Managing Property Manager

[Katie Cooke]

As new, out-of-state real estate investors with two duplexes in Dayton, Ohio, we are seeking guidance on the appropriate level of involvement with our property management (PM) company. We are currently navigating the balance between being informed owners and not micro-managing.

Specifically, we have a tenant who consistently pays rent late. While they do eventually pay with a late fee, we would appreciate some insight into the best practice for monitoring such situations. Is it standard to request monthly updates on late payments, or is it more appropriate to trust the PM to handle the matter as long as the rent is ultimately collected? Our goal is to stay informed on the business operations without interfering with the PM's responsibilities.

Additionally, we would like to understand the typical protocol for receiving updates on property repairs. We currently request progress photos (before, during, and after) and find ourselves frequently following up for status updates on projects. An example, almost 8 weeks ago we approved a repair that we still are not sure has been completed. We have reached out a couple of times regarding this issue and keep being told they will reach out the contractor for an update, and then we do not hear anything back. We also have some reservations about the contractor used by the PM for minor repairs. Could you please advise on what is considered a reasonable level of communication and oversight for repairs to ensure quality work without overstepping?

We want to have a professional and productive relationship with our property manager and want to ensure our involvement aligns with industry standards. Any advice on the proper etiquette and how to identify the line between engagement and micro-management would be greatly appreciated.

Thank you so much!

[Drew Sygit]

@Katie Cooke as @Arman Ahmed already posted, this is all relatively normal.
- Not sure why he's self-promoting though, as that may get him temp banned.

Hopefully, your PMC has an online owner's portal - that they actually use!

You should be able to see tenant balances and payment dates there.

Regarding micro-managing, recommend you spend some time with your PMC and ask them to send you their applicable processes to you in writing. If you understand how they are handling your properties, you may not feel compelled to micro-manage as much:)

The challenge will be getting those processes in writing as many PMCs don't take the time to do this - even for training their staff:(
- If you'd like a basic outline of some PMC processes, check out our website where we share many - and no this is NOT a solicitation for your business as we are only licensed in Michigan.

Some other thoughts:

Late Payments: many tenants pay late, because they live paycheck-to-paycheck. Nothing to worry about, but do monitor if they are paying later & later each month. 
- What's more important is to have a clear understanding of the PMCs eviction process. When do they send eviction notice? When do they send to attorney to file court case, etc. How do they keep you informed and what input do they allow you to have?

Repairs: this is the BIGGEST PMC-Owner challenge! Many PMCs are terrible at keeping owners updated:( Often, an owner doesn't find out about a maintenance issue until they see the charge on their monthly statement. Owners are partially to blame also as we try to engage our clients in the process of determing what to repair and what not to - and many either ignore us or tell us to just do what we think is best, but then later complain expenses are too high.
- FYI: we do our best to take a before video and an after one. For larger projects we also try to send 1-2 in-process update videos. 

Hope that all helps, but now let's address the REAL problem - why didn't you screen this PMC better and address all this BEFORE hiring them? 
- We see this all the time, which is why we've got this copy & paste advice below with links to blogs we've written here on BP:)

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In our experience, the #1 mistake owners make is ASSUMING all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY.

So, owners mistakenly think price is the only differentiator – and look for a PMC like they’d shop for groceries☹

We encourage you to learn from the mistakes of others by reading posts here on BiggerPockets from owners that picked a PMC solely by price and regretted it.

We recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Even if someone gives you a referral, do NOT make the mistake of assuming that just because a PMC met their expectations, they’ll meet your expectations. We all have our own expectations and what works for someone else, may not work for you.

If you’re new to all of this, it's often a case of not doing enough research, as you don't know what you don't know!

So, ask more questions!

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!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

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😊

Here’s some articles we’ve contributed to BiggerPockets about screening a PMC BETTER than you would a tenant!

20 Questions to Ask When Vetting a Property Management Company: Processes

13 Questions to Ask to a PMC: Communication and Documentation

24 Questions to Ask When Evaluating a Property Management Contract