I bought my first out of state rental about a year ago. Being new to using property management, I'm not really sure if I'm receiving poor service from my property manager or if my expectations are unreasonable.
- 1. The property has 3 units and brings in rent of $3200/month. I'm paying 10% PM fee. Does that seem reasonable? I know 10% is on the high end, but I'm not sure how many units (or monthly rent) you need to get to negotiate that down.
- 2. Here's the latest listing: https://www.zillow.com/homedetails/5200-2nd-Ave-S-Saint-Petersburg-FL-33707/81407033_zpid/? . I'm based in NYC and used to seeing professional pictures. These look like iPhone pictures and not particularly flattering. However, they rented the place pretty quickly. Should I expect more from the listing? They had 1 applicant for this listing.
- 3. We just found out 2 of the units are on the same electric meter. The PM received a quote for $3K to separate the 2 units and add a meter. I asked for a 2nd quote from another electrician because it was a significant expense. They've asked me to find a 2nd electrician to get a quote from. Seems strange I have to find an electrician - takes 30 seconds on yelp/google/home advisor.
- 4. PM hired a lawn mowing company that was charging me $150/month. In a BP, I found out the going rate was $80-$100. After 4 months of me bugging them, they got a couple of quotes and switched to someone $90/month.
- 5. In my agreement, it states they'll do an annual property review. I haven't received anything like this for any of the units.
So those are my gripes. On the positive side, they have filled the vacancies relatively quickly. Is this standard service? Or should I be looking for a new PM?
Any thoughts would be appreciated.
It is unfortunate to hear that you are having issues with your current property manager. My company, Great Jones Property Management has created a check-list that investors should use when evaluating a potential property management partner.
If you have any questions, I would love to discuss further!
1 - If you're not holding a large portfolio with a company, 10% isn't unusual at all.
2 - This is just a couple of miles from me, which is why I got an alert (thanks BP!). Definitely cellphone photography, and not good cellphone photography at that. I've seen a lot worse though, lol! You'll definitely draw more interest with better pictures, and a better photo sequence (order on Zillow). Lead with the "Wow!" photos - not a walkthrough.
No one cares about your closets, and they certainly aren't going to be impressed with a single panel of fencing in the front yard, much less as the 3rd photo.
3 - You shouldn't have to do their job - that's why they get a paycheck. It's easy to find contractors and get quotes, although the final decision should always be in your hands.
4 - Even $90 a month seems a bit expensive. There isn't that much lot to be mown, and most of the yards go dormant this time of year. I can see that as a summertime rate, but now? I haven't mown my own lawn in two months!
5 - If you're paying for it, make sure you get it.
Filling vacancies here, in this market, at this moment, is pretty easy.
I would totally recommend also doing some comparison shopping on property management companies while you're looking for electricians and landscapers.
And on your next vacancy, get a professional photographer in right after the cleaners do their thing. Even if you have to call them back later to get the other half (or third), it's totally worth it.
No problem @Matt S. I sent you a DM!
Speaking as a local property manager:
1. 8-10% is the going rate. There is not much economy of scale with Property Management (managing 100 units is 100 times harder than managing 1 unit - there are no significant per unit savings when you increase your number of doors as a PM. And if you think about it in terms of money, you're a $320/mo account. That's not a lot of money for the amount of work that goes into leasing, tenant relations, rent collections, accounting, and the other services your PM provides.
2. The photos are not great, but they are not terrible. The real question is whether the photos were sufficient to get you a qualified tenant? Apparently they were, so you saved about $150 on photography services. I am generally a fan of professional photos (my wife is a professional photographer, so I know that industry as well), and I generally do recommend having them done if/when you have the opportunity (i.e. house is vacant/empty/clean, the weather is right, and you can get a photographer in when all of these conditions are right). But most owners want their property listed NOW, and very few would want to wait a week or so for better photos. (Admittedly, even with a cell phone, one can do a much better job - a little knowledge of lighting, perspective, and depth of field makes a huge difference)
With regards to only having one qualified applicant, that is all you need. In order to comply with Fair Housing laws, we use a "first qualified" approach, not a "best qualified" approach. So you should not expect to be given a list of 5-10 applicants and "pick the best one" (you'd run the risk of applicants who were denied housing saying it was because of their race, color, religion, or other protected class). Rather, we process applications in the order they are received, the applicant either meets our minimum requirements or not, if qualified, they either take the unit or not, and if not, then we move in to the next one.
3. This is a common point of friction for new owners. As a property management company, we have already vetted preferred trusted vendors and we operate at a higher volume that an individual owner. Our vendors give us preferred pricing, respond quickly, and are already set up in our systems for billing, insurance, etc. They also take great care of us because we send them a lot of business. Though it may seem counter-intuitive at first, getting multiple quotes for a job like this can be a colossal waste of our time. Even if someone comes in a little cheaper, we'd still go with our preferred vendors because of the relationship and trust we have with them. So we often tell owners the same thing - If you want to coordinate the quotes and manage the project yourself, you are free to use anyone you want. If you want us to manage the project, then we need to use our trusted vendors. Here is a great video from Attorney Harry Heist on this very subject: https://vimeo.com/355609636 (side note: EvictTV.com is an awesome resource!)
4. You may have a valid point here. It's hard to say without knowing all the background. Most lawn mowing company charge around $25 per visit. Weekly during the summer, every two weeks during the winter.
5. How long has your tenant been in place? The phrase "mid-lease term" in this section of your contract is confusing. For lease renewals, we start this process 60-90 days before the end of the lease term. Asking a tenant whether they want to renew their lease 6 months out would be pointless. Often they don't even know for sure 60 days out!
Periodic inspections are a separate matter. We do have a periodic inspection checklist where we look for these issues, and we try to make sure we're inside each unit at least twice per year (every 4-6 months).
6. Reducing vacancy and turnover is our top priority and should be one of the top priorities of any professional property manager. If they are meeting this top goal at a reasonable cost without creating liability for you, I don't see any glaring issues here (based on the limited info provided). Have you posed these questions and/or had this discussion with your current PM?