Do you use the same company for PM & purchasing?

Question

Greg Kurzner · Answer

My two cents are as follows...we were tasked by Progress Residential to source and acquire homes for their portfolio in Atlanta but initially they did not want us to manage their homes for the reason mentioned...potential conflict of interest...after about 6 months using other managers with poor results, they came to us and asked us to manage given the fact that they were so pleased with the way we professionally approached the acquisition process.  I think, if a property manager knows they will have to produce results...ie. obtain the rent the acquisition staff suggested was attainable...get the home rent-ready...for the same general estimated cost the acquisition staff determined...then there is built in accountability.  If you use an agent to acquire, and they aren't tied to the outcome, there is no reason for them to "own" the estimated rental rate, repairs cost or "rentability."  Alternatively, if the same firm that is helping you buy is also responsible for managing the home, it avoids finger pointing should the reality not match with the pro forma.

Aaron K. · Answer

If they are the same company make sure you are not dealing with the owner when purchasing and that the person helping you buy sees little to no financial benefit from the management side.  On the plus side pocket listings are more commonly a thing in this arrangement assuming the PM company is of a reasonable size

Chris Virgil-Stone · Answer

Thank you for the feedback! I have analyzed the market and am intimately familiar with it so while I would ask the agents/PM opinion on rates, I would set them myself and hold myself accountable. I take anything agents say regarding investments (unless they have a sizable portfolio) with a grain of salt, but I do consider it. Obviously giving more weight to the agents opinion in a market I'm not as familiar with. Note: I have not invested in an area I have not lived.

I thought it might work in my favor to use the same company for PM and representation in the purchase. If the same company that represents me in the purchase also manages my properties, I feel they would be incentivized to take better care of the properties. Otherwise they would lose the PM fees and the commissions on future purchases and sales.