How to to banking/bill pay with property management

Question

Hello all

I've been managing my 12 unit apartment building that I've purchased for about two years.  For the first time I'm hiring a property manager and she's experienced but (4yrs experience) with units managed up to 120 units. One of the hang ups is she wants pay the bill but asked me how do I pay.  I've been paying through my business account bill pay.  Should I allow her access into my account, open a separate account, or how should I construct this so she can handle the bills?  Any advise would be great.

Account Closed · Answer

I'm sure you heard of, "too many hands in the soup". The worse thing any business owner can do is relinquish control and that is what happens when you hire a property manager. But, if you must hire one you will want to maintain as much control as you can handle. It is an eerie feeling when someone else has the power to write your checks and you find huge mistakes several weeks or months later.

We has many units in other states and we actually managed the properties for several years without a property manager. We used real estate agents to rent our units and we dealt remotely with handymen and contractors. It worked great for 10 years. Then for the past two years we hired property managers. In the past two months, we sold several of our out-of-state properties and we intend to sell every one as soon as we can get the tenants out. That does not say much for the success of property managers.

Even though we used property managers, we still paid every bill from our own office. We had one property manager in Idaho totally disappear with $40,000 of our cash she had in her account and suing was out of the question due to distance and costs.

Never trust someone with your money and never give someone else control when you do not have to. Property managers don't have magic bullets and many property managers do a worse job than many of the worst landlords.

Peter Tverdov · Answer

We manage 100+ doors in NJ. This is very simple, they would pay it out of their operating account. Rent collected, minus bills paid, minus management fee = money leftover for owner.

Theresa Harris · Answer

What bills?  If this is for repairs, sure but she can invoice you or deduct it from rental income.  Things like taxes, utilities that are tied to the property, nope.  I would not give her access to your bank account. I don't have a multi family, but my PM pays for repairs out of my rental income.  I pay condo fees, property taxes, etc myself.

Drew Sygit · Answer

@Beary Bowles you have two choices, hopefully this PMC accepts both.

1) Separate bank account for your apartment building: this appears to be what the PMC wants to do. All rents and expenses will flow through this account. The PMC needs access to pay the bills, including their monthly fee(s). 2) The PMC uses their operating account to receive rents and pay expenses. They then send you income less expenses each month to you.

In either option you run the risk of PMC mistakes or embezzlement. Option #1 does give you more access to information, but is usually not used on buildings under 20 doors.

Corby Goade · Answer

What bills are you referring to? Generally, the PM should be handling most, if not all, of the utilities and ongoing maintenance and they'll send you your monthly net rents and you use that to pay your lender on the property.

Max Versteppen · Answer

When you migrate to digital payments, you free yourself from the rigors of paper-based monetary exchanges. Property managers no longer have to drive around town picking up checks or make runs to a bank or P.O. Box.

With Bill.com, invoices are sent online and payment is made online as well - either by ACH, credit card, PayPal or more. Money flows immediately into the correct accounts and with no delays, creating a strong foundation for cash flow management.

Managers using Bill.com will receive notifications of bounces or insufficient funds immediately. With this information, they can quickly reevaluate other scheduled payments to owners or vendors that may be depending on those tenant payments.

Tenants also appreciate the variety of options for payment that best fits their personal or business preferences.