Hey all! Researching and starting my real estate investment journey.
I'm curious what everyone looks for in a property manager.
Also, is the ~10% in property management worth it? Are there ways to get lower rates?
10% is 1000x worth it. It's amazing how much value they bring for 10%. They have all the systems, processes, and regulations in house ready to go. 10% is cheap for that value if you ask me. But you do have to find a good one which can be hard to do.
I think one of the best indicators of a property manager is good communication. If you can't hardly get a hold them, dump it.
Hi @Michael Luo !
If you're interested in working with a property manager, making sure they are local experts can be one of the most important factors in making sure your rental property is profitable and up to code with local legislation and rental increases.
Having worked with Steve Rozenberg, Bigger Pockets contributor, professional real estate investor, and Head of Investment Education at Mynd Management, I've learned that not having a local team can be one of the biggest drains on investors' return on investment.
There are some great ways to source a local team. I'm happy to tell you more if you're interested.
I'd say the 10% management fee is somewhat industry standard but you can also look for PMs that are offering investor friendly pricing (lesser fees for additional properties onboarded) and/or flat fee pricing. There would be advantages to both depending on their other fees like leasing and renewal fees. The rent rate would then determine the break-even point for your percentage based vs. flat fee pricing.
To echo Allan I'd say communication, transparency and trust are key to a good PM. Do your homework before you choose and be sure they are no hidden fees or nuances to their fee schedule. The technology and economies of scale that come with a professional manager are a perk but having 'boots on the ground' to meet you or be at your property in a day is priority to me.
Let me know if I can help with any other questions!
One way to drive down management cost - Have a "high-end" rental property and find a PM who offers a flat rate management fee. $89 -$109 is pretty standard.
The higher they push your rent the less you are paying for management as a percentage of your income from rents. If you are getting $1800/mo in rent and you have a management company charging $90 you are paying a %5.
Look for a fast turn-around on communication and transparency. You should be able to call your PM and get him/her on the phone and get a sense of competency and real estate savvy from them. Ask for a referral from another owner to get a feel for their experience. Knowledge in their market is important so you know your property will fetch maximum cashflow.
You might want to read our series about “How to Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes