Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
I have made an offer on a property in the Belair-Edison area of Baltimore, which I will rent once closed. A couple things I need the communities help with. I am planning to use a listing agent to market the property to rent and vet tenants, once tenants are in place I would pass on to a property management to collect rent, handle evictions as needed, maintain books, take maintenance calls and schedule routine maintenance. However, for the maintenance calls and routine maintenance I would have the PM call me and I will have these calls taken care by my contractors/handyman. Will property management facilitate I handling the maintenance of the property and they just take the calls and make routine maintenance schedule?
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
My 2 cents would be that you don't need a property manager or a listing agent. My wife and I manage 40 properties with very little daily effort. To the point that we both worked full time corporate jobs and managed to keep those jobs until we had 20+ properties we were dealing with. You can do A LOT of managing by text while working a regular job. You are an hour from your upcoming rental. Zillow is literally all you need to being able to find a renter. We use Rentec Direct to collect our rent, market our properties (through Zillow), have tenants contact us if repairs are needed, and background screen our tenants - plus track all our expenses, etc. It costs about $4 a month per property once you have several on board. Might be a little higher than that for just your first one.
Why would you pay a PM 8%-10% to then handle the calls yourself? You are already going to be doing most of the heavy lifting. You just need a system (like Rentec Direct) or others to help you be efficient. Being only an hour away from your property, you would really only have to be traveling there when it turns over to show it to a new tenant. My vote is to keep your money, do it yourself.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
My 2 cents would be that you don't need a property manager or a listing agent. My wife and I manage 40 properties with very little daily effort. To the point that we both worked full time corporate jobs and managed to keep those jobs until we had 20+ properties we were dealing with. You can do A LOT of managing by text while working a regular job. You are an hour from your upcoming rental. Zillow is literally all you need to being able to find a renter. We use Rentec Direct to collect our rent, market our properties (through Zillow), have tenants contact us if repairs are needed, and background screen our tenants - plus track all our expenses, etc. It costs about $4 a month per property once you have several on board. Might be a little higher than that for just your first one.
Why would you pay a PM 8%-10% to then handle the calls yourself? You are already going to be doing most of the heavy lifting. You just need a system (like Rentec Direct) or others to help you be efficient. Being only an hour away from your property, you would really only have to be traveling there when it turns over to show it to a new tenant. My vote is to keep your money, do it yourself.
If you manage them yourself, give them expectations upfront when are appropriate times to contact you for non emergency items, what constitutes an emergency which for us was largely active running water like a pipe break (go over location of cut off valves with them at move in) and loss of heat over winter.
Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
6y
@Randall Alan great information, so direct deposit would be set up through rent tec? How is late rent handled? Also, how are evictions handled if needed? I don’t want my tenants to know I am the owner so I would operate under the guise of a property manager.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
Yes... Rentec Direct ACH's (electronic transfer) the money through a payment provider. There is no fee associated with the transfers... just the ~$4/month per door fee that Rentec Direct charges in their base. It's one of the things I really love about them. Rentec Direct has a tenant facing web portal where tenants log in and use their payment information to pay & report any issues.
Rentec Direct automatically adds late fees to their accounts if not paid on time. We charge a one time $100 late fee, PLUS $10 additional per day for 10 days if continued to not be paid. All automated by the system.
You can hire an attorney for evictions... but eviction are actually pretty easy to deal with ourselves. Its like 7-8 pieces of paper that you have to set up once on your computer and then just replace the names if you need to do another one. Your local county clerks' office likely has the forms you can download. We use the theory, "do what you want, farm out the rest".
Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
6y
I would not take all the advice from @Randall Alan. Some of it is good, but I'm pretty sure that Lakeland, FL is in a very different rental universe compared to Baltimore City. The type of tenants you might get in Belair-Edison could very well be the type of people who will not take care of the place. This makes it critical for you to screen them as thoroughly as possible and find a way to see them in their current living situation. Whatever their place looks like now is what your property will look like within a few months after they move in.
Also, the Baltimore City laws, rules and regs are among the most pro-tenant (though I didn't think it possible, DC is worse). If you are not careful, you can wind up with non-paying tenants and it will take you 3-4 months or more to remove them while you pay the mortgage and water bills. And currently, there is a moratorium on evictions that some legislators are pushing to extend to January 2021.
I'm not a big proponent of property management, especially for one property. I run a REIA in Baltimore area and have talked to many landlords over nearly 20 years about property management companies. The consensus is that there is no perfect one and your job is to find the best one and keep on them.
I'm not trying to scare you off of being a landlord in Baltimore, but want you to be aware of the potential problems so that you can make plans on how to avoid them. That way, you won't become one of the many calls I get from out-of-town investors begging me to buy their property (at a loss) and cursing the day they decided to buy a property in Baltimore City.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
We actually only buy locally to our area, so I have no knowledge of Baltimore whatsoever, and further we like to be within 15-20 minutes of our properties because we do self manage.
With that said, regardless of where you are you can have the issues that @Alan C. mentions. We currently have an eviction moratorium in Florida and we have 2 tenants not paying. Out of 40 it’s not horrible, but still frustrating.
The general nature of any location is going to drive the type of tenants you are going to attract. We have One low end property that attracts low end tenants. I’m sure you will experience the same - caliber of property drives caliber of tenant. It doesn’t change the fact that that you can screen your own tenants. We hold ours to 3x their income to the rent and typically have very little issue with tenants not being able to pay. In addition we background checks our tenants. The two evictions mentioned above were inherited tenants from when we bought the properties. When you are setting the qualifications and reviewing the applications you quickly can identify better versus worse candidates. It’s nothing you couldn’t do, but can always be farmed out (at a price) If you want to go with property management. Just realize if your properties are financed it may take 20-30% of your net profit for PM. For us, we choose to do it ourselves and keep the money.
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
6y
We manage property in NJ so this is a property management perspective. There is no point in hiring a PM if we need to call you and use your handyman to make a repair. No PM will do that, has nothing to do with you personally.
Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
6y
@Alan C. definitely Baltimore can be very challenging for even experienced landlords, much less a newbie like myself. That is why I wanted to incorporate the use of property management, but not have them offer a full case service as I would want to learn some of the maintenance that is involved in maintaining a property as it is my investment and also I get to build direct relationships with contractors/handyman. On the other hand, I have no interest in dealing directly with the tenants or dealing with the listing/leasing process, evictions. So my idea is basically outsourcing to the professionals the areas I have no interest in handling directly and dealing with the other aspects I want to learn. I work 9-5 so I don’t have the flexibility to go show the property to prospective tenants. Also, I don’t need to be getting calls all hours of the night from tenants, so PM interface with them directly and pass on maintenance request to me doing business hours and then I call my guys to go take care of it.
Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
6y
@Randall Alan I really appreciate your feedback and it has placed in the mindset that I can identify the things I can handle as I learn and then outsource the others, until I am fully up to speed with the operations of renting a property. Also, this property will be an all cash purchase.
I would question why you would buy all cash if you had access to financing. Rates are at all time lows and your purchasing power could go 4x further if you finance, if your goal is to maximize cash flow, financing multiple properties would definitely give you more income at the end of the day. Keep in mind your tenant pays your mortgage... and all the other expenses. I would definitely consider financing across multiple properties for the best bet operating income.
Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
6y
If you don't want to deal with tenants, you shouldn't be a landlord. You say you want to outsource the entire operation of your investment without knowing exactly what you need. You'll be at the mercy of the PM who could really take advantage of you.
No PM company will run your investments as well as you do. In my opinion, the reason to hire a PM company is when you have enough experience and/or properties to justify the expense. I know of PMs that will do a la carte services like you want, but again, I think your one property is not going to get the same treatment as one of their clients with 20, 50 or 100 doors.
Also, I think it's a good idea to know exactly what it takes to manage a property before you turn it over to someone else. The experience you get managing your own properties will generate a checklist of things you will want to look for in a PM. It will also avoid having the PM take advantage of you because you are ignorant of all the details involved in the day-to-day operation of a rental business. And it is a business.
I can't think of anyone getting into a new business without understanding how all the parts work.And not just on paper. Even McDonald's franchisees spend weeks at Hamburger College to learn every part of running the drive-in before they are allowed to own and operate their own unit. At that point, they are sent home to hire the workers needed for each part of the process. And because they've been through it themselves, they now have a better understanding of what kind of person is needed at each station.
I also tell any new landlords to spend at least one day observing the cases at the local rent court. It will really open your eyes to some bad tenants as well as really bad landlords. The learning experience is well worth the time you spend at the court.
Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
6y
@Randall Alan I’m using an unsecured line of credit to finance half the deal and the remainder is my money. I plan to refinance the deal and pull the money back out to purchase another property. I am using the Brrrr method.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
You didn't mention you were going to be BRRRR the property. PM's usually have a routine they follow. I don't see you saving any money on PM by doing what you are suggesting to do (handling repairs.) I think it would work best for you to have your feet in one pool or the other, but not one in each.
Rental Property Investor · Atlanta, GA · Member since 2020 · 16 posts · 8 votes
6y
@Tyrone Marson Property mgmt should be taking all of your repair requests and etc unless you tell them to contact if the repairs exceed a specific dollar amount.
Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
6y
As a PM in Cleveland, that's something we might do on a case by case basis but with very clear rules/expectations and we always make it clear that if owner/handyman/whoever isn't responsive in what WE deem a reasonable amount of time, or if the situation is urgent, we will revert to our standard procedures.
The handyman thing works especially well when we manage a property that was homeowner occupied, let's say they had one guy do the HVAC/plumbing for 10+ years and knows the house/system very well... so we will direct only those calls to that person, as an example.
Property Manager · Dallas, TX · Member since 2020 · 109 posts · 79 votes
6y
@Tyrone Marson
I think you are getting some solid advice and good questions to answer for yourself. I think you were on the right track with seeking the help of a quality property management firm. There's a lot of liabilities and costs to consider when running any type of business - and don't kid yourself, that's what you're doing here!
There are also a lot of lessons to be learned and taught in managing tenants and properties. I'm glad I'm with the company I am to teach me the ins and outs. A main thing I'd convey is learn how to properly vet your tenants.
Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
6y
I second @Alan C. on this topic. what @Randall Alan is talkling about would work in his market, but in Belair Edison you would need way more involment.
I manage all my units myself, it requires some work, a lot of messaging in times, and a lot of work when things go south. It would be nothing 10 months then suddenly you have everything happens at ones.
Also if you have 40 units around BelAir Edicson or west baltimore etc... you will be at the City Court a lot :D)))
Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
6y
@Ozzy Sirimsi I definitely will be rolling my sleeves up and getting involved. However, my agent was telling me she manages every single aspect of her rentals except the evictions. She said once her tenant misses rent and doesn’t pay in the legal allowable grace period, she contacts a PM to file eviction paperwork and pays the PM to just handle that entire process including going to court. Seems like a viable option I could use. What you think about her process of outsourcing evictions?
Property Manager · Dallas, TX · Member since 2020 · 109 posts · 79 votes
6y
@Mike Morawski thank you I appreciate the kind words. I'm really enjoying all the information im able to glean from all of the experts on these forums.
Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
6y
You don't need a PM if you just need someone to file for late rent and/or evictions. There are companies called "rent court agents" who go to court for your. The cost for them to file and show up at court is around $25 which is a bargain compared to spending all day in court.