Property Management Company Recommendations?

[John Michael Roberson]

Recently acquired 3 units in 38119 and 38134 and am almost finished renovating two of them and they will be ready to list for rent. I am curious of what PM’s everyone would recommend for the Memphis area? 

I’ve been in touch with a couple of local PM’s and their fee structure seems….well.. bad. They take anywhere from 75-100% of all the late fees and then charge a placement fee. The placement fee I understand, however, with the way they have their late fees setup, it’s advantageous for them to put in late paying tenants because they end up reaping all the benefits of late fees, leaving me with nothing to be gained at all by a late rent payments. It’s also set up to be advantageous for them to pick tenants that will have to be removed so they can get more placement fees. I have an excellent PM back in GA and they send 100% of all late rent fees to me so maybe I’ve gotten spoiled by thinking that’s how things should be? I’m really looking for everyone’s input here since I’ve only been in my investing journey for a little less than two years.

[Michael Smythe]

@John Michael Roberson

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!