Real Estate Agent · Houston, TX · Member since 2015 · 18 posts · 13 votes
I'm finding the vendors that the prooerty managers uses are expensive. I'm out of state. is it possible to manage the property from out of state?
I'm currently looking for bids for a new AC since their vendor charges are about 40 to 50 percent more than the estimates I've received.
Any advice out there?
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
9y
Carolyn W.
Remember your property manager works for you. You NEVER have to use their vendors.
I had an AC go out on my property in Tucson. The repair bill was ridiculous so I called three other AC companies and chose the best of the three to fix it. It saved me over $1000 and all it took was a little time on the phone.
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
9y
Carolyn,
yes, some of the times they are more expensive, i have hired my own contractors to do the work, depending on how much work there is. If it's minor work, i just let the PM co. do it, for major work i let them give me a price and i have other contractors bid. One thing the PM is probably doing is adding on to the estimate a certain percentage for hiring and managing the vendor.
Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes
9y
It is pretty standard for PMs to add a % of the vendor bill to your cost. It is the way they pay for their time to manage the repair. Most PMs do not put any language regarding management of repairs into the contract. So ask them directly if that is what they will do. As far as managing properties in another state, I did so very successfully for 20 years. That was before software for rent collection and tenant screening and posting webflyers. With software it is a snap to manage your own properties.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Carolyn W. You might want to state what the costs, fees, etc. are for you. From my (limited) experience what's common can be localized. Where I invest it's 8% instead of 10% if I go 30 miles away. In some geos it's common to pay leasing fees (or even re-leasing fees) but it's not common in my area. Someone may know of a PM that looks like it's 30 miles away, costs less, but is active in your area. Just a thought.
Greenwood, IN · Member since 2013 · 346 posts · 93 votes
9y
@Carolyn W. One of the reasons, why I still manage myself.
Property management companies take 8 to 10 percent off the top.
Now you hear they pad vendor costs, making repairs more expensive then if i hired myself.
And for what? I guess my question is, if they are adding fees on top of the vendor rates, and then most want fees for when they do a renewal(for what reason) and then they want a lease up fee.
What exactly is the 8 or 10 percent for, going out the door each month.
And on top of this, most of them will do a crappier job, than you can do yourself.
Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Gabe G. You are paying for time and it all depends on what yours is worth. Some people spend it better managing their own units and some benefit from paying a manager to do it for them.
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
9y
Carolyn W.
Remember your property manager works for you. You NEVER have to use their vendors.
I had an AC go out on my property in Tucson. The repair bill was ridiculous so I called three other AC companies and chose the best of the three to fix it. It saved me over $1000 and all it took was a little time on the phone.
True. But the point of getting a property management company to do the properties, is to free up your time.
If every quote, they are either mismanaging the quotes by 1000 dollars in your case, or flat our screwing you. That means every repair that comes up you have to go out and get quotes and find the repair person and schedule.
Which is one of the big annoyances of managing yourself.
Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Anthony Gayden I will continue to play devil's advocate a bit here. As a property manager, I am open to using a property owner's vendor of choice but there are limits. For example, if your bargain AC tech (who may be very good, btw) works a full time job somewhere else, can only communicate nights and weekends, and can't actually get to the job for another two weeks I'm likely to move down my list of known responsive vendors and get someone else out there sooner.
It can be frustrating when a property owner wants me to waste an extreme amount of time chasing a specific vendor so that they can save half as much money as my time is worth. A cranky tenant who deserves a quick fix and isn't getting one only complicates the situation further.
Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Gabe G. The fee is all part of their overhead in dealing with the front line of managing properties so you don't have to. Don't get me wrong, it's usually a significant chunk off your bottom line and if you are able to do a better job yourself by all means keep at it. If I wasn't already working in this business professionally I would likely self-manage too as it is expensive....but mishandling your own tenant relations, significant extended vacancy, inefficient repairs, etc can be much more costly if you are not the type of person or lead a lifestyle that allows you to stay right on top of this.
With all of that said, there are some horrible property managers running around out there. If you're going to use one make sure they are doing the absolute best job they can for you.
Real Estate Broker · Portland, OR · Member since 2017 · 100 posts · 56 votes
9y
When hiring vendors cost should not be the primary concern. Property Managers generally have more expensive vendors for one of two reasons. The first, they could be adding a surcharge to the work order which could impact cost. The second and most important reasons is that when hiring a vendor to enter a rental property you need the best of the best because this is one of your highest points of liability whether you manage the property yourself or not.
A vendor reflect you and if they do not do good work, are not reliable or are hoping to cut corners it can have an impact on not only your final result, but also impact resident retention.
I would find out why their is a significant price difference and then assess from there. If they are up-charging for repair coordination you can always see if other companies do not.
A good property manager is worth their weight in gold. A bad one is, well useless.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Property Manager vendor costs are higher than other bids probably because your property managers are taking a kick back from them under the table. Just one of many, many ways for them to pick the pockets of unsuspecting out of state "investors" because they know you won't and likely can't do anything about it. They have all the control in the situation, not you, you gave that up the second you crossed the state line. They will work that control to their best financial interests, not yours, and a vast majority of property managers and other out of state service providers will operate in exactly the same manner. Stay local, stay Humble.
Remember your property manager works for you. You NEVER have to use their vendors.
I had an AC go out on my property in Tucson. The repair bill was ridiculous so I called three other AC companies and chose the best of the three to fix it. It saved me over $1000 and all it took was a little time on the phone.
So you call your vendors, arrange them to go out to bid the job, field the bids, schedule the work, pay them ... why do you pay a property manager?
Property managers take 8 to 10 percent off the top for nothing.
Then charge, fees, for whenever they actually have to do something like pick up the phone or get a new tenant.
What are you really paying for?
And all the fancy software and relationships they have with contractors, actually results in a worse experience for both you and the tenant.
You think the PM gives a damn about your finances or experience? You think they give a damn about the tenant? They are hoping that tenant will leave so they can stick you with more fees to make the unit "rent ready" and generate a fresh new set of re-lease fees. You know why they do that? Because they can ... because as an out of state "investor" they have all the control and you do not, and they know it ... pay up sucka! If you don't like that, then stay local with your real estate investments ... and THAT is my point exactly.
Greenwood, IN · Member since 2013 · 346 posts · 93 votes
9y
@David Faulkner That is currently what I am doing. I don't see any other way, with the way property managers run their business.
Maybe if the properties were paid off, you could have the extra money to hire a PM and not care and about all the BS they pull. But definitely not with leveraged properties.
@David Faulkner That is currently what I am doing. I don't see any other way, with the way property managers run their business.
Maybe if the properties were paid off, you could have the extra money to hire a PM and not care and about all the BS they pull. But definitely not with leveraged properties.
Agreed, but take it from me, that doesn't change when the properties are paid off ... you don't get to the financial position of having a bunch of free and clear rental property by not caring if you get ripped off ... that is true before that point, and it stays true after that point :)
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
9y
@Carolyn W. If you are receiving bids from reputable companies that are licensed and have a track record and those bids are 40-50% less than the PMs referral bid than I think it is pretty safe to say you are getting taken advantage of. The PM probably figured you would take their word for it and not solicit any other bids.
True. But the point of getting a property management company to do the properties, is to free up your time.
If every quote, they are either mismanaging the quotes by 1000 dollars in your case, or flat our screwing you. That means every repair that comes up you have to go out and get quotes and find the repair person and schedule.
Which is one of the big annoyances of managing yourself.
Now you are managing the manager.
What's the point?
Tell me how I can manage myself when I live in Nebraska and my property is in Arizona?
One occasion where my PM did not have the best price available for a service is no reason for me to manage myself. I make plenty of money even with a PM because I bought right.
If anything it is a reason to get a new PM. You on the other hand can continue to spend your time limited to your local market and never able to expand to the point where you can make real money.
Do you honestly believe that if you had hundreds of units you would still be able to self manage?
No I could not self manage 100 units. However, that is not my goal.
20 would the absolute max I would consider self managing, considering I still have a full time job.
If they tried to screw you 1000 on a repair. They will try and screw you on other ways. Which means you will have to get every moderate size repair quoted, to make sure they aren't screwing you. I agree in your situation it might not be a reason to self manage, but to look for another property manager. However, I hear this is how most property managers run their business, so good luck with that.
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
9y
Those who have run a business before understand why fees are charged for providing a service and understand overhead. That little 5-10% taken for collecting the rent every month and managing the unit - most of that gets turned over to the insurance company for liability insurance that protects you as an owner and your tenants in case I mess up or someone I hire messes up, and workers comp that protects you and your investment in case an employee trips on the sidewalk while going to deliver notice, or a repairman falls off a ladder while cleaning your gutters.
Since any reputable PM will likely be covered by these insurances, it means their subs also will need to have their own coverage. IE Frank's Handy Repairs isn't going to get called out to replace your AC, because my insurance will go up since it will be covering his work. I'm going to call a licensed and insured company (more expensive). I can't afford to take on the risk that my sub will have an accident and WE won't have any recourse if they are uninsured.
So yes, repairs will likely cost more. I also have built a list, much like a general contractor does, of tried-and-tested subs we trust. In addition to that, for large projects, I'm spending my time to call around, get bids, and negotiate the best rates. If those services are of no value to you, then you're right, why bother having a PM.
What's left after insurance gets chewed up by overhead for maintaining an office and staff to collect rent, manage accounts and reporting, manage subs and their accounting, etc. I'm not crying poor, but when you talk about being nickle-n-dimed, its just that for the most part, nickles and dimes for taking on a substantial amount of liability.
Now, I'm not justifying 50% more expensive, and I definitely believe that any surcharges should be separated out so you understand exactly what you are paying for.
@Carolyn W. I'd recommending having a serious conversation with your PM to better determine how much of what you are being billed is being charged by the sub and understand how work gets sub'd out. This could also be the case of a lazy PM who just sends out whoever answers the phone first and doesn't shop out a competitive rate knowing he's not paying it anyway.
As a PM company ( 2 years working now) we use vendors who keep owners from getting sued if something happens at your property. It's assurance that you are paying for when the PM uses a company that is licensed, insured, and has workers compensation (which will cost more money). Most vendors who give cheap prices do not have workers compensation. They won't even mention it because most people don't even know about the legalities involved when bringing someone else onto their property.
Some owners ask me for 3 bids before getting any work done. If I have to schedule 3 bids with 3 different vendors that is 3-6 hours of my day for one property as you can't talk and negotiate with 3 different vendors at once. Not to mention having to schedule it with the tenant who may or may not have any time for me other than after 7 or 8 when they get off work.
Though I do have some owners who don't care if we hire criminals to do their work because they themselves are slumlords hiding behind property managers. I've had handymen steal packages from my tenants doorstep and then try to deny it, even though he got caught later at the post office, on camera, trying to send the package back to the tenant.
I'll give you an example.
I have a plumbing clog at unit #1
I call vendor #1 who I use regularly and they charge me $288 to clear the main line and the problem gets solved. They are licensed, insured, and have a call center where I know the secretary who is very nice and they have workers compensation. It is honestly a pleasant experience dealing with this company.
I have another vendor #2 whom I can call that charges me $275 to do the same work and they are licensed and insured and have workers comp. The owner answers the phone for me and he's very friendly. Their prices are usually cheaper than vendor #1
I have another vendor #3 who is the one that stole the package from my tenants door step. He charges $75 to do the repair and even fixes the shelf in the next room.
I have another vendor #4 who doesn't have a snake to do this kind of job, but he's usually around and can diagnose the problem and let me know what's really going on with it, as I am rather busy and often have to take the word of the tenant and photos etc to find out what is wrong. He is a good friend and I trust his opinion on what it might cost to fix or repair and how to get the job done.
As an owner Which vendor would you want me to use?
You see, People hire management companies for the same reason that they order a #4 at chick fila or mcdonalds. They are too busy! They don't have the energy to decide this stuff or time to sort through all the madness.
If however you have the time, then by all means, do the damn thing yourself. If not, you can always hire a property manager. Our job is to make your life less stressful, but when we take that responsibility on, you have to understand that you will be taking on a financial stress to pay for the decision making stress that comes with owning rental properties.
What if the property manager is doing the work with out telling you and sending you a bill sometimes 3 months later. when I was managing my properties i rarely had any calls, but Sense I turned them over to a PM I have spent 25,000 in repairs over one year s time of them managing the properties.