New Property Manager Advice

[Jacob Compton]

Hello All!

I just purchased a duplex. This is my first investment property. I don't want to pay for a property management company to manage my property, if I can help it. Below are some of the questions I am currently looking into... I was wondering if someone more familiar with property management may be able to provide their own solutions to some of these questions? Thanks!

- Where should I get a legal contract for my tenants to sign? Should I contact a lawyer? if so, how much additional cost is that?
- How do I find tenants? Should I post myself on Craigslist/zillow/etc or pay a company to do that for me? If I pay, how much additional cost is that?
- How do I screen tenants? How much is it to perform background checks?
- Is there a website I can go through for my tenants to pay me online every month? Are there any additional fees associated with that?

With all the additional costs of doing my own property management, should I just pay for a property manager?

[Kenny Dahill]

Hi @Jacob Compton,

@Travis Clark did a great job of responding.  Here is additional information to help you out:

Legal Contract:  You can buy state specific leases through online legal document platforms such as Legal Nature, Law Depot, Rocket Lawyer, etc.  They vary in fee structure: membership or pay-per-document.

Finding Tenants:  You can definitely do this free if you wish to handle the process yourself.  If not, consider hiring a leasing agent but they'll cost you a full month's rent check.  I personally haven't found much luck with Craigslists anymore, there are shady people.  Zillow has always worked best for me.  Depending on your region there might be more locally geared websites as well.  Some cost money.

Screening Tenants:  There are a lot of companies that offer free screening reports for landlords: Burbz, Cozy, Avail, Tenant Cloud, Turbo Tenant, etc.  It's important to do your own due diligence and not rely solely on their reports, 20%+ of reports have some type of error on them.  You will want to call previous landlords, meet them in person (if you're in town), confirm their 'proof of income'.  Don't worry too much about references because their aunt's neighbor thinks they're the sweetest young man in the world... seriously, who will use a reference that doesn't brag how amazing of a person they are.

Rent Collection:  Definitely a few options here as well, the same companies I listed early: Burbz, Cozy, Avail, Tenant Cloud, Turbo Tenant.  They all offer generally the same features of rent collection for bank-to-bank, credit/debit card payments and quick payouts.  They differ mostly in their membership costs since some are free and others have a monthly fee, plus per unit cost.  They all have their little quirks but do the same.

If you decide to hire a property manager, consider these suggestions:

Understand ALL their fees and terms:  Do not judge a PM simply by their monthly fee (8-10%).  Almost every management company has additional fees on top of that which could include late rent fees, listing fees, early termination fees, maintenance coordination fees, court appearance fees, etc.  You should expect to pay 18-20%+ AGI towards your manager.

Giving up control:  It's okay to hire a PM but understand you give up a lot of control over your property.  Which contractors to use, which scope to skip, which tenants to select, a lease you prefer, etc.  PM's manage a lot of units so they simplify their systems which unfortunately can eliminate any control for the landlord.

Interviewing:  You will want to interview a few PM's and make sure they communicate how you prefer.  Communication is often the biggest compliant with landlords, they can never get a lot of their PM.  Confirm who will be their lead PM for you, who their top contractors for each major trade are and have them describe their tenant turnover process.

Best of luck on the investment!