All Forum Posts by: Greg Weik

Just posting this again because it's the right answer.  PM already did his due diligence and legwork, and you have to be able to fire clients who do not share your ethics.   #gregwisdom  

@Elizabeth Schartman any of those unattended showing software programs are a terrible idea.  Check out my website blog to see a lot of detailed information on the topic.

It's commonly believed that there is "little money in rentals" for property managers.  I find that to be roll-on-the-ground hilarious, and here's why.

If you manage 500 properties at a $150/month management fee, I'm pretty sure that's $75,000/month revenue.  A month.  With hardly any overhead. 

So if a PMC has a new account or a vacant door that needs to be rented, they need to get their butt out there and rent that sucker!  :) 

The only business model that motivates a PMC is a model that takes commission out of the equation.  Showings simply have to be a sunk cost, something baked into the (overhead) cake, so they can send someone out to show properties as often as needed without any consideration for the cost to the company.  The problem is that most PMCs have a commission-based business model and most PMs are lazy.  :(  

Hi @Kelly Rao, we compete with Nomad in the Denver property management market, so I'm familiar with their business model. 

The short version is this:  If you're willing to pay (considerably) more for the security of guaranteed rent, they are probably worth hiring. Just keep in mind you are paying a significant premium for that peace of mind. 

My personal opinion is that a competent Property Management Company (PMC) will not need any gimmicks.  A competent PMC will simply rent your property to the best tenants -quickly- and they will charge a nominal fee to manage your investment property with competence. Your rent will roll in each month and you will be kept apprised of everything you want to know about (maintenance, renewals, etc.) 

There are a lot of gimmicks out there, such as eviction protection plans, free maintenance plans, etc. and Nomad is well aware that "guaranteed rent" sounds like a great selling point.  I tip my hat to their next-level gimmickry. 

The truth is, all rent is almost always entirely guaranteed.  A good PMC screens for and attracts the right tenants, for a much lower price. I say that as someone who has managed thousands of properties in a 15-year time frame.  It's exceptionally rare for rent to not be paid, especially to the point of having to file an eviction.  With Nomad, you're paying a lot of extra money for a guarantee that is not necessary with skilled and experienced property management combined with masterful recommendations for property condition; i.e. what a property needs in order to be rent-ready to the degree that qualified candidates will be attracted to rent the property. 

If it seems to be good to be true, it is. 

If you're shopping based on price primarily, the biggest differentiator will be company culture. What do the companies value?  

We pick up clients often from our competitors.  Those clients who shopped initially based on price or name recognition realize down the line, that other things were more important to their experience as a client of a PMC. 

Reviews are important, but the truth is far more nuanced in most cases. Many companies pay 3rd party reputation management firms to flood Google with 5-star reviews.  

Some examples of things that might not make it to a spreadsheet analysis:

-How do they treat tenants?  Any extra fees for paying rent online, maintenance requests, etc.?

-How responsive are they to clients?  Can you text them, call them, email them, and expect a human to respond or answer quickly?  Will that human have answers or will it be an answering service?

-How clear is their accounting?  This is a big one.  When clients have questions about their accounting, it seems that a lot of PMCs give the brush off or "we'll get back to you" and this can be a huge pain point when working with a PMC. 

As @Nathan Gesner said, marketing is a big part of this equation as well.  Have you looked at the marketing methodology and media used by each company?  I would assume they are probably very different.  Do they both do in-person showings, or does one or both companies utilize unattended showing technology?  What about video virtual tours?  Tenant application fees and "admin fees" for tenants to lease a property?  You need to know not only where they market, but how they respond to prospective tenants and how they conduct showings, as well as their screening criteria. 

California is a lot like Colorado.  It's easy to put tenants in a property (usually), but hard to get rid of them.  Marketing and screening are big parts of the puzzle. 

Hi @Juan Rodriguez, absolutely you can do it that way.  In reality, it isn't a new lease, it's an extension of the previous term.  

Inspect the property for any lease violations (and a clean AC/furnace filter) and if all looks good, send the tenants a DocuSign lease extension addendum that points to the original document and outlines any changes as well as the extension period.  

@David Siegel The only question you should concern yourself with is "are they qualified?"  If they meet your rental criteria and have a solid app, sure, why not cut them a small deal.  

In my experience, no tenant offers a full year upfront if they are qualified.  This type of offer is a major red flag to the professionals, and for good reason.  

@Brian Black - Good PMs don't need to charge an arm and a leg to deliver the goods.  Unfortunately, most PMs aren't good, and you pay for their inefficiencies. 

One thing to note, however, is that the quality of YOUR portfolio makes a big difference in terms of a PM's willingness to negotiate their pricing.  Keep in mind, that while you may be adding doors, it doesn't diminish the work-per-door your PMC is doing.  I don't know you, but if you are a difficult or needy owner, that could play a role.  

Quick anecdote:  Recently, a PMC came up on the market for sale in my area.  The PMC was slightly smaller than mine but had MORE THAN THREE TIMES the employees.  That same PMC could not compete with us on: -Price, -Marketing reach or marketing quality, -Responsiveness, -Any other deliverables.   They were, out of necessity, charging considerably more for their services, while being less profitable to boot. 

I hate it when people say "you get what you pay for."  That's one of the worst cliches of all time.  It gives cover to those who overcharge. My G Wagon was expensive but is a POS! 

Fees: 

-Tenant Placement: We charge $500 tenant placement (1 door under management) or FREE tenant placement (>1 door under management). We do advertise in the MLS @Drew Sygit, primarily because we benefit from the syndication channels.  We offer a $25 commission to Realtors who show our rentals (and many still show them!)  In fact, one just came across my email...

-Monthly: 7%, capped at $149 on the high end, $99 on the low end. 

-Annual fee $200 (1 door) or $100 (per door if >1 door managed). 

-No maintenance markups.  No fine print.  We've been in business for nearly 15 years now and we have hundreds of solid Google reviews.  4.2 overall. We haven't paid for marketing in years, but we still add over 100 doors/years.  It can be done. 

Sell your properties in Indy and buy in Denver, we will take care of you!  ;) 

.

Quote from @Grant Farrington:

Our tenants just moved out. The first floor is about 580 square feet, and the flooring is bamboo. Bamboo is a fairly soft flooring as far as wood floorings go, so to help prolong them, we do have a no pet policy. Our tenants got around that by having a large pitbull as an ESA. Upon moving out, the floors are covered with divots and indentations all over the floors. It looks like the finish is just scratched, but each scratch is actually a depression in the flooring. The only fix would be to have the floors sanded down and refinished, or put down new flooring.

Does this go beyond normal wear and tear? Through 4 others tenants the floors have been fine, and you can clearly see where the couch was sitting in the living room because that is one of the only spots where there aren't any scratches.

Any advice is appreciated! The property is in Ohio if that matters.

 Hi Grant, how is your move-in/move-out documentation?  It needs to be EXCELLENT for you to have a chance at a claim like this.  Crystal clear move-in photos of the areas in question and crystal clear move out photos of the same areas.  If it's not, cut your losses and chalk this up as the cost of education. 

Our policy:  If an owner allows pets, then light scratches from animal claws are ordinary wear and tear.  If they allow pets on a bamboo floor, then the divots you speak of would fall into the OWT category as well. 

What you're asking, however, is a legal question that no one can answer with certainty.  Likely not even an attorney can definitively answer this unless they can find case law that covers this exact scenario.  And even then, you would need the unassailable move-in/move-out documentation I alluded to above. 

If you've got great documentation, I would move forward with a claim.  I don't believe solid floors - even bamboo - can be reasonably assumed to have a depreciating lifespan, such as carpet and paint would.  I think there's a strong case to be made that you should be made whole, with new bamboo replacement floors.  Depending on that cost, I would consider consulting an attorney. 

Like many things in PM, it's a question of degree.  How much time and energy are you willing to spend fighting for this?  

A lot to unpack in this thread.  PM Companies are all very different, in terms of fees and services. 

-I hear DIY landlords tell me all the time that they are "good at tenant selection" - as noted above, eye contact, handshake, etc.  The bottom line on that is no DIY landlord has the empirical data to know if they're good or just lucky.  As a PMC with thousands of doors to draw experience from, we are actually, objectively, good at it.  Our criteria and selection process are never going to be rivaled by a "DIY handshake" landlord. 

-I absolutely help my clients identify their next rental investment properties, and I do it for free. It takes me only a minute to look at an address, determine what it will rent for, and draw from our vast portfolio of nearby properties to give the client some insight into what type of tenant applicants we are likely to see for a given property.  I know that if they buy the right property for us to manage, it's a win-win.  No reason for me to charge for this good-faith gesture on my end.  No one has a better front-row seat of which investment properties succeed or fail than a seasoned property manager.

-Fees:  they range quite a bit from company to company, but we place tenants for free once a client brings 2 or more doors for us to manage.  With a single door, tenant placement is a nominal $500.  Monthly management is 7%, capped at $149.  The only other fee is a $200 annual fee on 1/1.  For that, our clients get the best service and results in the industry, hands down.  Other companies charge more because they have to... because they are generally inefficient. They also pay their in-house PMs commission, which necessitates higher prices to the client. PM is all about systems and processes and technology, and most PMCs are stuck in 1995.

-To the OP @Chris Lo - the reason most DIY landlords don't hire PMs is that they often step over dollars to focus on pennies.  Most DIY landlords in my experience do not have the right philosophy on building true wealth through rental property ownership.  They often see a PMC as an "added expense" and believe they could "do that themselves."  Many DIY landlords do manage their properties successfully themselves - at least for a time - and they believe this is proof they "know what they're doing."  But... many of those same DIY clients end up coming to RES, hat in hand because at some point the wheels have fallen off and they don't know what to do. 

Rental property wealth (if you're doing it right) happens with appreciation and not strictly through cash flow.  Cash flow should be money in the back to prepare for the rainy day.  I've trained most of my clients over the years to trust the process, to trust that RES has their back, and to not sweat the small stuff.  

When you own a rental, there will be repairs, there will be vacancies at times, there will be problem tenants.  But when you look back over a 5 or 10 year period and realize the appreciation you've gained, you then realize that the PM company was there all along to manage the small stuff and they were worth more than you paid them.  

Time is your most important asset - even when it comes to a rental property.  If you value your time, find a good PMC who can give it back to you for a small fee.