Managing Your Property

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Brandon Toron
  • Kew Gardens, NY
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Prop Manager: $2k in rent (Would they work for me?)

Brandon Toron
  • Kew Gardens, NY
Posted Jan 14 2022, 21:07

Hello,

I am looking at lower-end properties out of state. I would need a property manager to make it work. I'm looking at properties that are worth around $100k-$150k that will rent roll at about $1600-2200. At 8-12% of the monthly rent roll, that would net them a max of $264 per month. I'm not sure if I'm way off here- but do you folks think the property manager wouldn't be doing much work for me at $264/month?

Want to ensure if I set this up, I have the out of support I need to find success. Any and all opinions are greatly appreciated. Thank you in advance!

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Owee Nicolas
  • Investor
  • San Diego, CA
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Owee Nicolas
  • Investor
  • San Diego, CA
Replied Jan 14 2022, 23:59

8-12% commission for Property Manager is pretty typical. I give 10% commission to all my Property Managers. With regards to your concern if the Property Manager will do the work for you at that rate, you need to make sure to look for a good Property Manager since they are not all created equal. Get referrals from your realtor, check the credentials of the Property Manager, check the properties they managed, etc. Basically do your due diligence. This will save you the headache later on. Good luck!  

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Account Closed
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Replied Jan 15 2022, 01:22

I find property managers charge 6% to 8% for their basic management tasks and charge additional for handling maintenance, advertising and signing leases. Then, even the best property management companies are not usually as efficient as a hands-on owner. So, you lose a lot of money due to having bottom of the barrel tenants, more damage to your property(s), poor quality maintenance and repairs and you will pay much more money for contractors and other vendors because you are not hands-on and you don't get to shop and deal directly with contractors and vendors.

Let me know where you are finding long-term rental properties for $100k to $150k that rent for $2200 per month because I will jump on a plane and buy every one of them.

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Jeff Hubert
  • Realtor
  • Fort Lauderdale, FL
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Jeff Hubert
  • Realtor
  • Fort Lauderdale, FL
Replied Jan 21 2022, 06:50

…and I’ll be right behind you on that plane.  2200 per month on a 100K home sounds to good…

Real Estate Agent FL (#3258066)

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Nathan G.
  • Real Estate Broker
  • Cody, WY
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Nathan G.
  • Real Estate Broker
  • Cody, WY
ModeratorReplied Jan 23 2022, 05:33

In my market a basic townhome can cost $175,000 and rent for $1,200.

Property Managers make money by working in bulk. It's called "stacking nickels" and your property would just be another nickel in their pocket. If they're smart and have enough rentals to manage, they can make a tidy profit.

As others have said, you really have to shop around. Not all property managers are created equal and cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!