Property Manager Screening

9 Replies

Does anyone know a good property manager in Springfield MA?

I am buying a 3 family home built in early 1900s. It is fully occupied with good cash flow.

I am looking for a property manager who provides good service to the tenants and me and has good rates. I am looking for something in the neighborhood of 5-6%.

This is my screening questions that I will be asking? Am I missing anything?

1. What is your property management fee? (percentage of gross rent or flat fee)

2. What is your tenant placement fee?

3. What is your make ready and cleaning fee?

4. Do you charge property management while a unit is vacant?

5. Are you have licensed in: electrical, plumbing, HVAC, builders (drywall, carpentry, renovations)

6. What are your hourly rates? Will you provide material and labor receipts with the before and after pictures for the repairs?

7. For any repair I would like you to call for authorization. Will you be OK with that?

8. Will you visit the property once a week and take photos of areas of interest once a month? Do you charge per visit?

9. What is your rent collection process?: Online, Cash, check? Please provide an example of the monthly statements you send to investors. 

I don't know anything about property managers in MA, but most PMs I've seen in other places charge between 8 and 10%. Unless 5-6% is the norm in that area, I'd be concerned about the quality of manager you would get for that low of a rate. It is also a bit unrealistic to expect them to visit the property once a week (and if they did, I'm sure they would charge you extra for it).

BP has a pretty good PM Interview Worksheet in the FilePlace. You might consider adding some of the questions there to the ones you already have. Another idea I read recently in a blog post was to call the management company posing as a prospective tenant enquiring about one of their available properties to see how their customer service is. This can give you a feel for how they would be treating your tenants.

your expectations are probably too high. I've seen some managers advertise fees around 5% but they have other fees on top if that like Inspection fees, marking up maintenance, etc. Don't get wrapped up in the cost without considering the value. Weekly drive-by inspections and monthly photos are completely unnecessary and bordering on harassment. If you hire a good manager, they will place good tenants that don't require constant baby-sitting. Some managers will call you about everything but I won't. Most of the really good managers I know will only call if a maintenance item is expected to cost more than a set dollar amount like $200 or there is a problem like a tenant that fails to pay. I think your list is a good start but your expectations are unrealistic. Sometimes the most expensive manager will put the most money in your pocket. Pay little and you'll get little.

James

For a 3 unit, you should be able to manage this yourself with the help of a local guy. Or even one of your tenants if they are handy. PM companies will always charge/pass on the cost of licensed work from Plumbers/electricians/capital improvement/apartment turnover stuff.

If the property is stable, you could find somebody local for 5-7% and include regular maintenance work, court shows for delinquencies, finding new tenants, collections, leases, etc.

Start with Craigslist.

@James Denon

Property management companies in my city seemed ... rude and not a fair partnership (for me). 10% gross rent fee, plus 1 full month commission, plus hidden fees, plus ridiculous 'escrow' requirements for each unit, plus a REQUIREMENT that you do a 1 year lease every time. I always roll into a MTM after the 1 year. This reduces turnover. The 1 month full commission does not incentivize the property management company to keep turnover low. You should be able to find a professional property manager willing to negotiate somewhat , like 7% gross rent plus 75% 1 month commission, or 10% gross commission with no leasing commission. I do the 10% fee and no leasing commission structure, but I also do my own bookkeeping, help with marketing and brainstorming, and manage/pay the lawn service guy. So it's a give and take.

You want to trust them and their decision-making abilities. While guiding them and relying on them as well - never be completely dependent. Make sure rent collection is structured so that they don't have complete control over your revenue.  

As a pm for 20 years it seems there are owners who need and want our services, there are owners who have been burned by property managers, and there are owners who probably should self-manage.  Property management is a high volume, low dollar business.  The owner and manager need to function from the same sheet of music and because of the economics of the business, this usually requires a pm to have his model and offer it to owners.  The PM's model may fit or it may not.  If a PM starts making a bunch of exceptions in order to obtain a client, chances are the relationship will end up failing.   Many of the issues that are discussed in this thread that are critical of property management or the demands requested, will likely only be accomodated by a company not handling many doors and with few systems in place.  

I have owned several businesses and property management is one of the more challenging due to the issues associated with the owners who have been burned or the ones who should self-manage because their expectation for the manager are beyond what could ever serve as a profitable business model.  A great PM will provide a service that allows an owner to not be involved daily with the intricacies of their properties, but simply enjoy the returns while using their time on more profitable pursuits.  Yes, a PM should be compensated for the hassles that go with management.  Rarely does it work out if the property pays minimal fees and the owner has to be consulted for every management and leasing quesiton.  If you have been burned, I understand how long it takes to get to the point of trust again, but not all managers are going to be incompetent.  

In the case where trust is a problem, after trying to self-manage it seems it becomes easier to desire and seek an experienced, manager with systems that will grow a trustworth relationship . 

Sorry for the lecture. 

In my experience, those who charge a lower gross rent percentage have higher fees for everything else, and markup any work being done. I also have yet to meet any PM that carries professional laborer licenses. I recommend you find someone with a flat percentage fee and agree to a clear set of terms before signing anything.

Ask if they charge an advertisement fee on top of the leasing fee, also ask if the charge the management fee for the first month if they also take the whole months rent as commission. Also if you do a move in fee ask if that is considered rent and subject to the management fee, you might also want to find out if they send a notice to your tenant if they are late on rent and if they charge you for it, I've gotten charged $90 for a 10 day notice. And make sure they tell you how soon they will contact you if your tenant is late with the rent. As you might have guessed I have not had good experiences with PMs so far, but best of luck

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