I have a few triplexes in Philadelphia. A certain management company runs everything for me end to end. The fee they charge per month is reasonable in the 4-4.5% range. They also charge one month rent for placing new tenants which isn't too bad. Where I get dinged very badly is maintenance. The company has its in-house handyman who tries to take care of most issues, but charges $90/hr which I think is excessive. It should be in the $70-$75 range for a licensed handyman in Philly is my opinion. For issues he can't solve, the prop mgmt company brings in outside vendors, who charge me like crazy. Unclogging a drain running auger for 3 ft -- $310; replacing thermostat in a water heater - $650. I dispute and eventually claw the crazy charges back, but it's becoming a nuisance.
a. Is the above story all too common?
b. I am looking to outsource maintenance to a different company. Need references
c. Should I just buy home warranty and let the tenants call the company for issues they run into? [exceptions will be roofing related issues]
BTW, all the properties are new construction and less than 2 years old. I am very shocked by the steady stream of maintenance requests I have had to deal with in the last 4-6 months. Please advise.
@Sudhir N. This matter has been debated heavily. The bottom line is, a home warranty is basically insurance, and insurance companies will always try to fight and not approve claims. If you do choose to work with a warranty, have the warranty company send a clear explanation of benefits. It would be very frustrating to add a new monthly cost to your balance sheet to have a home warranty to then find out that a repair is not covered and end up paying for it out of pocket anyway.
I have really not heard any great stories of investors with home warranties. I think like @David Vitarelli mentioned its more insurance than a maintenance solution.
Remember- you can't just pass off your maintenance responsibilities as an owner onto the tenants by saying 'deal with the warranty people'. You still have legal obligations to provide a property in accordance with local maintenance code.
Although this ship has probably sailed- a lot of new construction comes with a 1-2 year warranty. Your builders should have come and taken care of issues arising shortly after their work. Maybe reach out and see if they're willing to make things right?
Shop around other property manager websites in town and look at their rates (if listed). I personally think its a red flag if a manager has very low monthly fees but higher maintenance costs. This just incentivizes (even subconsciously) a manager to enjoy maintenance problems. Wouldn't you rather a manager make money off your rental income with you? and really only 'break even' on the maintenance side of things? Seems like your interests would be more aligned this way. Just my (biased) opinion.