Tenant screening and property management

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Tenant screening and property management

Kathy VillagomezPro Member
Investor · Long Beach, CA · Member since 2016 · 60 posts · 20 votes

Hi,

I finally have my first out of state rental and am wondering....

Do I hire a property manager to lease the property and self manage or do I use a tenant screening service such as Rentprep or just go with Rentredi where I get a discount?

The home has been vastly updated so maintenance will be minimal. I have relatives in the area to show the property.  There are already two prospective applicants just by word of mouth.

Does anyone have any experience with either of these programs? Any tips?

Signed Indecisive Ida :-)

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
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Property Managers do more than show a house and collect rent (at least the good ones). They understand the law. They know the rent market and can keep you earning top dollar. They have connections with vendors that are timely and do good work at a fair price so you're not scrambling for maintenance. They know how to screen applicants and prevent bad renters from getting in. When a bad renter does get through (or a good renter turns bad) then a good PM will have procedures in place to correct the behavior or remove the tenant. They prevent issues like unauthorized animals or residents, handle noise complaints from the neighbors, drive by and watch the lawn, etc.

There are many investors managing from a distance. Some do well. Most are doing the minimum to get by, probably losing more money than they would spend on a PM, and disaster just hasn't hit them yet.
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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    4y

    @Kathy Villagomez I would consider the local laws and ordinance where your property is located because that often is the deciding factor for most OOS investors.  Here in Chicago we have city & county ordinances that change often so it is tougher to be an OOS owner and stay compliant with the laws year over year.  Always consider your time in the process as a cost.  What is your time worth.  Mine is $200 an hour so if I can outsource something for less then that I take a hard look at it. 

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Property Managers do more than show a house and collect rent (at least the good ones). They understand the law. They know the rent market and can keep you earning top dollar. They have connections with vendors that are timely and do good work at a fair price so you're not scrambling for maintenance. They know how to screen applicants and prevent bad renters from getting in. When a bad renter does get through (or a good renter turns bad) then a good PM will have procedures in place to correct the behavior or remove the tenant. They prevent issues like unauthorized animals or residents, handle noise complaints from the neighbors, drive by and watch the lawn, etc.

    There are many investors managing from a distance. Some do well. Most are doing the minimum to get by, probably losing more money than they would spend on a PM, and disaster just hasn't hit them yet.
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  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Kathy Villagomez since I am a professional property manager who's entire business is centered around managing investments for out of state investors please take my opinion with a grain of salt...

    You just spent a massive amount of money on an investment you cannot see, keep track of, or protect.  Why on god's green earth would you not want a responsible property manager watching over your investment?

    Our company has pent up rental demand, when we list a unit we have tenants waiting for units to go live that are pre screened.  We have maintenance staff that is trained, has a company van, a company shirt and workman's comp coverage.  We answer our phones live for tenants and owners, and if something breaks we have a 24/7 call service. 

    Who are you going to call for maintenance work?  Lawn care?  Turnover's?  What if a tenant stops paying?  Yes, you can develop a massive list of subs to do everything but, how are you going to vet subs?  Who is going to check on their work?  What is all of your time worth to do all of this?

    Our company provides a turn key service to investors.  We also get bulk discounts on lawn care, HVAC, plumbing, electrical, etc... so our prices are usually better than what an investor can get to call directly.  

    There is a cost to using a Property Manager that is for sure.  The cost is usually a little less cash flow.  IN return you get peace of mind, your massive investment cared for, licensed and insured individuals watching over your home, and already in place business systems to deal with every situation that comes up on your asset. 

    The most common thing I see when looking at investment properties with foundation issues is a downspout that has been running into the foundation for years.  It costs about $10 in materials to put an elbow on a downspout to redirect the water away from the foundation.  It costs the investor $20,000 to fix this after years of no one caring to point it out.  9/10 times we find it on a self managed investment property for an out of state investor. 

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
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    You will either LOVE being a DIY property manager or HATE it.

    If you want to DIY you have to be ALL IN to be successful or things will slip and you will lose money.

    Otherwise, hire a thoroughly vetted PMC.

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  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
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    Amazing that you have friends/family nearby willing to work for free. I would imagine that will get old to them fast. 

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  • Kathy VillagomezPro Member
    OP
    Investor · Long Beach, CA · Member since 2016 · 60 posts · 20 votes
    4y

    Thank you all for your responses. Very helpful!

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  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
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    Quote from @Kathy Villagomez:

    Hi,

    I finally have my first out of state rental and am wondering....

    Do I hire a property manager to lease the property and self manage or do I use a tenant screening service such as Rentprep or just go with Rentredi where I get a discount?

    The home has been vastly updated so maintenance will be minimal. I have relatives in the area to show the property.  There are already two prospective applicants just by word of mouth.

    Does anyone have any experience with either of these programs? Any tips?

    Signed Indecisive Ida :-)



    Did a quick look at Rentprep and Rentredi. I don't think I like either one.  We prefer tenant screening where the fees are charged to the tenant, like apartment.com.  They are also compliant with local laws with regards to tenant screening. For example- Where we are located we cannot do background checks until we accept a tenant based on the credit application. Apartment.com has that built in. 
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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    4y

    @Kathy Villagomez I think the tough thing here is that if your property is in an A class neighborhood, then managing can be relatively simple. I would agree with many here that a good property manager is worth their weight in gold if you are in a B- area or worse. The tougher the clientele, the more you will need a PM. 

    If you do go the friends and family route, make sure you are compensating them for their time. Also, know that things change and the family may or may not be available to help with the next turn over. I personally worked out a deal with a family member to help me, and I wish I had just hired a PM. It wasn't worth it for my cousin and honestly probably left a bad taste in his mouth which 100% wasn't worth it for any perceived savings. 

    I think a good middle of the road option is to have a local agent help you lease the property. Leasing is probably the most important activity you do in property management. If you have great tenants, then the rest tends to fall into place. 

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