Property Manager with affordable tenant placement in Minneapolis

Investor · Duluth, MN · Member since 2015 · 70 posts · 22 votes

I used to own 4 rentals in west Texas. My property manager only charged $300 for tenant placement. I understand that I probably can't get that rate in Minneapolis, but I honestly feel that a full months rent for tenant placement is highway robbery. Does anyone know of any managers or management companies that are actually reasonably priced in the Metro? If not I may just have to start a property management firm and crush the competition.

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Amber Gonion

Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes

@Forrest Holden prices vary here in Mn, larger companies charge more and you may get a great PM or a crappy one as they have dozens. Our prices are $75/unit per month and 1/2 month rent for placement.

What you are paying for is #1 ensuring you are not sued for unknowingly violating fair housing laws, #2 ensuring your property is priced correctly according to comps, the best property manager cannot fill a unit with good tenants if it is $300 over market rate. #3 properly market your property accentuating the positives of the property. Peace of mind knowing that maintenance, both preventative and emergency maintenance are taken care of.

Questions to ask your prospective PM are what is your fair housing training besides the CE credits for your RE license, what certificates do you hold, how much experience do you have, what is you maintenance crew like (what kind of experience, how many, after hours?)

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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
3y
@Forrest Holden, step 1 you need to become a real estate agent. Step 2 get enough experience and education to become a real estate broker. Step 3 open your own real estate brokerage with all of the costs for things required for licensing like an office, errors and omissions insurance etc.
https://www.propertymanagement...

The property manager you paid $300 to was probably an illegal under the table person doing property management.

For the work involved in tenant placement, many agents (myself included) don't even want to do the work for 1 months rent. Keep in mind that agent is likely splitting that fee with their broker. So, they might get as little as half that fee... OR if they put the listing on the MLS and another agent represents the tenant as little as 1/4 the fee.

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James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
@Forrest Holden I find it interesting that you used the phrase ".... reasonably priced".

The "average" monthly rent in my managed portfolio is ~$2,400 mnth, that's $28,800 revenue in a 12 mnth lease. How "reasonable" does $300 expense to get $28,800 seem? That's a 96X multiplier, seems a bit more "ridiculous" than "reasonable" to myself.

To be more accurate, the "average" being 3yr lease, WITH a automatic annual rent increase (because we are pro's at this and actually know what were doing", it's more accurate to say $90,792.00 gross revenues for..... $300.00.......

To reiterate what @Kevin Sobilo stated, to provide Property Management services the MINIMUM requirement is to be a R.E. Broker, which requires to carry specific insurance policies, offices, software systems, licensure expenses, continuing ed expenses, and this just get's on the ability to exist, that's it, just to exist. On top of this if your half-azz decent you have; tens of thousands in annual legal fee's for annual contract reviews and refinements per what has come to pass in the year, compliance staff to keep on top of all the various compliance changes in every municipality of overlapping control (city, county, state, federal).
And than we get into the "fun" things like how to operate a website that drives millions of traffic weekly, so one can actually FIND a tenant, the various software systems to pre-screen persons, schedule showings, operate lease signings, and on and on and on.
There is a reason why the fee's are rather universal at what they are, and why those who come out with a "discount" service, rather universally go under in a matter of months.
A complaint that $2,400 fee for; all the marketing, advertising, showings, contracts and contract signings, background checks, inspections etc etc etc not to mention ADVISORY. To say this is "ridiculous" fee in exchange for $28,800 - $90,792, that statement stands out as the most "ridiculous" item to myself. Yeah, I'd say $2,400 for all that is WAYyyyy "reasonable" if not well UNDER-priced.
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Daniel Anshus
Realtor · Bloomington MN (bloomington, mn) · Member since 2016 · 451 posts · 263 votes
3y
@Forrest Holden 1 months rent is typical in this market. I do know a good PM service that charges a flat rate but for a lot of properties it is actually more than 1 months rent. Thankfully in the minneapolis area it is super easy to place your own tenants as vacancy rates are so low you will usually have multiple people trying to rent your space.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
Las Vegas also charges $300 for a tenant. Even a $3,000/mo 3 year tenant because they also plan to make 8% of that $36,000 per year as well. So you’re $2,880 + $300 or $3,180 for $36,000. That seems plenty high. Certainly there's should be no need to pay $3,000 plus $2,880 or almost $6,000 for $36,000 in rent. 17% seems excessive.
I did pay MN renters warehouse a full month’s rent in MN 7 years ago for a tenant that’s still there. BUT! They guaranteed the first 3 years of rent and they only charged $89/mo instead of 8%. So the first year I paid $3,000 plus $1,070 or $4,070 the first year for $36,000 (11%?). But the next 2 years only cost me $1080 for $36,000. 3% total PM costs. The upside to higher end rentals is I cancelled their service 4 years ago and as mentioned the tenant is still there at no cost. Either they got lucky or did a great job and I’m grateful.
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James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Bill B.:

Las Vegas also charges $300 for a tenant. Even a $3,000/mo 3 year tenant because they also plan to make 8% of that $36,000 per year as well. So you’re $2,880 + $300 or $3,180 for $36,000. That seems plenty high. Certainly there's should be no need to pay $3,000 plus $2,880 or almost $6,000 for $36,000 in rent. 17% seems excessive.
I did pay MN renters warehouse a full month’s rent in MN 7 years ago for a tenant that’s still there. BUT! They guaranteed the first 3 years of rent and they only charged $89/mo instead of 8%. So the first year I paid $3,000 plus $1,070 or $4,070 the first year for $36,000 (11%?). But the next 2 years only cost me $1080 for $36,000. 3% total PM costs. The upside to higher end rentals is I cancelled their service 4 years ago and as mentioned the tenant is still there at no cost. Either they got lucky or did a great job and I’m grateful.

With Renters Warehouse, there is 2 completly seperate services on PM side of things: There is Tenant Placement (TP) which is what I referenced. YES, RW does that and that alone for self-managed properties. Maybe 40% of portfolio engages in this. And then Property Management which is compeltly seperate, currently $109 in Twin Cities monthly.

NOT trying to advertise or market here, just equip to explain and facilitate your math of things.

So yes, a person can do ONLY TP and get that $28k-$90k rev for only the ~est$2,400. OR can also do the PM.

I get that some companies like to skew the math of things ay look, they only charge $300 TP fee IF you go with there outrageously over-priced PM service. To me that's just a form of scamming.

We stand on our TP fee as fair rate for superior results.

On PM fee, we stand on that, alone, of it's own merits and fee in connection.

I call that clarity and transparency. The others mentioned giving "teaser" rates on this for also doing that, it's all just way to scamy to pass my sniff test. And I hold this true of ALL PM's, when they have clear-cut transparency in what they offer and fee's that indicates professionalism and experience. The ones doing teaser rates and all these scamy pricing games, yeah, there is a reason for it.

And to what you said Bill, I advise everyone START with best quality PM they can find, and then LEARN, adopt, get things down where they can self-operate, ride that coat tail. Every landlord being more professional is best for ALL of us, so i am happy to have a client say there canceling after a year of learning, awesome! just like i am happy to retain that client that says they figured it all out and DON'T want to do any of it, lol. I love them because they "get-it" of all the crap our Pm team wades through on a daily basis, they value us.

So, happy for those to learn and grow to leave the nest. But free it ain't, and seek to pay slave labor cheap, well, your gonna get what you went for. Scamy is how one get's scammed.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Forrest Holden:

I used to own 4 rentals in west Texas. My property manager only charged $300 for tenant placement. I understand that I probably can't get that rate in Minneapolis, but I honestly feel that a full months rent for tenant placement is highway robbery. Does anyone know of any managers or management companies that are actually reasonably priced in the Metro? If not I may just have to start a property management firm and crush the competition.

It's not so simple. A lot of cheaper property managers are cheaper for a reason.
I'm certainly the most expensive in my market. I'm the only one that charges a fee for new leases or lease renewals, I charge a higher monthly fee, I keep pet rent and late fees, etc. An owner with a $1,500 rental might pay me double what they will pay my "competitor" charging 8% and no additional fees, but the quality of service is significantly lower and will likely cost them more in the long run.
I've seen many new property managers start out with the idea that they'll charge lower fees, build a huge business, and beat out the competition. Just like discount sales agents, their plan only works for a short period of time.
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Tracy StreichPro Member
Real Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votes
3y
Would you do it for someone else for $300? I often find you get what you pay for.
[email protected]918-728-8080
1 Reply
Justin Rademacher
Real Estate Agent · Member since 2022 · 61 posts · 31 votes
3y
A good property management company is worth their weight in gold. So what you may "give up" in expenses, you should easily recoup in ROI. For example, a great property management company may charge one month in lease up fees, that same property management company typically has a very in depth vetting process. This will save you money and headache down the road with "misplaced" tenants. ROI isn't always just about the return of money. Time freedom is important to consider. The less time you have to deal with vacancy, the more time you can spend on expanding your investment portfolio.
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Forrest HoldenPro Member
OP
Investor · Duluth, MN · Member since 2015 · 70 posts · 22 votes
3y
Quote from @Kevin Sobilo:

@Forrest Holden, step 1 you need to become a real estate agent. Step 2 get enough experience and education to become a real estate broker. Step 3 open your own real estate brokerage with all of the costs for things required for licensing like an office, errors and omissions insurance etc.
https://www.propertymanagement...

The property manager you paid $300 to was probably an illegal under the table person doing property management.

For the work involved in tenant placement, many agents (myself included) don't even want to do the work for 1 months rent. Keep in mind that agent is likely splitting that fee with their broker. So, they might get as little as half that fee... OR if they put the listing on the MLS and another agent represents the tenant as little as 1/4 the fee.

Actually they were a licensed broker and nothing was under the table. They were just extremely efficient in a geographic location where the cost of labor and the cost of living is substantially lower. They managed my properties for years with no issues. A property manager can also be extremely successful without listing on the MLS in some geographic locations. I'm just tired to seeing managers that charge 1 months rent for tenant placement and a monthly fee when all they do is place a tenant and collect rent. Luckily I believe I have stumbled upon an outstanding property manager that provides A LOT for a reasonable price. Nothing even close to what I got in West Texas but I understand that prices are higher here and that you get what you pay for.
1 Reply
Wendy Man
Member since 2019 · 104 posts · 35 votes
3y
@Forrest Holden Who did you end up finding? Please feel free to direct-message me if that works better. Thanks.
0 Reply
- Forrest HoldenPro Member
  OP
  Investor · Duluth, MN · Member since 2015 · 70 posts · 22 votes
  1y
  Quote from @Wendy Man:
  
  @Forrest Holden Who did you end up finding? Please feel free to direct-message me if that works better. Thanks.
  
  I know this was a long time ago but I will still respond. https://www.rpmviking.com/
  They will not take on low quality properties and will not work with everyone but they have A LOT to offer. I am no longer buying in the Twin Cities though, things seem too inflated and I have found a new market.
  1 Reply
Wendy Man
Member since 2019 · 104 posts · 35 votes
3y
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3y
@Forrest Holden perhaps it would make more sense to make sure you FULLY understand what each PMC you interview ACTUALLY does to earn their tenant Placement Fee.

We do a lot more than at least 50% of our competition to earn our fee.
For $300 no PMC is going to put your property on the MLS to get itmax exposure with other agents.

Also, with the rental market finally slowing down, how wise is it to go with the cheapest company instead of the best?
[email protected]248-209-6824
Logical Property Management4.9459 Reviews
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Justin Rademacher
Real Estate Agent · Member since 2022 · 61 posts · 31 votes
3y
@Wendy Man Absolutely. We have a few that we highly recommend around the area. Shoot me over your email either in this thread or a DM and I can send you some of the ones we use if you need them.
0 Reply
Amber Gonion
Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes
3y
@Forrest Holden prices vary here in Mn, larger companies charge more and you may get a great PM or a crappy one as they have dozens. Our prices are $75/unit per month and 1/2 month rent for placement.
What you are paying for is #1 ensuring you are not sued for unknowingly violating fair housing laws, #2 ensuring your property is priced correctly according to comps, the best property manager cannot fill a unit with good tenants if it is $300 over market rate. #3 properly market your property accentuating the positives of the property. Peace of mind knowing that maintenance, both preventative and emergency maintenance are taken care of.
Questions to ask your prospective PM are what is your fair housing training besides the CE credits for your RE license, what certificates do you hold, how much experience do you have, what is you maintenance crew like (what kind of experience, how many, after hours?)
4 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Nathan Gesner:

Quote from @Forrest Holden:

I used to own 4 rentals in west Texas. My property manager only charged $300 for tenant placement. I understand that I probably can't get that rate in Minneapolis, but I honestly feel that a full months rent for tenant placement is highway robbery. Does anyone know of any managers or management companies that are actually reasonably priced in the Metro? If not I may just have to start a property management firm and crush the competition.

It's not so simple. A lot of cheaper property managers are cheaper for a reason.
I'm certainly the most expensive in my market. I'm the only one that charges a fee for new leases or lease renewals, I charge a higher monthly fee, I keep pet rent and late fees, etc. An owner with a $1,500 rental might pay me double what they will pay my "competitor" charging 8% and no additional fees, but the quality of service is significantly lower and will likely cost them more in the long run.
I've seen many new property managers start out with the idea that they'll charge lower fees, build a huge business, and beat out the competition. Just like discount sales agents, their plan only works for a short period of time.

Never been more true a statement:
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