Pseudo-inheriting a residential property with minimal experience.

[Dennis F.]

Hello all,

I have recently been given the responsibility of managing a 6 unit residential property in Brooklyn, NY. Without going into details, it belongs to and has been managed by a family member, but do to health issues they are no longer able to manage the property or give advice. Now everything has been put on me to figure it all out.

I'm here asking for advice on what I should do next. I can handle the basic stuff like paying the bills, but I do not have any knowledge on handling tenants, rent-stabilization laws, lease-renewals, collecting rent, etc. I was going to try out a management app like RentRedi to help. I would just go to a management company, but I am hesitant given this property has a fairly low net income do to taxes and rent-stabilization, a management company would greatly eat into the profit. 

What is the best place online to find answers to question I might have, for example; How do I find a good handyman for small fixes or a good contractor for bigger fixes, and whether a price is a ripoff or not? What is the appropriate way to contact tenants about the change, leave a note under their door or call? How do I properly handle late rent payments or fill out a rent-stabilized lease renewal?

Thank you for taking the time to read this.

[Nathan Gesner]

Quote from @Dennis F.:

Hello all,

I have recently been given the responsibility of managing a 6 unit residential property in Brooklyn, NY. Without going into details, it belongs to and has been managed by a family member, but do to health issues they are no longer able to manage the property or give advice. Now everything has been put on me to figure it all out.

I'm here asking for advice on what I should do next. I can handle the basic stuff like paying the bills, but I do not have any knowledge on handling tenants, rent-stabilization laws, lease-renewals, collecting rent, etc. I was going to try out a management app like RentRedi to help. I would just go to a management company, but I am hesitant given this property has a fairly low net income do to taxes and rent-stabilization, a management company would greatly eat into the profit. 

What is the best place online to find answers to question I might have, for example; How do I find a good handyman for small fixes or a good contractor for bigger fixes, and whether a price is a ripoff or not? What is the appropriate way to contact tenants about the change, leave a note under their door or call? How do I properly handle late rent payments or fill out a rent-stabilized lease renewal?

Thank you for taking the time to read this.

If you think it's expensive to hire a professional, wait until you hire an amateur.

You need to hire a professional property manager, especially in a market that is often hostile to Landlords. At least hire them for one year while you gather your wits, learn the law, figure out your processes, etc.

You can't ask all the questions below, but you can get an idea of what a good property manager looks like and then screen until you find one.

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!