi are not out of line ... for SFR for sure just can't happen.. and most folks I think are talking SFR at least from what I see.. most folks with Multi you don't see the PM complaints near as much.. different managers
Most the multis in LA are property managed very well from what I have seen. Top to bottom full service. Some can do it all even into total redevelop. Trying to get the same professional service on a couple sfrs renting sub 1000 is maybe not a realistic long term plan. It could be an everyone loses deal for some of those. Many homes were never meant to make any real significant money lets face it. Volume or self manage are likely more realistic business plans for many of the cheaper sfrs if you want those type of "investments."
Agree with others that the post from @Brad Larsen is spot on! I'm not a property manager, but I think that as an investor the first step in finding a great PM and having a great relationship is to treat them how you would like to be treated. Be responsive, professional, reasonable and easy to work with, and only then is it fair to expect the same from them.
I see the attitude of "I can't believe I'm spending $X on PM fees!" but I'm not sure those people are valuing their time or energy. I've done the math multiple times from when I was briefly self-managing, and it is totally worth the $75-$100/month for the time savings and peace of mind.
Anyways, to answer the OP, why do (some) PM's suck? I think it is a hard, thankless job, and it's hard for them to find and keep competent people on their staff. Also, there is a constant back and forth between keeping both the tenants and owners happy. I think that is a unique conflict that doesn't exist in any other business. Who is really their customer...the tenant or the owner? They get paid when the tenant pays their rent...but they need to keep the owner happy enough so that the owner keeps using them.
Good/proactive PM's want to find and keep good tenants in place who aren't going to be calling them once a week...less headaches/time required and more consistent cash flow for them...which is what YOU want as the investor as well, right?!
I have largely been happy with my PM's. But I set the expectations up front on what I expected out of the relationship, and I invest a few minutes every other month or so to check in with them.
The title question here is pretty funny.
I suppose it's same reason that contractors can suck or about any other profession. Apathy and/or incompetence. Don't care and/or don't know any better.
Look at the requirements to be a PM. A RE license? That's rich. I took that stupid test. Knowing RESPA or agency disclosure or the square footage of an acre does not help running rentals.
Get one that came up in the trenches of their own rentals. Get one that HAS their own rentals. Get one that doesn't need to pay a leasing agent a commission. Get one that actually asks a clarifiying question or two when a repair request comes in instead of immediately sending out the maytag man at $100/min. With an upcharge. The same ol' same 'ol will give you mediocrity at best.
Manage yourself if the property is in your backyard or quit whining. If you don't want to get your little hands dirty, it's on you. Passive income does not meet passive investment.
You have to make sure they are working for you. Meaning when you call them they respond to you in a timely manner because that's what you pay them for. A good PM will already have the best maintenance personnel ready to deploy once a issue arises at your property. If you only have 1-3 property's you can do it yourself no problem. I've wasted $12,000 over the past using a PM and I'm the one always either fixing it because it's something simple. I'm going to put it to you like this...time vs. money? Which one do you prefer when it comes to doing it yourself (time which has no $ associated with it) or money (pay a reasonable pro to do it for you so you can save time).
Can anyone recommend a good mechanic Dentist, hair stylist, etc.
It is your job as the investor to seek out a quality team. There are a lot of property managers out there, the barrier to entry is low. Put our a sign and you are in business. I do not believe there is regulation in this area. The other challenge is for them to profitable, they need scale.
If you perform your due diligence and ask around you can find quality. I am my own property manger, mostly for tax reasons. A number of the investors I work with use the same PM. I have been recommending them for years. It has allowed them to be investors and not landlords
I can speak from a property manager perspective. I wear many hats, but I truly enjoy Landlording and so I got my realtors license to become a property manager and shaped my business from reading through this site for the most part. I do not advertise (aside from CL) and have a small group of clients in Central NJ that I am looking to grow. I work very hard to place fantastic tenants because I do not want any headaches and I do not want my owner to be unhappy. I am very picky and particular with this (including the owners that I work for, some are crazy and incredibly cheap and therefore not worth my time). I am quick to communicate with tenants regarding any issue and communicate with my owners whenever I feel they need to be notified of something. I am very organized, keep things simple, don't mark up on repairs, etc and just have a passion for it. I decided to do this because my area needs good PMs.
You should be able to tell if you're dealing with someone good. I get people who ask me how many doors I manage (as if that DQs me from managing their 4 plex or SFH). Hire someone hungry, someone who communicates well, has plenty of vendors ready in their phone and is organized. That's what works for me and my owners love me.
I work with two property managers.
The first, I pay $2 a day to manage the day to day dealings with tenants on one rental AND her crew is helping get the other house marketed. That's cheap labor! Would you work for $2 per day? I wouldn't.
The second I pay $2.42 per day to manage the day to day dealings with a tenant. Again, I wouldn't (and don't) work for that small amount of money.
My time is worth much more than that. My property managers are awesome.
By contrast, I work out with a personal trainer twice a week. He charges me $140/hour through the health club I belong to.
For the same reason most realtors suck; their interests are only partially aligned with your interests. It's the small difference that causes most of the conflict.
It's all but impossible to provide high-quality property management services on 8% - 12% collected rent approach (which is the general SFH property management approach). Next, there are many ad-hoc property management companies that simply are developed and exist as a means to manage investor-owner properties and pull money off of distressed and ill-informed landlords, and third, a lack of resources and financing - lack of business planning and ability to execute are common in the property management industry. Next, it's often challenging to provide quality services to overly price sensitive consumers - that's just fact. The majority of investors are novice investors that come and go around real estate booms. The investors generally only seek low-cost from an over-leveraged property. As shared herein, there are good property management companies (to include mine) yet to be successful in property management the service approach must be professional, transparent, and built upon trust by both parties.
That don't. You deal with the wrong ones.
I must be a Class "D" landlord...with 3 properties, I haven't hired a PM yet.
Great info in this post from all angles.
As an investor, realtor and owner of a property management company my favorite management clients are the ones that have tried to manage their rentals themselves. Heck, my favorite clients in general are the ones that have tried to manage their own stuff. It's a humbling experience and people who have done it themselves tend to be able to extend a lot more grace than those who haven't.
So this is at all of us in RealEstate
We Get What We Pay For
How do we turn this into some like Brrrr so people can remember it's easier
Golden rule ties in somewhere.
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Because there is no money in it!
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