I closed on 4 properties over a month ago. Three already had tenants upon closing. One was vacant and I spent 3 days doing cosmetic work. There were only a couple things that I wanted and still need my property manager to take care of. The property manager must manage about a million properties because they still have not taken care of these things and got the place rented out.
I am under contract for my 5th property. The listing agent/bank owned property canceled my inspection two different times before just finally allowing my inspector in. The day before the inspection the listing agent said I have to overnight a check. I did not do this bc I am out of the country. My wife was sick but dropped it in the mailbox 2 days later. That was too late for the bank and they said I have to wire the money now. I had my realtor put a contingency upon passing inspection in the contract. Well, I just got the inspection report back a few hours ago and the property needs a new porch, has two minor leaks, broken windows (which i new about), and some of the bricks on the top of the chimney are loose. I know I cannot count on my property manager to get me any estimates so I am thinking about trying to find a new property manager. I'm really frustrated and am thinking about just canceling the contract. I am thinking about holding off on buying real estate until I can find a dependable property manager. O and one that will give me reasonable estimates when they actually do give me estimates. I just vented and would like other peoples opinions on my situation.
It never hurts to put Plan B in effect. I would definitely start looking for another PM if dissatisfied
Be persistent. If you have run the numbers on your properties and you know they are good deals then keep charging forward. You will have good feelings just as intense as the frustration you have now when you finally have your first month of all the properties rented and paid on time.
Talk to your property manager about what they are doing to get it rented. I had one that took a couple months to rent and I was wondering why my PM wasn't getting off his rear and doing something about it. I started talking to him once a week and it turned out he was busting his rear to get it rented, advertising and hours of showings. Tenants kept saying they were interested and then not filling our the application or they were not well qualified.
4-5 at once is a big bite to take, a lot of stress at once, maybe get all of them rented and a PM you are satisfied with before buying another.
There is a lot of articles, blogs and forum posts on screening your property manager. Do some searches and a few hours of reading, it will be well worth your time.
I apologize in advance, as this is going to sound harsh. But I'm a huge proponent of people taking control and responsibility for your situation...
What you describe -- a bad property manager -- is probably the most common issue among buy-and-hold investors, and if you don't know how to deal with that simple issue (both emotionally and tactically), you're probably not ready to be buying as many properties as you are.
You need to learn to take control of your deals and the people you have working for you, instead of letting them control you. Stop complaining about your property management company and just fire them and find someone else. It's their fault that they aren't doing their job, but it's YOUR fault that you're still sitting around waiting for them to do it.
In the time it took you to write that post, you could have fired your PM. That would have been a step towards solving the problem...not just venting about it...
That's true and you are right. I was actually thinking of that when I was typing that complaint. I was thinking maybe I am wasting my time on here but figured I wanted to hear other peoples opinions or maybe even a referral. I was actually waiting back from my realtor who was getting me a referral for a new property manager. Now, I just have to read over the contract I have with my property manager before I fire them. I cannot just fire the property manager without having a new one as I am overseas and would have nobody to manage my properties.
Take a deep breath! 5 houses in a short period of time is stressful . First thing you need to do is identify why the houses are sitting empty. Before you say they are a horrible company look online and see if you see any ads. You want to check there presence online.
If you are not happy with the inspection. Talk to your realtor. Once you have realistic expectations from your "team" there is no reason to not demand this from them!
I feel your pain. Having a good property manager is absolutely the MOST important thing is managing rentals, especially out of state. If you dont have that, you will not make money. I would hold off on more purchases until you can stabilize these four and have them perform for at least 6 months. Sounds like you are also doing some measure of rehab. In that case having a reliable contractor is equally important. It seems you have put the cart in front of the horse and jumped into buying multiple rentals without a reliable team in place. Learn the lesson, build the team and move on.
Just like what @Anish Tolia said, you need a contractor you can depend on.
Using a property manager to do a rehab would be like taking your lawn mower to your car dealership if it doesn't work.
A property manager can handle light repairs, things that simple need a plumber called, electrician, etc,,deciding what is the right way to fix something and getting competitive bids for a rehab is something they aren't setup to do.
Find a good contractor, have them get estimates to you know what the repairs will cost if you close on the property, then use them for repairs,,bring the property manager into the mix when its ready (or just before its ready)
Sorry to hear about your frustrations, we've all been there! Sometimes when we've hit the bottom we can only go up.
The important thing is to learn something from this experience which will make you wiser in the long run. Personally, I've learned the most by overcoming obstacles. When you're in the moment, it's hard to see the glass as half way full. Though, as you progress in your investing career looking back and learning from the past will propel you to success.
Hope that helps!
I just want to thank everyone who replied to my post. I have chosen to hold off on my fifth property, for now. I have made a couple rookie mistakes and am going to wait until I build a good team. I assumed that my property manager would have a team of contractors that could do work when I am away. I was wrong. I now know that I have to build my own team and that the property manager is mainly responsible for getting my properties rented out, collecting rents, and evictions when necessary. I expected too much from them and now realize that I am the one that has to make sure things get done. This actually makes me a lot less stressed because I know I can get things done rather than relying on someone else. O yeah and the contract I have with my property manager is for two years. If I break the contract, I owe them 10percent of the rents for 12 months. I figured I would throw that out there so others make sure they know what they are signing for if that is in their contracts. I am not so frustrated anymore and have learned from my mistake. I will build a solid team and move on.
Perhaps I am not effective at delegation but after 25+ rentals over 15 years I have not found a PM that I can truly rely on. I have tried out 4 different companies and 2 of them were recommended by investors I trust. PMs promise to take away your headaches but it has been my experience that they take their percentage and other headaches keep popping up like whack-a-mole (vacancies, HOA or neighbor complaints, big-ticket repairs, etc.)
I self-manage my rentals now and my strict, initial screening seems to be the biggest deterrent to problems down the road. Properties out of state or you being out of the country sounds like another layer of difficulty. Sorry I don't have a magic bullet but I do have equity! If you hang in there, you will have a very nice retirement someday!
Hello @Jason B. I am in the process of purchasing my first investment property with plans to lease it out and am sitting back reading everyone else's advice on choosing a PM or self-managing. Sorry I do not have any advice but thank you for allowing some of use newbies to learn from your experience.
Also, I'd like to learn more about how you were able to obtain financing for multiple homes at once. I have my eyes set on a second property but haven't closed on the first.
Hello Denise Mayo-Walley,
Glad you can learn from my experience! The best advice I can give you is to build a solid team before getting several properties and make sure you read over the contract you have with your property manager. My contract is for two years and if I break it I will owe them 10 % of the rents for 12 months. Just don't count on them to do everything.
As far as financing, I guess they went off of my income and great credit score. Plus, no debt probably helped. Let me know if you have any other questions and I'll try to help. I'm still pretty new to REI though. Good luck with your second property!
@Jason B. You say if you break it, but they also have obligations that should be clearly stated in that contract. If they fail to do their job, do whatever it takes, from a friendly nudged to hiring a lawyer.
I do think you made a wise decision on that 5th property. Get your team and your systems in place first.
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