Just wondering if people/property owners have any tips/suggestions strategies that they have used in the past to manage property management company. Primarily to ensure they are achieving the desired operational (leasing, rent and other fee collection, maintenance upkeep etc.) efficiency with positive cash flow.
Best way to get this kind of information is to talk to investors and agents in the area you have your investments in. Agents talk, investors talk.
You have alot of management companies out there that are merely professional rent collectors. They just collect their 8 to 10% per month. Its sad, but there are some good ones out there. Go to a local REIA or contact 3 to 5 real estate professionals and ask them who they are recommending and why? ask them those same questions you posted. You will be able to make a decision and lock down 1 or 2 credible management companies who do what they say
Thanks for the response. I am looking for more information on what to do after you have assigned the property to a property manager. What are some of the things that work and not work when it comes to monitoring and managing the manager.
Hi Jain, I have hired a Property Management team for managing 50 units of mine. They charge me 6% of collected rent roll. If you interested in talking ever, I can tell you what my team currently does. I have employed them as of recent, it's been about 2 weeks!
They have a great "cloud" software in which I can see all activities such as maintenance, rent collections, delinquencies etc....
I would say ask other investors in the community who they use for a property manager. Usually it is best to find this out at your local REIA meet ups. I also would ask for references. In many states you are required to be a licensed real estate agent (NYS requires this) There are a lot of people out there that will charge very low rates but are not technically 'legal' With that said there are other property managers that churn tenants ( to increase their own income) or create 'fake repairs' and charge out of town landlords for the 'fixes'
I believe making sure to find someone who his trustworthy is paramount and someone that actions and words align. These are the principles we work on for our Property Management Company.
It really depends on your needs & wants. How often do you want report statements on your properties? Can they provide that? What details do you want in your reports? Can they provide that? Do they charge you for small maintenance costs like replacing light bulbs? Are you ok with that? Are they responsive to tenants? Are they responsive to you? Do they enforce tenant cleanliness? Do you care if they enforce tenant cleanliness? So on and so on....
Bottom line, Make a list of what's important to you. If they're meeting your standards then great. But if not, then it's time to shop around.
Thanks all for sharing your insights. I actually use Buildium and have my Property manager manage my properties in it. I do setup budget for the year and then I compare the actuals with it and I do review with them every month on the rent collection and other things that they did on the property. Just wondering how other people do it.
We have the property management company prepare their proposed annual budget and review it in the first part of Jan. every year. Once it's finalized we review their monthly reports comparing actuals to budget and get the manager's action plan for correcting any discrepancies. We also walk each property unannounced at least once a quarter to take the pulse on the ground. Like @Nik S. we prefer working with mgt companies whose platform includes an owner portal so we can look at the numbers directly online.
We're dealing with an 'interesting' situation with one property in a very blue collar market. The majority of tenants do not go online much (if at all) and our managers there are very professional but aren't really set up to handle as much in person business as the tenants are used to doing. We may have to switch to a smaller, more hands on mgt. co. but that usually means I have to budget time to learn then teach the new co. how to use their own prop. mgt. software.
I am a guy who likes to take control of situations. It's hard for me to wait for results and of course wait for others results. Having access to my properties income, expenses etc at all times in quintessential for me. My largest investment is about 1 hour away from my primary residence & it feels great knowing I can at least have access to a daily update of my property details.
There's a lot of Property Management companies out there but very few do it right. Also, depending on the property you are investing in, it requires a certain team. I have interviewed management companies who specialize in turn around / stablilization. Where an investor takes a distressed property & a PM team helps turn it around cosmetically as well as occupancy. They change all dynamics of previous management and have the right tactics to make it a better place to live. Not only that but certain teams can increase your ROI simply by their expertise of screening/placing tenants.
While I was interviewing, I called about 5 places. Only 2 places responded with their brochure via email....
To end all, essentially I am emphasizing on finding the right PM team for your particular invesment. Class A require a certain manager as opposed to a PM team that has a niche in turning stigmas around and stabilizing occupanies. Sometimes companies that specialize in stabilization/more hands on charge more but in some cases it's well worth it...
I'm with you Nik. I reviewed at least a dozen companies who were managing similar properties in the submarket, did a deeper investigation into the best six and selected the top three to come make presentations. They knew the property and knew exactly what our objectives were there. What I didn't realize at the time was how much the tenants preferred to deal in person due to their lack of knowledge or comfort around doing things online (my bias). I assumed (and you know what that does) that the tenants would appreciate how much simpler and less time consuming dealing with these things would be, especially since many are young families. Lessons learned and still learning.
Good idea by having each PM co give you a presentation!
In fact, my PM co offers a portal for tenants to pay online. Sad part is majority of them have no internet access (mixed tenant demographics)! They all get money orders and snail mail them in.
What I am dealing with now is changing the previous business model. It was previously managed "owner/operator". For lack of better words, ma & pop. Meaning when rents due on the 1st, its okay to make arrangements to pay a little here and there before months end! We (management company) are now "training" the tenants that ALL rents are to be paid on the 1st. They have till the 5th before 3 day notice will be posted (unless some type of reasonable arrangement is made given a unexpected circumstance).
So far I have got a few rents EARLY which is a great start. I'm interested to see how next week pans out!
I hear you Nik, personally I can't imagine not paying all bills online but clearly that isn't the case with everyone... yet. We did find a service that will let tenants pay with cash at participating convenience stores and that's working well, especially since there's a 7-11 right down the block from that property. It's called Pay Near Me http://www.paynearme.com and there are locations in Warren too, might be worth checking into-
That's an amazing option! A lot of the tenants use to pay in cash and weren't able to get money orders in a timely fashion (for whatever reasons). Some people only like to pay in cash as well.
I am forwarding that link to my PM asap.
Awesome information! Thanks!
Thanks for sharing this. I really like the idea of using paynearme, will be exploring this right away. Thanks again!
Another payment option to avoid cash can be Paypal.com. It lets the tenant pay with a credit card or debit card (for whatever reason a lot of younger folks with no financial sense don't have checking accounts now, but everything gets loaded onto their reusable Visa debit by cashing their paycheck at Wal-Mart). Then the money flows directly into your bank and an emails notifies you of the transaction. There are other services like Paylease.com, but they can be difficult to work with and are only worth it for large properties with a couple hundred units or more.
I was forced in to property management path purely because I was on my own in a city with no family and 12 units, infant twins and a husband that was underway 90% of the time.... I had to give up my day job because I could not find anyone that would manage the properties with the diligence and attention to detail that I have. I interviewed 10 different property managers in my area, and the one important question that no one could answer was how many rental properties did they personally own. I keep getting the answer "I have been manning property for years and I currently have XX units that I manage". It was very clear that they really didn't understand what being an owner was all about, and definitely missed the point I was trying to make.
I would definitely tell you that if you want to know if your property manager is doing their job, make random visits to the property. Obviously you are not going to be able to go in unless you have given the tenant proper notice, but you should do do as I call the "Drive Bys" at least every 6 months.
Also make sure that you learn your property manager's cycle. For instance our company collects rent from the 1st-5th (pretty standard), we start processing money as soon is it is available (depending on how a tenant paid it could take 4 business days for ACH/E check to process or 7-11 payment to come through) between we are typically finished paying owners by the 11th of the month (depending on where the days of the week fall). You can always tell if you have a good management company if they process is like clockwork, there are no extra or hidden charges every month, and how they respond to your inquiries.
Once communication is breaking down, If they are trying to avoid your phone calls or emails you definitely want to find someone else to work with. But If at any point you don't trust that your Property Manager is working in your best interest it is time to find a new one.
I believe that a truly professional management company should have all the resources you need and then some. They could simply be your accounting department, your maintenance department, your leasing department and legal department or all of the above. That should be the discussion you have with them.
You, as an investor, will fall into one of two categories; Hands-on or Hands-off. The latter being you simply checking the PO Box each month to receive your owner statement and maybe in the spring meet with your Manager to go over operating budget and to discuss upcoming Capital Improvements.
The only way to manage the manager is to be the manager in my opinion. Either that or you find a Property Manager that has a well equipped team with the knowledge and experience to handle every facet of the property management business.
The question to ask is, "Why have I hired a Property Manager if I have to manage them?"
I think one sentence would sum it up:
You get what you pay for!
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