Get Property Management to only service part of a triplex?

Question

Have a quick question for the BP forum regarding my PM and management of a Triplex in Delaware. To give some context, I have a triplex in Delaware with 1/3 units currently rented. It's a C location, so Bought it a few months ago and it's been breaking even with the 1/3 occupancy, but I'm obviously looking to find tenants for the other two units. The PM has been pretty mediocre am I'm probably looking to move onto someone in the near future.

I recently sourced a tenant, through my father, and I think he'd be a good fit for one of the apartments. My father owns a business and he is one of his long standing employees. I think his profile will be borderline for the requirements the PM will have, but I'd like to take him on anyways as he has a connection to family and there will be a higher level of accountability because of that. He has agreed that his rent can be deducted from his paycheck on a monthly basis, so collections should be easy.

A couple of questions, do I need to have the PM involved if I will take responsibility for this tenant and all maintenance, collection etc for the one apartment he is occupying?

If I do give the PM the opportunity to essentially just process this tenant and start collecting the management fee, could i negotiate something along the lines of not having to pay the leasing fee/move-in costs?

As I've mentioned, I don't think the current PM is doing a great job, so I'm not feeling especially generous and don't feel like the PM should be entitled to getting the full leasing fee for someone that I found completely on my own. Maybe I'm in the wrong about this, but curious to get everyone's thoughts.

Nathan Gesner · Answer

As a Property Manager, I don't want to deal with part of a property. I'm either managing the entire thing or nothing at all. Why? Because it complicates things when one tenant is reporting to you and another to me. If there's a noise complaint, your tenant calls you, mine calls me, I call you, you call your tenant, I call my tenant, I call you...it's a ridiculous level of complexity and wasted time. Who monitors the lawn? Who watches the common area for trash or handles a broken washer/dryer in the laundry room?

No thanks. I'm either in or out.

Patti Robertson · Answer

It depends on what your existing contract says.  If you are under contract for management of the entire tri-plex the PM may require you pay them for this unit too.  I have plenty of buildings where I only manage some of the units.  Almost always that’s because the owner is living in one, but sometimes it’s because the owner already had a tenant they didn’t wan to turn over until the lease turned, etc.  Read your PM contract then call your PM and see what they are willing to do.

Steve Rozenberg · Answer

@Ben Holloway

I have learned that finding the right property management company that aligns with your business model is the key to your success or to your failure in your business I would suggest you find one that matches and aligns with what your strategy is

I would look up NARPM and start with them..Below are some questions I would think would be a good starting point for you to see who really treats their company like a business or a hobby.

Questions to Ask prospective management companies

* What are your average days on market for vacant homes?

* What is your average rent amount for all properties managed?

* What is your average work order cost for the owner?

* What is your average make ready cost for the owner?

* Are all my invoices uploaded to my owner portal?

* How do you advertise your vacant units?

* Do I receive video of my pre and post make ready?

* Do you have a setup fee?

* Do you upcharge on maintenance?

* When do you make owner payments? How often?

* Are you a Certified Property Manager?

* Are you a member of NARPM?

* What is your Guarantee?

* Do you provide move in and move out reports

* How many pictures do you take of the property prior to tenant moves in and after the tenant moves out

* Do you get weekly reports when the property is vacant what prospective tenants are saying about your home

* Do you provide monthly newsletters to your tenants

* Do you hold investor education classes to help me become a better investor

* Do you have single point portfolio based management services?

* How many properties do the owners actually own themselves?

* What do you do to ensure that the tenant is responsible for security deposit disputes since that is the largest reason for owner lawsuits

* How familiar are you with the newly changed laws that can affect you the owner if they are not used correctly?