Use a PM to find a tenant vs DIY
Member since 2020 · 11 posts · 2 votes
Use a PM to find a tenant vs DIY
Most Popular Reply
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y@Derek Andrews if you are going to self manage then you absolutely should place the tenant yourself. I still manage 32 doors out of 58 here in the Berwyn and Cicero area, and I can tell you that the LAST piece I will give up is leasing. If you get a great tenant, it solves 90% of your problems in this business.
36 Replies
- Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes6y
@Derek Andrews if you are going to self manage then you absolutely should place the tenant yourself. I still manage 32 doors out of 58 here in the Berwyn and Cicero area, and I can tell you that the LAST piece I will give up is leasing. If you get a great tenant, it solves 90% of your problems in this business.
- Flipper/Rehabber · Cincinnati, OH · Member since 2020 · 300 posts · 417 votes6y
@Derek Andrews What @John Warren said is spot-on. If you're ultimately going to be managing the single family home, I highly recommend finding and vetting the tenant on your own. If you are wondering where to start on finding a tenant, there are a lot of great resources on Bigger Pockets and on the web with more detailed info. I would definitely put a "for rent" sign in the yard to start with, and you can also list the property on websites like Zillow. Here's a forum discussion that has some additional helpful information on finding a good tenant:
https://www.biggerpockets.com/forums/52/topics/252527-finding-good-tenants - Member since 2020 · 11 posts · 2 votes6y
Originally posted by @John Warren:
@Derek Andrews if you are going to self manage then you absolutely should place the tenant yourself. I still manage 32 doors out of 58 here in the Berwyn and Cicero area, and I can tell you that the LAST piece I will give up is leasing. If you get a great tenant, it solves 90% of your problems in this business.
John thank you so much for your encouraging words! With no institutional background in real estate I was just beginning to think if I was being a bit too eager with being completely "hands on."
- Investor · Palo Alto, CA · Member since 2020 · 14 posts · 11 votes6y
@Derek Andrews Make sure you post to the online marketplaces, as that's where you'll get the most leads, especially Facebook Marketplace and Craigslist. Best of luck! :)
- 6yShawn AckermanPro MemberReal Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
@Derek Andrews I would first start with understanding and outsourcing tenant screening. Market the unit online. If you want to use a screening service then that's cool but ultimately I think you should select the candidate after the screening entity sorts through the candidates based on your criteria. In my market I look for 3 times the rent amount in gross income monthly, no evictions in last 3-5 years, property visit to their current home and past housing/current employment references. All the best!!!
- Flipper/Rehabber · Cincinnati, OH · Member since 2020 · 300 posts · 417 votes6y
@Derek Andrews While it's true that people increasingly go to online resources to find a home or apartment to rent, the old fashion sign really can still do the trick! I'd definitely still post online, but you also never know who might walk or drive by the sign in the yard and decide to give you a call. Best of luck to you!
- Investor · Louisville, KY · Member since 2017 · 199 posts · 253 votes6y
I manager 28 units in my market and the leasing portion is the most critical step. I would not hand this over to a PM unless I was on my death bed. As said earlier, get the right tenant and your rental experience will be a great one. Get the wrong tenant and well....you know.
- Financial Advisor · Indianapolis, IN · Member since 2018 · 294 posts · 165 votes6y
I have tried all the market places, but I seem to always have the best luck on Craigslist. Make sure you have multiple layers of screening in place for background, credit, employment, etc, charge an application fee and have a buttoned up contract. You'll have it rented in a weeks time.
Good luck.
Danny McNulty
Financial Advisor
- Member since 2020 · 11 posts · 2 votes6y
- Investor · Austin, TX · Member since 2016 · 18 posts · 9 votes6y
@Derek Andrews Definitely do it yourself if you can. Every one of my tenants I found has been through postings on Craigslist + Facebook Marketplace. Usually, I get many to choose from. Just make sure they can prove they make money some money! TurboTenant.com is a great site to checkout
- 6yDave SpoonerPro MemberRental Property Investor · Cincinnati, OH · Member since 2020 · 869 posts · 823 votes
There is a time and a place to use a PM, but it's beneficial to do the leasing process yourself. That's one of the most critical steps when renting out a property like @Michael Jones mentioned. I also recommend learning to do things yourself when you are first starting out before you ever decide to use a PM. Like others have mentioned, Zillow, Craigslist, and Facebook Marketplace are all great resources to utilize. I'd definitely require criminal, credit, and eviction checks in addition to an application.
- Member since 2020 · 11 posts · 2 votes6y
Originally posted by @Levi Bernard:
@Derek Andrews Definitely do it yourself if you can. Every one of my tenants I found has been through postings on Craigslist + Facebook Marketplace. Usually, I get many to choose from. Just make sure they can prove they make money some money! TurboTenant.com is a great site to checkout
Thanks Levy! I guess at times a PM can be pretty impressive into making you believe that you need them to do a job that, with just some hard work, can be done by yourself. Appreciate the advice buddy !
- Property Manager · Raleigh/Durham NC · Member since 2015 · 210 posts · 293 votes6y
Long before I became a residential property manager I started with Brandon Turner's book on managing rental properties. I recall my wife and I read it together after we put the baby to sleep each night and bookmarked pages as we moved on to each step.
https://www.biggerpockets.com/store/managing-rental-properties-ebook - Rental Property Investor · Denver, CO · Member since 2019 · 22 posts · 11 votes6y
Hey Derek, while I agree with most of the replies so far about doing it yourself... One thing Ive learned AFTER doing it myself is time is money. If you really think once your first couple tries spending time listing, showing, and then trusting your gut along with a couple books you read is going to be a magical combination, do it. Its not that easy unfortunately.
I use a combination of PM companies and my own efforts depending on the areas. I have a few states I rent in. Use all the resources you have, including the PM's perspectives, leases, processes, etc. Vet from there and come up with your own formula. Don't go out prematurely thinking you'll know the best bet based off of reading a book or some forums
Warren above says...
"If you get a great tenant, it solves 90% of your problems in this business."
This is very true, and?... - San Francisco · Member since 2020 · 9 posts · 4 votes6y
Everyone so far has given great insight and suggestions.
I wanted to add my personal struggle with same dilemma. I am going through this right now for the first time long distance and had the same debate on how to handle PM versus self managed. We ultimately are going to continue been managing the properties through Cozy. From there, the listing gets syndicated to a few other rental sites.
However, in Arizona at least, Zillow is still king for rentals. Zillow Rental manager is how I have scheduled all my tours and communicated with potential tenants. Their app works very well if you don't have a second number to give out to applicants. We have a family friend who is and agent on the ground who we are paying per tour, as reimbursement for gas and time mostly, but we will meet and Zoom all the applicants personally.
- 6yDaniel SegoviaPro MemberInvestor · Columbus, OH · Member since 2019 · 107 posts · 15 votes
Derek,
I think the piece you are looking for is how you go about advertising your property, how you screen potential tenants, drafting a lease specific to your state, and what is a good way of collecting the rent. Am I right?
Well, it goes without saying everyone who has replied before me has the landlord experience in the rental world, and they know what they are talking about, so listening to them is super important for your success.
Having said that, BP has partnerships with PM software companies to help you advertise and manage your properties. This link already has the BP companies sorted out to only show you online companies
https://www.biggerpockets.com/real-estate-companies/property-management?utf8=%E2%9C%93&search%5Bcompany_category%5D=property-management&search%5Blocation%5D=&filter%5Bspecializations%5D=Property+Management+Software&sort=
Now, I personally use Avail.co (it is not a typo, it is literally avail.co). I have used them for 2 years so far and I like them. You get a 1-month free trial or unlimited free basic management. If you want more, (which I recommend) it is $9.99 a month for 1 property, $16 for two, etc. Once you create your personal profile, you create a profile for your property(s) and they push your advertisement to all major sites such as Zillo, Zumper, Trulia, etc.. the list is long. If you price it right, have good pictures and good property descriptions, inquiries will start coming in. Then, it is when you MUST have all of the other pieces of your plan in place. That's why you follow what everyone has mentioned here to include reading Brandon's book and watching the Webinars so you can ask the right questions during screening, etc.I normally point my prospective tenants to submit their application and background check through Avail. Depending on your level of comfort, Avail offers few options regarding background check and eviction records. I normally go for the full 360 checks so I can review employment history, income verification, criminal records, etc. But again, that is me, I like that piece of mind. In the end, those are the applicant's records and Avil holds a copy of them so the potential tenant can use this same documents to apply on another listing within Avail in the event I chose a different applicant.
At the beginning, all communication happens through Avail but as you talk to the prospective candidates you choose to move outside Avail and communicate directly on your phone, email, etc., but again, the choice is yours. Once I get the initial screening and ask them to submit their application and background check, I get to review the potential tenant applications, then I follow up on those I have selected whether in person, over the phone, or whatever works for us. During this second stage, I lay down expectations.
After my selection, I draft the lease using Avail's software, you just click on the applicant and Avail does the rest. The cool thing about Avail is that it will ask you which state is this lease for, and it will create the lease according to the laws of that state.But you can always tailor/customize it to meet your needs. As an additional percussion, I have my state lawyer to look over it. I only have to do this once because the next lease will have the same approved lawyer lingo.
Because I had already communicated expectations, my future tenant knows they have to set up their bank account and payments through Avail. Avail will then deposit the payment in the bank I set up. The cool thing about it is that the site will send automatic reminders about upcoming due dates, and will track late payments and fees, etc. It takes away my headache.
Talking about headaches, because your tenant has an online portal within Avail, in the event they need maintenance they can submit their request through the site and you will receive an email or text with their issue. If you have a maintenance person you work with, you can set their phone number and email address so they get a notification as well. All you have to do is follow up with your maintenance guy.
Probably I went overboard with it all.
Either way, Avail is a cool and cheap way of managing your properties if you are small. As you grow, probably your systems will have to change. This is my process, although not perfect, it works for me. Good luck, I hope you will find what works for you as you. Keep us updated. - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes6y
@Derek Andrews Ok, I gotta set the record straight here because holly cow this thread has been a series of the absolutely worst advice and direction I have ever read on BP, ever.
First off; it was said that you have zero experience in leasing, property management, and have no idea where to start.... and people are saying you should just go out and magically figure it out overnight and the results will be.... yeah, the results will be what your skill and experience level equip you for, a tenant nightmare.
Second; you said that with PM services you will be at net 0, so that would assert you can't afford any screw-ups, like those that come from a bad tenant, bad lease, etc..
Let me ask you this Derek, if PM services is such a pointless nothing why does the top Pro's such as @Brandon Turner say every time to factor in and use PM services ESPECIALLY when starting out? Because it's so pointless? Yeah, your getting setup for a big life lesson with the insane advice I read above.
Here is intelligent advise taking all facts into account: Find a well referred and rated PM service who will do tenant placement for you, and tell them your position, and ask if you could be as involved as possible in the process so that you can learn and experience from it, not micro-manage. If they are decent they will happily do that, my office would no problem. And with that your going to learn more in 30 days than you could from 3 years on your own, you will get a great lease, you will have highest chances of getting top quality tenant, and you will have ultimate say on tenant acceptance.
Yeah, it will cost 1 months rent, and it could save you many months rent in potential losses you have a high chance of getting doing something your not qualified to do. Or, leave the unit empty for months on end as you try to study on it, and still you only know theory not real world fact.
Hire the best, be involved in the process and learn, learn, learn. IF you had knowledge and capabilities to self-manage and lease than yeah, it would be an option, but you don't as you said so it would be like me saying "hey, I'm on a sinking ship and know nothing about boat repair, what do I do" and they say "oh, it's easy, boat mechanics are BS, just google it and you will figure it out", yeah no, Momma didn't raise no fool.
Please, be smart, I can't tell you how many investors end up having to sell to be in a situation because they spun that wheel of destiny and lost big time, or others were able to pull personal cash to hold it and came to me to manage it from there on, after losing many thousands.
- Rental Property Investor · OK · Member since 2019 · 126 posts · 114 votes6y
On some out of state homes I have, the pm placing tenants was worth the 1 month rent as payment. They were able to list/show the home and more importantly, the PM was able to handle the insane amount of things my township flagged to renew my certificate of occupancy (thanks NJ...) Their contacts and handling of renewing the CO was invaluable. I've also had the same scenario where the PM found qualified people within a few hours and placed them with minimal effort. Both times I paid 1 months rent and was greatful for it.
- Member since 2020 · 11 posts · 2 votes6y
Originally posted by @James Hamling:
First off James thank you for your input. The advice from everyone on my issue has been overwhelmingly appreciated! And thank you for outlining a view point opposite everyone so that I sort of see both sides of the coin.
As stated I have zero real estate experience, but I'm certainly no stranger to hard work and dedication. I would never go as far to say PMs dont serve a purpose (I have no knowledge to reference on the matter lol). In all honesty, had I put down a large down payment I wouldnt have any questions with a PM initially because I'd be clearing some sort of take home monthly. I'm definitely analyzing all the info you all are sharing with me. Because after all, to me, all of you who've responded have the level of success that I'm trying to achieve in this field.
Thanks James!
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes6y
Originally posted by @Derek Andrews:
Originally posted by @James Hamling:
First off James thank you for your input. The advice from everyone on my issue has been overwhelmingly appreciated! And thank you for outlining a view point opposite everyone so that I sort of see both sides of the coin.
As stated I have zero real estate experience, but I'm certainly no stranger to hard work and dedication. I would never go as far to say PMs dont serve a purpose (I have no knowledge to reference on the matter lol). In all honesty, had I put down a large down payment I wouldnt have any questions with a PM initially because I'd be clearing some sort of take home monthly. I'm definitely analyzing all the info you all are sharing with me. Because after all, to me, all of you who've responded have the level of success that I'm trying to achieve in this field.
Thanks James!
As you said, you don't have experience or knowledge, and are very tight on the $$$$ of the property, it's foolish and ignorant to tell such a person to just go figure it out on there own, that kind of learning curve will cost time and $$$$, and you can't afford a screw up.
I will give you just 1 example of the difference; when I market a property for a tenant it goes onto 84 various listing sites online, not 8 or 4, 84. On top of that I have regular traffic built from having been such a resource for tenants, so people looking for a place to lease just know to come look on my website, because we do literally hundreds of tenant placements every year. With all that, no a person will not get anywhere near same results by just posting on Zillow or (and I can't believe anyone suggested this) Craig's List which by the way is notoriously the absolute worst place to find a tenant hands down.
And even if you did get tenant applicants, how do you vet them? What do you look for? Do you know how to do background checks? Do you know what to look for in income? Do you know what blemishes to overlook and which are red flags? Do you know what common lies to look for?
I am trying to help save you from learning via pain, and to guide on how to learn via success. Hitch your wagon to a Pro, and absorb everything possible from them until your educated enough to set out on your own to replicate those success systems and processes.
And remember that a person can only give advice and direction from there own success index. For myself, we have 7 new tenant placements this week the office is pounding out the paperwork on, I am listing half a dozen turn-key units for sale, we have 3 purchase offers we are moving through, 250 odd units on "cruise-control" with less than 2% revenue variance from covid-19, I am working through a few buy opportunities, 1 under contract, and I don't even know whats coming up next week or month, on average another 20+ tenant placements and so on. Point is, I am actually in it, I speak from real world application, not book theory, and not from a handful of properties here and there. I consult 200+ investors at this time, and I have seen and heard so many landlord nightmares that I could write an encyclopedia of what not to do and why. Learning is a choice, of either from your own mistakes, or those of the entire village, I choose the village.
- 6yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Derek Andrews the best consultants help you evaluate all your options, so you can make the best decision for your situation and risk tolerance.
James Hamling has given you another perspective to temper the advice of all the posters. Much of what he has written is factual or makes logical sense, while most others shared what works for them, without considering the big picture.
So, let's try to sum up your options:
1) DIY Tenant Placement
PROS:- Save money
Experts know legal & regulation issues
You have final decision, but can't blame anyone but yourself
CONS:
- Your lack of tenant screening knowledge
Cost
Lack of legal & regulation knowledge
2) Hire a Real Estate Agent
PROS:- Local experts
You can still DIY manage
CONS:
- They often lack detailed screening knowledge
They may not know all PM regulations
Cost
3) Hire a PM
PROS:- Should have thorough tenant screening process better than all above
Should know all legal & regulatory issues
Should give limited tenant-performance guarantee
CONS:
- Cost
You usually don't have input
Can you trust them?
All, feel free to add a pro or con under each option:)
Hope this helps, so you can make the best decision for what works for you.
Logical Property Management4.9458 Reviews - Save money
- 6yJonathan BombaciPro MemberMember since 2020 · 23 posts · 7 votes
- Real Estate Agent · NH · Member since 2020 · 23 posts · 54 votes6y
@Shawn Ackerman That's good advise. I am a licensed real estate broker for over 35 years and have property managed for over 20 years. Having that set of criteria is critical. I would add checking out their employment history as well. Many times if a tenant is in and out of jobs, they also end up being in and out of rentals. It's important to try to get at lease 2 years worth of rental history and job history if possible. I ask for names and phone numbers of current and past landlords, as well as, bosses. I also ask for 3 personal references. The other really important thing is getting a credit and background check on each applicant. Over the past few years, I've found that people are often not what they seem... I have had prospective tenants give me fraudulent landlord info (I found out one who gave me a name of a friend who pretended to be the landlord).
The other bit of advise I'd offer, is not ruling out using a trustworthy, recommended property manager to place a qualified tenant for you. We used to do it for a 1/2 of one month's rent one time fee. If the tenant turned out to be a problem within 3 month's of the placement, I would place another tenant for free. Just something to consider. For some reason, property managers who have stayed in the business for the long hall are pretty good at "qualifying/assessing" a tenant's character and are experts at separating the sketchy ones from the great ones
- Brookfield, WI · Member since 2016 · 191 posts · 108 votes6y
Not noted here, do you have the personality to deal with tenants? I found out quickly I was "too soft" and went to a pm. On the flip side, having self managed a few years, I knew exactly what I wanted in a pm company. You'll end up paying (in time, cash, or both) doing it yourself first, but consider it paying for the education, then maybe you can transition the property to PM and still make some cash (rent increases, find ways to decrease costs..etc.)
Join the conversationCreate a free account to reply, vote on answers and follow this thread.