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Managing Your Property

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Matt Speer
  • Rental Property Investor
  • Indianapolis, IN
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Would you fire your PM if their days on market avg was over 40?

Matt Speer
  • Rental Property Investor
  • Indianapolis, IN
Posted Oct 26 2022, 13:22

Serious, yet simple questions: 

Question 1: If you found out your property management company had an average days on market of over 40 days would you immediately fire them and look elsewhere? 


Question 2: 
If you answered yes, to question 1, what do you look for in a new property manager? 

Question 3:  How do you know your new PM isn't just a good salesperson?

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Michael Robbins
  • Property Manager
  • Henderson, NV
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Michael Robbins
  • Property Manager
  • Henderson, NV
Replied Oct 27 2022, 08:28

@Matt Speer I would focus on the particular rental property and "true" comparable rentals when determining the average days on market.  For example, many times when DOM are pulled they include furnished rentals or rentals that are 3,000 sq ft when the subject property is 1,500 sq. ft.  When analyzing why a property may be on the market for longer than comparable rentals start with assessing the condition of the home (does is show and smell clean, any deferred maintenance, dark inside...).  Next, focus on the listing (did the PM use professional and attractive pictures... does the home have 2 bedrooms and a den/office but not listed properly?).  Last, price....  

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Peter Tverdov#4 Managing Your Property Contributor
  • Real Estate Broker
  • New Brunswick, NJ
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Peter Tverdov#4 Managing Your Property Contributor
  • Real Estate Broker
  • New Brunswick, NJ
Replied Oct 27 2022, 09:49

DOM is a tough one because like others have said, the owner can affect that. We are the experts and give our opinion but the owner needs to agree. We have had some owners want to ask for pie in the sky rents, then after 6 weeks they start to listen to us. Is that our fault at that point? Same with renovating. I had one unit vacant ALL SUMMER. Owner started out with unrealistic rent on an apartment with no upgrades done. Finally after cutting it over 15% I told the owner let us at least upgrade the kitchen. We're about to finish that and even in winter time I bet we rent the place in 2 weeks.

OP has some weird angle on this one, I am waiting for his sales pitch. 

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Jeff Copeland
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
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Jeff Copeland
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
Replied Oct 27 2022, 10:52

Here's another example illustrating the reason DOM is a tricky metric and does not capture actual vacancy:

- PM takes 30 days to get unit ready and listed.

- PM Lists Unit

- Unit rents in 7 DOM

- Tenant moves in 23 days later. 

DOM = 7 days

Actual vacancy experienced by owner = 60 days. 

  • Broker FL (#BK3326487)

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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Royal Oak, MI
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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Royal Oak, MI
Replied Oct 27 2022, 12:14

What did the PMC say when you asked them about the 40 day metric?

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Alexander Szikla
  • Real Estate Agent
  • New York City
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Alexander Szikla
  • Real Estate Agent
  • New York City
Replied Oct 27 2022, 13:55

Depends on the market - but in New York, New Jersey and Florida (where I am active), I certainly would!

Typically, units are leased up before the existing tenants leave (they must give 60 day notice as per my lease). Anything beyond 30 days is completely unacceptable in my view. 

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Tyler Lingle
  • Real Estate Broker
  • Indianapolis, IN
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Tyler Lingle
  • Real Estate Broker
  • Indianapolis, IN
Replied Oct 28 2022, 10:52

Besides rental price and advising the owner to do more work / clean up on the property, what levers for marketing does a good PM company employ @Matt Speer?

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Matt Speer
  • Rental Property Investor
  • Indianapolis, IN
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Matt Speer
  • Rental Property Investor
  • Indianapolis, IN
Replied Oct 28 2022, 11:00

@Tyler Lingle great question. “The proof is in the pudding” as the say. At the end of the day investor care about 3 things when hiring a PM 

(1) Profit and ROI

(2) Good communication and overall experience  

(3) Peace of mind 

Most questions about tenant/applicant qualifying, leasing process, maintenance process, fee structure, etc. are all centered around the question "will I make the ROI I'm looking for?".

Next, it’s not ALL about the money. The experience matters. I want to be informed and be in the know. A good PM balances communicates the good and the bad updates and likely leveraged some technology to do this. 

Peace of mind is the last piece of the puzzle. Is my PM changing the furnace filters, checking in on the property and do they have integrity? If yes, you can be at peace and let the pro do their job. 


Thoughts? Did I miss anything? 

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Tyler Lingle
  • Real Estate Broker
  • Indianapolis, IN
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Tyler Lingle
  • Real Estate Broker
  • Indianapolis, IN
Replied Oct 31 2022, 08:32

@Matt Speer I agree completely that communication and peace of mind are a HUGE part of it. Main thing I'm curious about is, I think rents / property itself decide if it's vacant or getting leased, NOT management. Thoughts? 

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Matt Speer
  • Rental Property Investor
  • Indianapolis, IN
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Matt Speer
  • Rental Property Investor
  • Indianapolis, IN
Replied Oct 31 2022, 08:38

@Tyler Lingle investors hire property managers to do exactly that — manage the property. So if it needs improvements to rent, a good property manager will explain that to a client and coordinate turnover improvements. Also - the only other lever is price. If an owner doesn’t want to make updates, lower the price. 

I think technology and the burgeoning consolidation in the PM industry will cause there to be a major raise of the baseline standard of quality service a PM will need to provide. Some will step up and succeed. Others will do nothing and start to lose business, eventually failing altogether. 

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Tyler Fontaine
  • Property Manager
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Tyler Fontaine
  • Property Manager
Replied Nov 1 2022, 09:30

Answering question 1. I wouldn't say to immediately fire your PM. Some things to consider... The average days on market will vary depending on the where it is; the season that you are in (late November to February are tough - holidays, weather changes, etc.); the pricing strategy behind the rentals; what price point are the rentals looking to achieve (if it is at or above market rent it may take longer to find a tenant. My question then becomes, what's an extra week or two to rent it if you are going to get the best cashflow situation possible?); I'd also say the asset class matters - if a PM manages mostly "A class" units, you generally have a lower number of qualified applicants who are looking for that specific product.

Moving to question 2. Some things to look for are the systems they they have in place. How do they collect rents, pay vendors, issue notices, handle evictions, tenant qualifications for placement, how are maintenance issues addressed, is there in house maintenance or is it all third-party vendors, and so on.

If the PM is just a good sales person... they wont last. PMing is a relationship/teamwork game between investors and PM's. Good PM's will have references, reviews, multiple case studies they can point to about their business, their systems will be tight and transparent. Credibility should be easy to discover by asking the locals in your area about a specific group.

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Eric Fernwood
  • Realtor
  • Las Vegas, NV
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Eric Fernwood
  • Realtor
  • Las Vegas, NV
Replied Nov 7 2022, 10:25

Hello @Matt Speer,

If the market average for similar properties is 90 days, your property manager is doing an excellent job. If the average is ten days, further investigation is required.

There are other considerations.

  • Competition - Your property must be perceived by at least one qualified tenant as the best option for them. If not, it will not rent. You can lower the rent or enhance the property to be better than the competition. Which is the better option is a spreadsheet decision.
  • Market-ready condition - If your property is not market-ready, it won't rent for market value or to a tenant you want. Many times I noticed some would be good properties that had been on the market for a long time. Frequently, I found properties that were not clean, had weird smells, damaged carpets, etc.
  • Overpriced - Some people think that they can negotiate a higher rent by asking above-market rent. This may work in a white hot rental market. However, it never works in a more “normal” market. When people look for a place to rent, they cut properties outside their price range. People looking for a higher-priced property will not consider your property. It is inferior to others in that price range. Over time, you lower the asking rent to market. But it still does not rent. Why? People disregard it because there "must be something wrong with it." Your only option will be to lower the rent below market. People will then "take a chance" and see the property. Over-pricing the property results in below-market rent and takes longer to rent.
  • Photos - People spend $400,000 or $500,000 for a property. Another $25,000 for renovation, and then market it with photos that look like a crime scene. Your property will just sit on the market unless you ask for below-market rent. Only quality photos of a clean, rent-ready property will attract people willing to pay full market value. You cannot afford to save money on marketing photos. Spend $100 or $200 and hire a professional real estate photographer.
  • Marketing - Your property manager's job is to get your property on every relevant real estate site. If the property is overpriced, the photos are not high quality, or it is not in market-ready condition, your property will not rent.

Other thoughts

  • How long did your property manager predict it would take for the property to rent?
  • What do you believe another property manager would do differently so the property would rent faster?
  • Check the management agreement. You may not have the option to cancel the contract without paying a fee.
  • Talk to your property manager. Ask them why the property hasn’t been rented.
  • Did you follow the property manager’s rent recommendation?

I hope this helps.

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Alyssa Dyer
  • Rental Property Investor
  • Oklahoma City, OK
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Alyssa Dyer
  • Rental Property Investor
  • Oklahoma City, OK
Replied Nov 25 2022, 17:39
Quote from @Matt Speer:

Serious, yet simple questions: 

Question 1: If you found out your property management company had an average days on market of over 40 days would you immediately fire them and look elsewhere? 


Question 2: 
If you answered yes, to question 1, what do you look for in a new property manager? 

Question 3:  How do you know your new PM isn't just a good salesperson?

Man, without context it’s tough. real estate isn’t usually black and white. 

who sets the rent rate?
what’s their leasing criteria?
what’s going on with the market? 

ultimately, if it’s high I’d say it’s worth having a conversation with the PM. But I’d make sure it’s a conversation, not an interrogation. Communication and clear expectations (from manager and PM) are important for a property to perform and the investor to feel good. 
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Henry Lazerow
  • Real Estate Agent
  • Chicago, IL
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Henry Lazerow
  • Real Estate Agent
  • Chicago, IL
Replied Nov 25 2022, 17:55

What program are you using to gather this data? Very cool. 

My brokerage managed 1100 units. We market listings month and half before a tenant leaves and run under 3% vacancy. We just do north side chicago which is class A/B markets. 

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V.G Jason
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  • Rental Property Investor
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V.G Jason
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  • Rental Property Investor
Replied Nov 25 2022, 18:07

There's too many variables to simply point at DOM. Were there renovations, what's the relative market like, do you have stringent leasing policies(min FICO score, no pets, no guests), are you priced too high?

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Jonathan Klemm
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Jonathan Klemm
Pro Member
  • Contractor
  • Chicago, IL
ModeratorReplied Nov 28 2022, 04:51

Hey @Matt Speer - I feel like there is so much additional context needed to answer your question properly.  What is the typical least up rate for your market?  What is the typical lease-up time for your PM?  What is the condition of the property?   What kind of neighborhood is it in?  Is it priced right?

I know when I am looking for a PM here in Chicago, I ask a plethora of questions and then ask for referrals.  The best property managers are system and process-driven individuals and companies.