New Investor Looking for Good Property Manager
Hey everyone!
I am new to real estate investing. I have only been at it for about a year now. Got 3 units under my belt and I have been loving every minute (well most anyway) of diving into the awesome realm of REI. I recently got a 9 unit bundle deal in Cleveland, TN under contract. I live in Washington state and it is my first time investing in Tennessee so I am still trying to get my team together. I am very excited, but I am realizing that I will be wanting to get a good property management company to help me out. Does anyone have any recommendations?
Also the deal has 4 separate properties (my first time buying multiple properties at a time). Any tips on how I can get insurance coverage that is affordable, but is also flexible so if I sell one of the properties it can be easily removed from the policy?
Would you recommend separating the loans with my commercial lender?
I would love to connect with any investors in the Chattanooga area. I am trying to learn about the area. I have come across some deal that did not work for me, but other investors with more capital may have loved those deals.
I sm going to follow the replies because there is much you ask in the one post so I'll be interested in the answers.
Feel free to reach out to me at any time for questions that are more involved than a back and forth post.
Much success - happy investing !!! Bob
Thanks Bob! Yes I'll be excited to see the answers as well. Maybe I should have just posed one question to start!
Hey Charles!
Congrats on getting that deal under contract! Tennessee is a great area to invest and I have seen more & more people looking down this way! As for property management, a great group that I use personally is Abode Property Management. They are local guys that know the area VERY well. They also have a great in-house team to work on any renovations you may need. If you want any more insight, feel free to send me a PM.
On the commercial lending piece, it really just depends on the bank's policies. If you do each property individually, you could run the risk of pre-payment penalties if you are looking to offload some sooner than later. If they are bundled together, you could just have the title company do a partial lien release and pay down the note accordingly if you are looking to sell one property. However, bundling the properties could lead to some flexibility problems depending on the bank. It all comes down to what your investing strategy is.
I hope some of this helps and feel free to reach out if you have questions!
#2 Managing Your Property Contributor
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#2 Managing Your Property Contributor
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Even if someone give you a referral, what meets their expectations, may not meet yours.
In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.
It's often a case of not doing enough research, as they don't know what they don't know!
Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.
So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.
EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!
This also leads owners to ASSUME simpler is better when it comes to management contracts.
The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!
We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.
We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:
We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.
EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!
P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊
#2 Managing Your Property Contributor
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#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
@Charles Maddux with that many units, you should be able to get a commercial blanket policy. This will allow you to easily add/drop properties and pay the resulting coveerage monthly.
Regarding separate loans, it will be more expensive than just one blanket loan. The only hassle of a blanket is selling only part of the package later. You would have to prove to the lender how much each property is worth in order to calculate a partial payoff. Can be a real BIG issue when property values are dropping.
Why not manage your own property?
Quote from @Austin Jameson:
Hey Charles!
Congrats on getting that deal under contract! Tennessee is a great area to invest and I have seen more & more people looking down this way! As for property management, a great group that I use personally is Abode Property Management. They are local guys that know the area VERY well. They also have a great in-house team to work on any renovations you may need. If you want any more insight, feel free to send me a PM.
On the commercial lending piece, it really just depends on the bank's policies. If you do each property individually, you could run the risk of pre-payment penalties if you are looking to offload some sooner than later. If they are bundled together, you could just have the title company do a partial lien release and pay down the note accordingly if you are looking to sell one property. However, bundling the properties could lead to some flexibility problems depending on the bank. It all comes down to what your investing strategy is.
I hope some of this helps and feel free to reach out if you have questions!
Thanks so much for all the valuable info! The Chattanooga area has changed/grow a lot in the time since I lived there 10 years ago. I will definitely have to look into Abode Property Management.
I have not heard of partial lien release as a strategy! A couple of the single family homes that come with the deal are in pretty rough shape and would work better as flips than buy and hold based off my numbers. I will definitely need to look more into this strategy and talk to my title company. I am learning my primary investing strategy, but I am looking primarily at small multifamily buy and hold properties for long term rentals.
Quote from @Drew Sygit:
Even if someone give you a referral, what meets their expectations, may not meet yours.
In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.
It's often a case of not doing enough research, as they don't know what they don't know!
Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.
So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.
EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!
This also leads owners to ASSUME simpler is better when it comes to management contracts.
The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!
We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.
We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:
We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.
EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!
P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊
Thank you so much for taking the time to answer my query! I will definitely check out multiple PMCs and look over their contracts. I love your advice! This year has been a BIG learning experience and I am happy to put in the work. As I have been managing my own properties up until this point, I have A LOT to learn about working with a PMC. After reading your response, I am sitting down and writing out of a list of questions for interviewing PMCs. I'll try to find some examples of good PMC contracts and use them as a guide.
I reached out to my lender and given my plan to flip a couple of the single family homes, it may make more sense to divide the loans upon purchase. He is working on an estimate for how much option would cost.
PS: I took your advice and I am checking out several quotes for a commercial blanket policies.
Quote from @Michael Mikhjian:
Why not manage your own property?
Hey Michael,
I do manage 3 of my units currently, but adding 9 more plus coordinating renovations and looking for new deals is tough with everything else on my plate. I have a full time job working 50 hrs a week and a new baby! Truthfully, the money its going to cost me is worth it to spend more time with family. My long term goal is to be as passive as possible with my real estate investment with multiple units covering my monthly expenses. That being said I have enjoyed it so much that I may stay investing actively and make it my full time gig. I'll keep you posted ;)
Congrats on this package deal! That's awesome! As far as property managers, my #1 recommendation would be to really dig in to how they do things. Not every property manager is the same.
Ask to speak with a current client, and ask that person what they don't like about that PM, to learn the worst case scenario. No PM is going to be perfect, I've heard all the gripes from my clients about their PMs, so it would be a red flag if a current client says only great things!
Ask for their numbers: typical turnover time, etc. They should be able to provide that.
Check if the property manager manages properties like yours: similar type, property class, neighborhood, etc. They don't need to hit all those boxes, they should hit some.
Review the contract that you sign, as well as the lease agreement the tenant signs. We have a client who's trying to sell a rental, and the lease agreement with the tenant says they must provide access for sale of the property only within 60 days of the end of the lease. We aren't in that timeframe, and the tenant is refusing access to anyone for anything, even for an inspection or appraisal, so practically that rental is going to be impossible to sell.
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Real Estate Agent Georgia (#409775), Virginia (#225236143), and TN (#358836)
- http://adriennegreen.com
Quote from @Charles Maddux:
Quote from @Michael Mikhjian:
Why not manage your own property?
Hey Michael,
I do manage 3 of my units currently, but adding 9 more plus coordinating renovations and looking for new deals is tough with everything else on my plate. I have a full time job working 50 hrs a week and a new baby! Truthfully, the money its going to cost me is worth it to spend more time with family. My long term goal is to be as passive as possible with my real estate investment with multiple units covering my monthly expenses. That being said I have enjoyed it so much that I may stay investing actively and make it my full time gig. I'll keep you posted ;)
TY for that insight! I'm in a similar position with 12 units / 25 tenants. In my case I ended up building a management software with full automation (My day job is building automated software) so my stress is quite low.
I would be happy to talk with you. We have 15 properties in Chattanooga and we are from Chattanooga, although we live outside of Nashville.