Frustrated with next business move for my rental

Philadelphia, Pennsylvania
General Landlording & Rental Properties
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Frustrated with next business move for my rental

Mahmuda L.
Member since 2021 · 36 posts · 2 votes

I have an individual property manager who does not advertise. So I have to. My place only gets 3 to 4m lease and 9m at best but rare. And I have a very involved work life as an engineer at a big tech company. I could not find individuals who adverse on the side. Renting 5 rooms separately in not allowed in Philly so it’s hard to find companies. I feel cheated when I look for long term candidates and my manager hands them over to her other landlords who have brand new 3b2b without compensating me given candidates often don’t like my place. So even my advertising isn’t benefiting me. The manager has a girl who posts ads on the side, is not too reliable, consistent or pro-active, charges me same for 3m or 9m lease. Should I switch to full service airbnb company? It will be much less profitable. Now I pay 8% management fee but then it will be 20% ish, plus more vacancies so less income. But at least I am not patching tenants on five rooms every 3 to 4 months. I also worry losing trust and business relation with current manager who has been otherwise very reliable to me. Who knows how reliable the airbnb company will be given I am on the other side of the US.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Mahmuda L.:

I have an individual property manager who does not advertise. So I have to. My place only gets 3 to 4m lease and 9m at best but rare. And I have a very involved work life as an engineer at a big tech company. I could not find individuals who adverse on the side. Renting 5 rooms separately in not allowed in Philly so it’s hard to find companies. I feel cheated when I look for long term candidates and my manager hands them over to her other landlords who have brand new 3b2b without compensating me given candidates often don’t like my place. So even my advertising isn’t benefiting me. The manager has a girl who posts ads on the side, is not too reliable, consistent or pro-active, charges me same for 3m or 9m lease. Should I switch to full service airbnb company? It will be much less profitable. Now I pay 8% management fee but then it will be 20% ish, plus more vacancies so less income. But at least I am not patching tenants on five rooms every 3 to 4 months. I also worry losing trust and business relation with current manager who has been otherwise very reliable to me. Who knows how reliable the airbnb company will be given I am on the other side of the US.


You need a new manager. The rental market is strong and there's no reason they can't find you one-year tenants.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

The DIY Landlord Book4.7248 Reviews
WebsiteView Page
4Reply
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Mahmuda L.:

    I have an individual property manager who does not advertise. So I have to. My place only gets 3 to 4m lease and 9m at best but rare. And I have a very involved work life as an engineer at a big tech company. I could not find individuals who adverse on the side. Renting 5 rooms separately in not allowed in Philly so it’s hard to find companies. I feel cheated when I look for long term candidates and my manager hands them over to her other landlords who have brand new 3b2b without compensating me given candidates often don’t like my place. So even my advertising isn’t benefiting me. The manager has a girl who posts ads on the side, is not too reliable, consistent or pro-active, charges me same for 3m or 9m lease. Should I switch to full service airbnb company? It will be much less profitable. Now I pay 8% management fee but then it will be 20% ish, plus more vacancies so less income. But at least I am not patching tenants on five rooms every 3 to 4 months. I also worry losing trust and business relation with current manager who has been otherwise very reliable to me. Who knows how reliable the airbnb company will be given I am on the other side of the US.


    You need a new manager. The rental market is strong and there's no reason they can't find you one-year tenants.

    Remember: cheaper doesn't mean you'll make more money.

    Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

    1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

    2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

    3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

    4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

    5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

    6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

    7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

    This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    4Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Mahmuda L.

    Not understanding exactly what your problem is?

    Are you specifically looking to rent out your entire house for 12 months at a time?

    Or, trying to rent out each individual bedroom?

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    0Reply
  • Mahmuda L.
    OP
    Member since 2021 · 36 posts · 2 votes
    4y

    @Nathan G. Thank you for that extended response. They are very helpful and hopefully I get to use some on my search for managers.

    1Reply
  • Mahmuda L.
    OP
    Member since 2021 · 36 posts · 2 votes
    4y

    @Drew Sygit I am looking for less involvement with the rental business, less stress and for maximum profit. I am trying to find the business strategy that makes best sense while it keeps me centered as in motivated at my life and less frustrated.

    These are some options:

    1. Keep my current manager (she has a family business) who rents to group or to individual while

    a. owner advertise [current, very frustrating]

    b. Some company advertise [couldn't find for room rental ]

    2. Hand over to some full service management company for

    a. long term rental [hard with 5b2b setup if room rental and targetting student which my manager currently specializes. I tried 5b2b for single family.. too big for them, so rent decreses a lot]

    b. Airbnb [curious to try but concerned with fees]

    c. Short term rental (not airbnb) [not sure]

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Mahmuda L. it sounds like you're trying to fit a square peg in a round hole - and then getting frustrated it's not working!

    Why are you trying to rent out rooms in violation of Philadelphia statutes? What decent property management company (PMC) would put themselves at risk to do this for you?

    Yes, we agree with most your options, but you may also want to consider selling this ugly duckling property and buying 1-2 properties that are easier to rent and manage.

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    2Reply
  • Mahmuda L.
    OP
    Member since 2021 · 36 posts · 2 votes
    4y

    @Drew Sygit fair point. I need to sacrifice on rent I think. If I do a 1031 exhange, with inflation and much higher mortagte rate, it will set me in worse position than I started with. Given philadelphia hosuing price is also skyrocketing, my house appreciated but it also means housing prices have gone up. I had it as primary residnece which became rental when I moved out of state for work. I had less restriction on downpayment. With new loan, the downpayment will be at least 20%. I don't have that much in budget.

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Lisa Connor may be "addition by subtraction".

    How much would you net from a sale of this property?

    What's the rental market like where you live now?

    What other rental markets could you invest in, both long-term and short-term (Airbnb) rentals?

    Be a problem solver!

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    1Reply
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