I despise Property Management companies. I think a majority of them are thieves and thrive on nativity. I usually end up buying my properties from people who used PM companies and ended up needing to sell their property.
My .02 is that nobody will look out for your asset more than you. Does anyone have good stories involving PM companies? How many units do you think warrant hiring a PM company?
Hi Brett. I own a property management company and we aren't all bad. Unfortunately, there are a lot of them out there that give us a bad name.
I used to work with a property management company, in property sign-ups.
Most of our clients that I would meet were folks that owned at least a few properties and wanted to see what all the hype was about with PM.
I personally only would use a PM if I had 10 or more properties, I think that would probably be a good time to relinquish some of the stress associated with being a landlord and focus on acquiring more properties.
As with any industry there are the bad eggs in the bunch. I would assume that it should be the responsibility of the homeowner to find a reputable company.
I thought about using a management company, but I want to first see how things will go. When I get to about 25-30 properties I will definitely be using a property management company
I personally self manage for a couple of reasons
1) I enjoy it
2) i like not having a middle man.
3) No one cares as much as you do.
4) I like saving the management fees
i will probaly always self manage.
Generaling property managers in that regards is unfair. i have seen some good ones and many people have great stories. It is like investors, easy to get bad raps hard to get good ones.
@ Brett B.
I have 17 doors, in 2 states and the closest are about 1800 miles away. I use property managers and have pretty good ones. Had to fire one who was terrible though. Such is life. My cash flow is reduced by using a PM and I know enough people in both locations than I could self manage from a distance. Perhaps I will one day. But for now, managing my own properties is not the highest and best use of my time. I'll trade money for time any day of the week and I'd rather use my time acquiring/selling new properties.
Michelle Na that is one of the reasons I think I will only own what I can get to by car. Distance would not work in my model.
Thank you all for responses
When I get over 10 properties , I will start my own property management company .
I use property management. I use a small company and so far they have been great. It does reduce my income by a small amount but I live nowhere near my rental. I make sure a family member shows up when maintenance is being done.
I think it all comes down to your goals and perspective. Yes there are a lot of bad property managers out there but there are also a lot of good ones and the question is how do you want to spend your time?
In the past when we used a realtor to find tenants, we had a realtor recommend that we go with an applicant. Upon us looking at the credit report, we saw a large collection from an apartment complex.
Yes, I use them. I agree that the vast majority of PMs are VERY bad. But not 100%.
I also agree that no PM will look after your proeprty as well as you would.
To me.. it comes down to a few questions.
Do you have the time to manage your own?
Do you WANT to manage your own?
And I will add a partial 1/3.. CAN you fully manage your own? (I say this because of issues with long distance if you are not near the property.)
If not, then hire a PM.
I self-managed for a long time then turned the re-renting part over to a PM and gradually turning full control over to a PM. (So I manage the PM instead of the property.)
@Brett B. yikes, strong stuff abt mgmt companies. I've always had a property mgmt company manage my properties because I'd rather spend my time find the next deal or optimizing the investment than screening residents, coordinating maintenance requests, etc.
When I purchased my 1st home in 2009 I had a property mgmt company. I agree that nobody will care more of your property than you do but I think you can get a property mgmt company to care enough by providing financial incentives and good oversight.
You will never guess where I am coming from. I am straight to the point kid of guy. I am a fellow New Yorker, I thought we were all like that?
I hear what you are saying but I guess I am a control freak and I want to know what is going on with all my units. I handle he requests, my Realtor Screens Tenants and I usually have an onsite person to keep an eye out. I may be busy as all get up but I like it that way.
If you hire a PM, you should vet them and get a copy of their insurance and get references, and also you set the rules and get them to sign your paperwork on how you want everything done and put them on a 90 probation period and never sign a year contract with a PM.
Hi Brett, I could go on for days about this topic but I'll try to keep it brief. I use property managers for my out of state properties. One is great and helped me recover from a terrible property manager, the other out of state manager is okay. With both, I instruct them about with what I want including a template of paint, carpet, tile, etc for turnovers and I negotiated every line of the contract. The "okay" manager didn't want to raise rent because my really good tenants may move elsewhere. (We discussed, raised rent, tenant stayed.) The great property manager gets me above market rents.
Because of ownership structure, I also have a property manager for one of my local properties. When I have a chance I will find another management company as the company has not served me well.
My other local properties are self managed. I work well with my tenants and have dependable people to handle maintenance issues. As a result, I have successfully managed my properties without it becoming too much of a drain on my time. Frankly, I have little tenant turnover because I spend a lot of time initially "training my tenants."
So -- use property managers if you must (distance) or if you don't have time to train your tenants. Even if you are very busy, make time to review and question your property managers and review their statements. Finally, visit your properties and talk with your tenants -- after all, it is a business expense.
How many in state vs out of state units do you have?
Thank you. A four plex in Alabama and two condos in New Jersey. 9 local units -- DC and Maryland.
I like PM's that own rental property themselves. Our's own or related to the owners of more than half of their management portfolio.
@Brett B. If I own single family residences up to 100 of them I believe I would not use a PM and I would manage them myself. However, if I were to buy a 100 unit apartment complex that could support a good reliable PM then I would probably hire a company right off the bat since I know I would not be able to manage an apartment complex by myself. I would ensure I bought a property big enough to pay a PM.
We own and manage our own properties. I've heard the sales pitch given by most PM companies in my town. However, I've learned the most about these PM companies from coworkers at my place of employment who have rented properties and were treated poorly by PM companies. This has given me insight into which ones I would avoid. Also, I learn about the good, the bad and the ugly during the screening process when I do rental background checks.
1. Tenant is one day late with rent, knows to pay the late fee (which is a percentage of the rent due and not a flat fee.) She gets the money order, but calculated the late fee wrong and is short by 25 cents. When paying in the office of the PM company they point out to her that she is short 25 cents. She hands them a quarter and they refuse to accept it and make her go get another money order to pay the 25 cents! If she doesn't do it that day, they will increase the late fee each day for the 25 cents that was not paid.
2. Prospective Tenant sees a house advertised that he wants to rent, goes through all the steps to apply and pays the application fee. Then the PM company tells him that house is not available and refuses to refund the application fee, but tells him the application fee can be used for him to apply for any of the other properties that they have available. None of which appeal to him. Bait and switch!
3. Prospective Tenant applies to rent a house. Has successfully rented from another PM company in town with no problems and a good rental reference. This house however is managed by a different PM company who makes the tenant go through a hellish application process and charges the tenant outrageous deposits and fees to qualify, at least three times what other companies in the area charge. Also requires them to get a co-sginer and although only requires a tenant to have 3x monthly income, requires a co-signer to have 5x monthly income. The co-signer is her elderly father who is bewildered by the requirement of the PM to examine his financials as if he was applying for a mortgage and just about throws in the towel. The Prospective Tenant gets the place, but is worried about future dealings with this PM company. The property owner had previously managed his own properties and had no clue how poorly the PM company would treat his tenants, but he is locked into a contract with them now with no easy out.
Shiver me timbers!
Updated almost 4 years ago
Note: I do plan on working with a PM company sometime in the future. I have my short list of those that I will consider and certainly will vet them well. Thank you for the insight from all of you who have reputable PM companies.
I think there is a difference hiring a pm and a pm company. I have two Pm's for my properties but they work directly for me. I find that the companies who gave several clients seem to be the problems in my opinion.
Finding a Property Manager that is a good fit is really hard to find. Every investment I own is to far for me manage. I had a really honest property manager who was overwhelmed with the job and couldn't get things done on time, so I fired him and hired a seemingly competent and energetic property management team. The owner turned out was crazy and at one point pointed a gun at one of my tenants. I ended up firing him and going back to the honest guy, I make it work by calling three days a week to stay on top of every little thing that they are supposed to do.
Then in another area I have a PM that is very good but in such demand that I can't get the one on one time as often as I would like.
Thank you for your share. A crazy story there!!!!
Another way to look at this scenario is that a solid relationship must be formed between the owner and the manager. Just selecting a person based on paper or promises without meeting and vetting that person is a recipe for disaster. No one will manage your property like you, but if you show support to the PM and keep in contact, essentially managing the PM then it will turn out better. For most PMs that do poor jobs it is just their character. If you put them in a restaurant they likely would mess up your order. Maybe being a PM is not their strong suit, but it is getting the bills paid. So it is ultimately it is up to the owner to select and work with a good PM.
For owners you have to be responsive. What I see from owners is that they want the PM to do A-Z, and then do not want to answer the call when a pricey repair needs to be done. Also, owners are buying properties that are not good investments and expect a PM to work magic to make it cash-flow. More and More new landlords lack information and knowledge and cannot effectively manage their own property or know what to expect from a PM.
So it works both ways. A solid foundation between the owner and the PM will help. If not move on to either a new owner or new PM. I am very selective in who I will manage a property for, and I expect them to be selective with who they ask as well.
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