Finding and Vetting a Property Manager - International Ownership
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
1y"Nobody will care more about your property than you."
That's true, and false.
A property manager should align their interests with you. The more money you make, the more they make. They should know the market better and keep your rents up. They are better at screening and keep out the trouble-makers that don't pay or trash the property. They have trusted contractors. They know the law inside-out and protect you from bad renters or unique situations like the COVID eviction moratorium.
Managing from a distance can be done, but you still need boots on the ground to handle showings, inspections, eyes on the property regularly, etc.
The DIY Landlord Book4.7247 Reviews
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- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
"Nobody will care more about your property than you."
That's true, and false.
A property manager should align their interests with you. The more money you make, the more they make. They should know the market better and keep your rents up. They are better at screening and keep out the trouble-makers that don't pay or trash the property. They have trusted contractors. They know the law inside-out and protect you from bad renters or unique situations like the COVID eviction moratorium.
Managing from a distance can be done, but you still need boots on the ground to handle showings, inspections, eyes on the property regularly, etc.
The DIY Landlord Book4.7247 Reviews - Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes1y
Quote from @Greg P.:
In the next six months I will be moving out of the country.
I am on the fence with my current rental property. I would like to keep it as there are two doors on the property and it would cash flow nicely with my insanely low mortgage/interest.
However, I’m leery of managing while living internationally. It would clearly require good property management. Has anyone ever done this? I have a decade of self management - all successful with some slight annoyances.
Anyone have any strong reactions to this? I would always tell new landlords that out of state management is crazy. But I know the area and units and have been able to attract good tenants in the past. Of course that’s because I’m focused on it as an owner. I’m sure a property manager would not have the same focus.Thoughts? Thanks
Greg, you say the properties "would" cash flow nicely.. Are they currently cash flowing nicely? If they are, and assuming you living outside USA is only temporary, perhaps you do what Nathan Gesner suggests and find a property manager where your interests and theirs aligns? If you can't or don't want to now might be a good time to unload the properties.
I will say overall I think that "nobody will care more about your property than you" tends to be much more true than false. Can you find a good property management company - sure? But, it is tough.. Your other option is to test it out and see if you can make it work. If it doesn't, then you sell. Best of luck with your decision.. - 1yGreg P.Dallas, TX · Member since 2016 · 49 posts · 16 votesOP
Quote from @Nathan Gesner:
"Nobody will care more about your property than you."
That's true, and false.
A property manager should align their interests with you. The more money you make, the more they make. They should know the market better and keep your rents up. They are better at screening and keep out the trouble-makers that don't pay or trash the property. They have trusted contractors. They know the law inside-out and protect you from bad renters or unique situations like the COVID eviction moratorium.
Managing from a distance can be done, but you still need boots on the ground to handle showings, inspections, eyes on the property regularly, etc.
Thanks for this. That's good perspective, it's a win/win for them as long as they don't start thinking that they can make an easy buck and pass expenses on.
Do you have any experience or recommendations on best practices when screening a property management company? I would assume history, # of doors, experience and the team they bring for boots on the ground would all factor in.
Also curious if you can think of any circumstance where an issue would require me to travel back to the states. I am assuming that even in worst case evictions that it could be handled remotely between a property manager. It would be pretty annoying to have to do international travel for stuff like that though - so trying to think through any fringe use cases that "could" happen, however unlikely?
- 1yGreg P.Dallas, TX · Member since 2016 · 49 posts · 16 votesOP
Quote from @John Kunick:
Quote from @Greg P.:
In the next six months I will be moving out of the country.
I am on the fence with my current rental property. I would like to keep it as there are two doors on the property and it would cash flow nicely with my insanely low mortgage/interest.
However, I’m leery of managing while living internationally. It would clearly require good property management. Has anyone ever done this? I have a decade of self management - all successful with some slight annoyances.
Anyone have any strong reactions to this? I would always tell new landlords that out of state management is crazy. But I know the area and units and have been able to attract good tenants in the past. Of course that’s because I’m focused on it as an owner. I’m sure a property manager would not have the same focus.Thoughts? Thanks
Greg, you say the properties "would" cash flow nicely.. Are they currently cash flowing nicely? If they are, and assuming you living outside USA is only temporary, perhaps you do what Nathan Gesner suggests and find a property manager where your interests and theirs aligns? If you can't or don't want to now might be a good time to unload the properties.
I will say overall I think that "nobody will care more about your property than you" tends to be much more true than false. Can you find a good property management company - sure? But, it is tough.. Your other option is to test it out and see if you can make it work. If it doesn't, then you sell. Best of luck with your decision..Thank you! Good question - I've been house hacking on this property so your question made me do some math.
Currently I rent a one bedroom studio for $1,100 which covers the $899 mortgage but not other expenses. The $1,100 has been nice for house hacking purposes but when looking at this as a remote investment your question helped to put some numbers down.
The main property leased at $1,850 in 2018/2019. I'd expect it to rent at or above $2,200 as even 2 bedroom apartments are going for that much now - and it's a house. But because I haven't rented the main property since 2019, I'd conservatively estimate $2,100. I'd expect that a 4br house would go for much more, though. Given today's market.
But conservatively, at those prices ($1,100 studio, $2,100 house) they would bring in$38,400 a year.
53% of that would go to fixed expenses ($899 mortgage @ 2.15% interest, $5.8k property tax, $4k house insurance). I estimated a property manager taking another 20% (12% of monthly rent + another 8% in way of first month's rent when tenants are placed). Maybe 20% is too rich and it's cheaper but I've never shopped property managers.
Estimating an additional 10% for vacancies and 15% repairs.Fixed expenses + PM + 25% for vacancies/repairs = $37,996, or $404 left over.
Now I'm torn because I could put estimated proceeds ($200K or so) in a fixed income investment and earn that today without doing anything.
BUT, it is nice to have the US address as I go international, and if I wanted to come back I'd have a property. And the interest rate is absurdly low in today's environment. Decisions, decisions.Income (Two Doors) 38400 Unit 1 (@$1,100) 1100 Unit 2 (@$2,100) 2100 Expenses 37996 Fixed Expenses (@53% Taxes + Insurance + Mortgage) 20588 PM (@12% plus $3,200 for placement = 20% total) 7808 Repairs (@15%) 5760 Vacancies (@10%) 3840 Net Income 404 - Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes1y
@Greg P., I applaud you for doing the #'s. Perhaps others can weigh in on your estimates, but they seem high to me - especially the vacancies and property management. Also, with the interest rate being so low, it might make sense for you to keep it especially if you think you could be moving back to USA.. However, if the loan is assumable, that could also be very attractive to a potential buyer and could end up driving what they pay you higher. It is also good that you consider options for making money.. If you took the proceeds and invested in fixed income..
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
Quote from @Greg P.:
I have more detail the last section of my book, but here's a shorter version:
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. Try interviewing at least three managers.
1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, 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, a 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. Consider 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. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest 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 Book4.7247 Reviews - 1yGreg P.Dallas, TX · Member since 2016 · 49 posts · 16 votesOPThis is incredible detail and more than I could have ever expected! Thanks very much gives me exactly what to focus on. Much appreciated!
Quote from @Nathan Gesner:
Quote from @Greg P.:
I have more detail the last section of my book, but here's a shorter version:
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. Try interviewing at least three managers.
1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, 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, a 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. Consider 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. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest 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!
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