I just closed on my first small apartment complex (15 units) about 20 mins from where I live. I listen to a lot of podcast by
@Gino Barbaro who emphasizes a lot about "managing right", which I agree (and as well as many others) that it is an important component of investing in multi-family.
I wanted some inputs from other apartment owners on how you keep your property managers in check?
How often do you visit the properties?
Do you guys ever send surveys to your tenants to make sure that maintenance issues are addressed in a timely manner by your PM?
Any ideas and or suggestions on how to manage your PM would be greatly appreciated!
@Andy S. I am going to give you my personal perspective, which may or may not work for you.
Finding a good property manager is a lot like finding a good tenant. If you do the research up front, you won't need to baby-sit them the rest of the time.
A good tenant doesn't need to be inspected every three months. They don't need you knocking on the door asking if they have maintenance issues or checking the air filter. A good renter will pay on time, show respect by caring for the home, and they will communicate well because they understand it is your investment.
Likewise, a good property manager doesn't need to be baby-sat. You won't have to ask for a financial report because they will send it every month. You won't have to ask why they spent $300 on a plumbing repair because you will know they are trust-worthy and will treat the investment like it was their own.
I understand it takes time to develop trust but far too many investors feel they have to constantly question every decision the PM makes or check up on every action they take. If you've been with a PM for six months and still feel they require micro-management, that tells me you either hired wrong or you have some personal issues.
I currently work with 4 different PMs in 3 different markets. 2 are great, 1 is questionable, and 1 is yet-to-be-seen because I just brought them on.
What I can say is this: the #1 signal that a PM is on top of things is the level of communication and responsiveness they exhibit to you (the owner.) Do they return your emails and phone calls promptly? Do they reach out to you proactively when issues arise? Do they call you when you forgot to order the annual survey or whatever?
So, when I interview a PM, I always follow-up with an email with a random question that I didn't ask on the phone. It doesn't matter what you ask. what matters is that they respond to you in a timely manner. I've had PMs that sold me the world on the phone, after I followed up with them via email AND voicemail, they couldn't be bothered to return my correspondences (some people prefer one media over another, so make allowances.) If they aren't returning your calls, then the probably aren't returning the calls of your tenants either.
To answer your specific questions: I never visit properties. Partially because a lot of my properties are out-of-state, but even those that aren't, that's not how I want to spend my time. What I will do is that a property sits on the market for a while, I'll ask the agent/broker who sold me the property to swing by and have a look at it and let me know if they have thoughts and feedback. That has proven to be helpful.
For my class-A properties, I have a 6 or 12 month survey in which the maintenance personal walks the properties and fixes any small items, and reports anything larger. I haven't quite decided what I want to do with my class-B properties, but I may do an annual maintenance survey as well.
Hope that helps!
There are entire books written on the subject. WE have a vertically integrated company and are actively managing, but I am not part of day to day operations. So what I look for in our company is direct communication with the managers, leasing agents and the ability to ask and get answers quickly. I also have access to financial data through software, we use App Folio and the reports are very detailed.
If you are wary of your company, send out surveys to tenants with questions about the company and have them send back to you. Use either mail or jot form. Tenants love to complain, so if there are problems, you will hear it.
Software will also tell you if maintenance is being handled in a quick fashion and how it was handled.
You can always install cameras on your properties and view the cameras from anywhere. Same with having them in the office and common areas.
It depends on how far you are from the property. If you are 20 minutes and it is your first deal, I would go a couple times a week, unannounced and varied times to check up.
If a problem arises, nip it in the bud. Address it promptly and lay out what you expect from the company. And do not cheap out and under pay your company. Property management is a difficult and sometimes not a very profitable business
Hope that helps
Hey Andy. I also have a small community...29 units. I went through two bad PMs before finding a decent one, and they are still only mediocre. I vetted all three extensively. I stayed on top of all three extensively. And you know what, NONE OF IT MATTERED. All three of them were going to continue to do the same processes whether I was on top of them or not. I now have backed off and my life is a lot better. I still have to put up with poor practices. Recently, pipes burst and ruined floors in a vacant unit and in the unit next door likely because the heat was not turned on, although they say it was...but the the other 27 occupied units were fine...
Vet extensively, have a regularly schedule call/email with them, include extra vacancy and repair costs in your deal analyzer, and see if they perform...that's all you can do.
@Nathan G. Thank you your advice, I really appreciate it.
@James Kojo Great points!! With my single properties, my PM was very responsive to questions...I just wish they manage apartment complex too. I really like that idea of having a maintenance survey done once a year.
@Gino Barbaro Thank you Gino.
@Mike Dymski I'm going to write down your suggestions. Thank you!
@Andy S. I invest out-of-state and property management will (likely forever) remain a mixed bag. I still do visit every 6 months or so. I like to put my feet on the ground, tour the property, tour the neighborhood, and most of the time I'm at least looking a couple of deals while I'm there. So the "objective" in going out there is only partially to "keep the PM in check". There is also the reality that different owners like their properties dealt with differently. Some might say it's "keeping the PM in check" and some might say it's "communicating about how I want the properties maintained". And for the latter, I don't expect it to be me extracting more out of the PM. I'll happily pay to powerwash the small portions of siding on my bring buildings. Other owners would probably see that as a "waste" and unnecessary. But during a first meeting with a PM it's hard to make a list of those 100 expectations. However, it's easy to develop that over time. Net result, those visits should be a win-win.
I also get reports, receipt scans, etc. through my owner portal in Appfolio. Is there a way that I can 'audit' these? Not really. If a plumber bill is $200 could it have been done cheaper for $100? Maybe. Was it $200 so that the problem could be handled that day instead of next week? Maybe. Who knows. I could audit each receipt and ask 100 questions but (by that point) what the heck is the point of having a PM. So all of that maintenance stuff just goes to the bottom of the pile of things that I care about. Why? If I sweat anything it's the big stuff. Which boils down to vacancy. If you're 95%+ full then those little data exports and owner distributions always look beautiful.
So, for you, with those 15 units in Fresno you should start with focusing on occupancy. Occupancy with good, qualified, tenants. If you have 2 vacant units at $800/month that's $1600 in gross rents your missing out on. Once you take away things like utilities, a PM fee, etc. you might end up with $1,000 (just being conservative). Focus on the $1,000 in net-rents to pay the mortgage, etc. rather than if the $300 plumbing bill could have been $200 if they had called around. Focus on the $1,000, not the $100.
That's not to say that some PMs won't screw you, take kickbacks from contractors (yes, that happens, a lot...and is hard to really document), or otherwise mess things up. Some will. You'd actually WANT them to try and steal a lot up front so you can fire them. The dangerous ones are the ones smart enough to take small contractor kickbacks over time. Until there's some dispute and the contractor finds the name of the owner...and the owner gets a phone call...
@Andrew Johnson Thanks for the great advice!!
I'm definitely not trying to micro manage my PM. As long as the units are fully occupied and the maintenance request from tenants are answered promptly, that would be a good start.
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