All Forum Posts by: Caroline C.

@Jennifer Ryan here are some of the things we look for:

- understand their business: how old, how big, etc

- properties: what types do they manage, avg rental amount range, avg lease length, vacancy lengths

- fees: onboarding, tenant placement, monthly, renew fee, inspections, etc

- tenant screening: in house or no, how screen, how many past landlords contacted, does owner have word in final say

- collecting rent: process for late rent, collection, eviction

- maintenance: in house or no, how do they communicate with owner, do they hold maintenance fund, process for major repairs

- Misc: online tools for owner and tenant, how do they pay owner, what day of month do they pay owner

Also, make sure you don't sign a contract that locks you in for a year. If you are unhappy, you should have the ability to exit within a reasonable timeframe.

@Bryan Hogsett we have 2 condos and 1 house in the Tamarindo area in Guanacaste, and they all make money. Overall occupancy is less than we originally thought and startup expenses were high, and there are new VAT regulations that are increasing prices across the board, but so far there have been enough bookings to offset all expenses.

@Zoe Lee I've worked with some PM's that hide this and some that show this. They all generally keep the late fees, so that is not negotiable - it is part of their business model and how they make money, especially when dealing with lower end tenants that pay low rents and therefore they receive low monthly PM fees from the owners. I once worked with a PM that split the late fees with the owner, but that is not typical.

However, late fees should only be taken by the PM LAST, after the owner is fully paid rent for the month. Incoming funds from the tenant should be considered 'rent' until rent is caught up and then anything else collected should be considered 'late fee'. Late fees continue to accrue each day and the PM will eventually get paid all the late fees when the tenant catches up - this is their incentive to try and collect the late rent and late fees. Sometimes they forgive late fees or don't collect it, but that is on them and again should be after the owner is paid full rent for the month.

Yes, sometimes mistakes are made, and even if the accounting can't be 'reversed' after the fact, if you know the amount of the late fees that were taken by PM instead of paid to you in rent, they should be able to make new adjustment entries to fix it.

If PM takes income as late fee before rent is fully paid for the month, or if their accounting system doesn't let them fix mistakes like this after the fact, you need to find a new PM.

One other thing, I think it has been mentioned, but if tenant never fully catches up, then their effective monthly rent is higher than what you are receiving each month since the late fees accrue each day until they catch up. When I've worked with PM's that share the late fee balance in their online portal, and tenant was close to catching up, I've been able to step in and ask whats going on, and ask PM to forgive some of the late fees to get tenant back to $0 balance.

@Robin Gravlin you aren't so much 'leaving cash in a company' as 'leaving cash in a property'. TK is just a shortcut. At the end of the day you have a property with tenants in it and property management. Due diligence on the property, such as inspection, appraisal, personal visit is key. Don't close until all these things are done. You should do this with ANY property you buy. Property management is key to a good long investment, so do a deep due diligence on that as well, don't lock yourself into a 1-year commitment, and don't hesitate to be hands-on and proactive with them, and then switch if you find it necessary.

@Rich Lazaro that is exactly the problem with property management in general. They seem great when the tenant pays their rent on time every month. But then when the tenant moves out, you find you are unhappy with the upkeep of the house and the PM's management of the turnover and getting a new tenant. 

Unfortunately that is the way it goes a lot of the time, and we found that we have to be very hands on and proactive with our property management to ensure things are being handled proactively and to our standards. For instance, we always insist on a inspection and walkthrough 3 months before end of lease to ensure proper upkeep. Also, we don't hesitate to change PM when we have been unhappy, which we've done several times.

In the sales process, you really have to dig deep to get references from customers that have had multiple turnovers and problems to be addressed to get a sense of how they operate through problems.

@Bryan Hogsett congrats! We looked into some developments where you buy raw land and the developer builds the house, but decided to keep it simple and go the condo route instead. They custom builds can be really nice though, especially with a pool and a good sized lot. 

We plan to spend a lot of time in CR ourselves - our youngest child is just off to college, so we are spending a month there now, and hope to make longer trips in the future! 

What region is your spot?

@Mark Miles It is worth paying something extra for a unit that is completely ready to go - furnished properly and has all the right supplies in place, since that can be costly when you start a STR from scratch. It is not worth paying extra for the reviews since they can't be moved over. When I bought my first unit, it had STR history that could not be moved over, so for the first 6 months, I simply put a link in my listing to the old inactive listing so that people could read the reviews under the prior owner.

@Sharls Alexander Join JAX-REIM online. Also schedule a trip to Jax to attend a JAX-REIA meeting in person. Best ways to meet people in the market.

@David London GC was hired by the PM, then you should hold the PM accountable. Tell PM it is unacceptable and that you are looking for a new PM that can handle managing rehab projects because your current PM clearly cannot. Remind PM how much lost income you have by missing the fall semester deadline - how much you are paying EACH DAY in holding costs. I'd be looking for a new PM right away. Also, don't sign PM contracts that don't allow you to cancel without 30 days notice.

@Luis Velez since you are planning to buy with HELOC, make sure you set enough aside enough funds for reserves. When you buy a $50k property, you may encounter repairs needed or costly turnovers, and perhaps sooner than you would think. Cash flow on those properties are great, but poor or late rent collection and managing repairs can eat up all the cash flow and sometimes you have to dig back into your own pocket. You need to do a thorough due diligence on your property manager.