How to find a good property manager for my two-unit multi-family?

Question

Hi all,

I have a two-family multi-family in Queens, New York. My family and I used to house-hack, but we have just recently decided to rent out both units. We've been managing the one tenant we had, it was manageable. But now our property is no longer our primary residence and we have two tenants (both section 8), I foresee managing the tenants ourselves would be more challenging, that's why I think it's time we hire a professional.

The only experience I had close to interviewing a property manager was a call with a local property management firm, didn't go with them because they were not responsive after the initial call.

I would like to know what I need to pay special attention to while interviewing a property manager. What sort of questions I need to ask? Is it better to hire an individual or a property management company? Obviously chemistry plays a part. To me personally, responsiveness is very important so I'll be looking out for that.

I would love to hear stories of how everyone else found their first property manager/property management company too! Any lessons you've learned etc.

Also open to recommendations in the Queens area.

Cheers!

Jinyu

Nathan Gesner · Answer

Remember: 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!

Jennifer Edwards · Answer

@Jinyu ShaoSince your tenants are Section 8, be sure to ask property management companies if they manage Section 8 properties. These kinds of properties come with unique challenges and require specific knowledge to manage.

Also ask about their client retention rate - longevity is a good sign.

Randall Weatherall · Answer

In my area, there are 2 main types of PM:

1. Larger more automated/use a ton of VAs to try to do things quickly, but are largely hands-off direct to the client. This is usually frustrating as the VAs don't tend to be able to solve most issues on their own and always have to kick it around until you are upset at everyone. That said, for properties that run well, it tends to be fine as you're barely being bothered and get your automated statements on time. You will not have much input for your property as they have systems in place and too much fighting back = kicked out of the club/ignored.

2. Smaller, more hands-on and run ragged. Most of their clients are already too worried, too pestering, and want too much attention (why they probably got kicked out of Type 1 PM Co.). They can be awesome as long as you let them do their thing and bother them when you have an actual concern instead of every day asking if it's still standing. They pay attention to you and handle hedge cases a bit more quickly usually, but not always.

Figure out which one you think you want, then find out it's probably the opposite in a year or two and interview both types. You can figure this out by asking the percentage of VAs that they have working for them over in-office workers.

Jinyu Shao · Answer

Thank you @Nathan G. @Drew Sygitfor the detailed reply. This is super helpful. I didn't even think that I would need to ask questions to that level of details, but it totally make sense to put more time into the selection upfront to avoid problems in the future!

Drew Sygit · Answer

@Jinyu Shao

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”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

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😊

How to find a good property manager for my two-unit multi-family?

How to find a good property manager for my two-unit multi-family?

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