@Barbara G. Actually, you first said - "I thought my first option would be to be if any of my relatives would do the Property managment for me for a PM fee."
PM by definition is a real estate activity, and in most states you need a license to do it. Maybe you do have plenty of experience, and can handle all of your properties yourself. I think long distance management can totally be done with a few key people in place locally. However, hiring a real estate agent for tenant placement, like Sue previously mentioned, is a bad idea. They don't know what they are looking for. Screening tenants is a skill that gets honed over time. I'm assuming the RE agent has no experience in PM when I say this. Obviously, if the agent also happens to be an expert tenant placer, then by all means, use that resource. Hiring a family member is even worse because they would be breaking the law in many states.
Remember, to get your money regularly, a lot of things have to fall into place. You home needs to be maintained, repairs need to be handled quickly, good tenants must be chosen, and rent must be collected. If any of those things are mishandled, the money starts going out the door quickly. An ounce of prevention is worth a pound of cure.
Also, rules and regulations vary GREATLY by state, so what flys in NY may be totally against the law in NC. You have to be very familiar with each state's laws in which you invest. I've been managing properties in NC for more than 12 years, and I still occasionally learn something new about NC laws, and it doesn't help that the laws also get revised regularly. You even have to know the ins and outs of the particular City, not just the state. In Raleigh, you can't have more than four unrelated people living in a home together. You also must register your property as a rental with the City. Five minutes over in Cary, that's not a thing.
Long story short, if you don't find any value in paying for PM, then of course, don't hire one. What concerns me is when people misinform other people or give just plain bad advice, and now those newbie folks run off and get themselves in trouble. Hiring someone for a job in which they have zero experience is simply not a good idea.
No Never. And I wouldn't pay a leasing fee or any other fee than compensates them for the property being vacant and turnover. Those are a couple of your biggest expenses. Unfortunately, in property management some companies have fees on these and it is one of their largest sources of income. They make money on turnover!!!!!!!!!!!!!! Their fee structure should be in line with your goals. Good long term tenants.
For example, I'd rather pay a renewal fee than a leasing fee. I really don't like any fees beyond a percentage of the rent collected. With this fee they want to keep it rented to people who pay rent. CRAZY IDEA HUH!
I only pay a cut of the rents. no rent, no cut.
A good PM company will only make money when you make money. If they make money on vacant units, where is their incentive to get units rented??
Would you hire a Property Management company that charge a fee for vacant units. Is this common practice or should this be negotiated?
Unless this is standard in an area, which I doubt, it could be that the PM has landlords who procrastinate too much about repairs and repainting and so forth during the downtime, and out of desperation, the owner of the PM has said "right, you can leave it empty for two months arguing about the paint but your gonna pay me whilst it sits there", and over night, the PM adds a $30 don't piss me off charge.
You could just ask them why they have this charge.
@Barbara G. Actually, you first said - "I thought my first option would be to be if any of my relatives would do the Property managment for me for a PM fee."
PM by definition is a real estate activity, and in most states you need a license to do it. Maybe you do have plenty of experience, and can handle all of your properties yourself. I think long distance management can totally be done with a few key people in place locally. However, hiring a real estate agent for tenant placement, like Sue previously mentioned, is a bad idea. They don't know what they are looking for. Screening tenants is a skill that gets honed over time. I'm assuming the RE agent has no experience in PM when I say this. Obviously, if the agent also happens to be an expert tenant placer, then by all means, use that resource. Hiring a family member is even worse because they would be breaking the law in many states.
Remember, to get your money regularly, a lot of things have to fall into place. You home needs to be maintained, repairs need to be handled quickly, good tenants must be chosen, and rent must be collected. If any of those things are mishandled, the money starts going out the door quickly. An ounce of prevention is worth a pound of cure.
Also, rules and regulations vary GREATLY by state, so what flys in NY may be totally against the law in NC. You have to be very familiar with each state's laws in which you invest. I've been managing properties in NC for more than 12 years, and I still occasionally learn something new about NC laws, and it doesn't help that the laws also get revised regularly. You even have to know the ins and outs of the particular City, not just the state. In Raleigh, you can't have more than four unrelated people living in a home together. You also must register your property as a rental with the City. Five minutes over in Cary, that's not a thing.
Long story short, if you don't find any value in paying for PM, then of course, don't hire one. What concerns me is when people misinform other people or give just plain bad advice, and now those newbie folks run off and get themselves in trouble. Hiring someone for a job in which they have zero experience is simply not a good idea.
Dawn, screening tenants is not rocket science. An agent generally can legally act as a property manager, while a non-agent cannot. Therefore, they are a good choice if someone doesn't want to hire a property management company. They can legally manage properties, and all they need to do is use a screening service and pick up a copy of the landlord-tenant laws. I learned everything I needed to know in the Nolo Press book for California landlords.
I can see you are passionate about the subject, but because I disagree with you, that does not make my advice "bad," and yours "good." One of the things that makes for a great property manager, is the ability to be diplomatic. I think you need a little more experience in that department.
One person's "good" is another's "bad." Until you can quantify and qualify the PM actions, "good" and "bad" don't mean much. Examples: That PM sucks! I had a great place ready for rent and he took 8 weeks to get it rented! (Behind hte scenes: Yes, the PM pre-screened 12 applicants, and screened two, and it took time to get a qualified tenant.) Vs... That PM is great! My place rented in less than a week! (Behind hte scenes: Yes, the PM is getting paid nothing or minimally to place tenants so he doesn't screen and the first person with cash (a convicted felon, with cash from a recent drug deal) is placed in the unit.)
My view is that 99% of the time, owners don't set expectations correctly on the work performed by a PM. Likewise, 99% of the time, PM don't set expectations correctly on the performance of their service. Most PM companies, as a business, are not that well run.
Pre-screening and screening tenants is not rocket science, but without a process don't get an expectation that a screening will have a positive impact. I've met brokers who think that all discrimination against tenants/applicants (ex: "you can't be treating people differently"... and they include criminals with violent history) is illegal. They, of course, are wrong. But they believe they are right. And that makes them a hazard to your financial (and possibly physical) health.
The reality is that the broker's course spends virtually no time on effective property management. The "good" brokers have figured it out. They are valuable, but they are very hard to find. And a broker that will implement your processes... well, that is one in a million. That's why people self manage.
@Account Closed With all the tales of terrible tenants landlords have had over the years, clearly screening tenants is not a skill everyone has. I will stand by my advice to hire someone who is GOOD at screening tenants, not a random real estate agent or your cousin's next door neighbor's brother. Well, unless they happen to also have experience in this task.
@Account Closed
Look, I understand you have been burned by PM companies in the past, so you have a very passionate view of their worth. I've read a lot of your posts. I get it. I know whatever I say will not change your mind about them, but there are still much better alternatives than hiring someone with no experience to screen tenants for you. I'd rather just do it myself than hire someone else who has no idea what they are doing. Why not hire a PM to just do the tenant placement and then self manage after the lease starts?
I managed my own properties from 2004 - 2010 before I started my PM business. I didn't hire a PM. I didn't even know the industry existed when I bought my first rental. I became good at tenant screening over those six years before I started offering my service to others for payment, so no, I didn't need to offer any refunds.
You didn't mention hiring a family member, but someone else did, so that was still very relevant to the conversation. I wasn't just talking to you when I made my first comment. Also, I already know I am not someone you would hire (see paragraph one). This isn't meant to be argumentative, but I think your disdain for the PM industry as a whole is painfully obvious in all of your posts, but that doesn't mean there aren't good managers out there, and they do provide a valuable service to people who want to invest in RE. You steer people away from it every opportunity you get, and I think some of the people you make these comments to could really benefit from a good PM on their team.
I'm really not arrogant at all about the business. I provide a valuable service to some people. For others, it may be completely useless. It depends on how much of yourself you want to put in it. It's like any other service provider. If you can and want to do it yourself, more power to you. If you have better things to do with your time, then hire it out.