All Forum Posts by: Kenny Dahill

Read. Read. Read.  Learn. Learn. Learn!

Don't care if it is BiggerPockets, books or even podcasts.  Managing a duplex should not be too difficult to self-manage.  Make sure you have the proper legal documents, communication channels and know how to perform due diligence on tenants.

Absolutely.

Also, make sure every tenant is responsible for one lease.  I always tell my college renters I only want 1 check, so if 3/4 pay it is your responsibility to get the last 1/4.  That way the burden is on them collectively, and not individually.

BTW, every reference will say they're "good kids".  It's a waste of time, just expect drywall damage.  And as one of my tenants learned, it's not easy to punch through both layers of drywall.

My experience is hit or miss on security deposits.  When their parents pay they want their security deposit back so they clean the house as great as possible.  Without parents, they don't mind destroying the place and walking away from the $500 they each contributed.

Hi @Deodat Ramdat, Detroit property managers are typically very specific about the areas they do or do not manage.  I would suggest you provide more information about the location, the more specific the better.

Also, what's most important to you for property management?  Management fees, eviction experience, managing renovations, etc.

Hi @Billy Bell, my thoughts:

Bad:

•  (2) year term, why not (1) year
• $15 paper advertising.  Random.
• Acting attorney?  Yet they aren't attorney's...  I believe most often they're "agents" of the owner
• 50% recovery fee:  I think 40% is more common
• Tenant flips: Make sure to get an estimate before this occurs, I would prefer fixed costs per project than an hourly rate.

Good: 

• 45-day termination notice is nice, typically is PM (30) and landlord (60). 
• $275 eviction court fee.  Just make sure they must appear in court, I've seen before that they hired it out to a lawyer which then charged the landlord since technically it wasn't the "PM" who represented them in court.
• Maintenance rate: I like they put in their the listed amounted.  Ask what the minimum hours per charge is though.

Hi @Erik Gensler.

First off, congrats on the  28-unit!  Going big on your first property.

My suggestion to anybody in real estate, regardless of type or role, is be honest with yourself.  Real estate is nothing but assumptions, literally starts with our assumptions in pro-forma's.

We tell landlords all the time that there is a property manager for the services you want and cost you're willing to pay.  Buyer beware though!  So before you even consider asking property managers interview questions, consider asking and writing down the answers to these questions:

• How hands on will I be as the landlord?
  • 100% off of, send me the check monthly and we're good?
  • I want to at least have the opportunity to review tenant applications
  • I want to select the tenants
• What actions would cause me to intervene with management?  PM's hate intervening landlords, but sometimes it's needed.
  • Only during evictions
  • Only during maintenance
  • Only during tenant turnovers
• What class of tenants/property is this?
  • If it's lower class then expect higher fees.
  • If it's lower class then expect fewer management firms to be interested
  • If it's lower class then expect vacancy will occur, and don't blame the PM for every eviction
• What's more important: quality of service or cost?
  • You can't have both.  You can hope for both, but one must be a prioirity
• What are my investment intentions for this property?
  • Renovating the property
  • Increasing rents
  • Long term hold, steady rents

The more you understand about yourself, the better odds of finding the property manager who fits your needs.  I highly suggest you write these all out before you even talk to management companies, you're more likely to stick to your agenda if it's written.  This will guide in your interview processes and final decision making. 

For example, if you've decided that cost isn't a factor then you should focus the majority of your interview on inspections, tenants, and service related questions.  If cost is THE decision, cut out the 10% firms and don't waste their time.  Start immediately with the 8% who might not have the best service reputation but they're in your affordability range.

Whatever you do, be honest with your expectations.  Both the property managers and yours.

@Brady Miller, do what you feel most comfortable with since it is your asset, investment and liability.

Take this lesson learned and whomever you select for the next property manager, make sure they agree to your tenant criteria's and due diligence process.  Have them incorporate an addendum if needed.  It might cost you higher fees but if it makes you feel more comfortable then it is worth it.

@Narjodh Singh, before you terminate your contract make sure you completely understand your property management agreement terms.  You might still owe them fees for any tenants that they have already placed for you, whether they're the PM or not.  That could cost you more in the long run compared to timing it with a tenant turnover.

Hi @Brady Miller, lot's to cover and sorry to hear about your difficulties.

Issue #1: Tenants with evictions history.  Hiring a real estate/landlord attorney is the correct move here because regardless what your Property Management Agreement (PMA) says, the law will always supersede.  Every state/city have specific real estate and landlord laws.  Perhaps receiving security deposit is a form of executing the lease.  Or perhaps it's a BS line from the PM so they can move onto the next property that needs leasing.

Issue #2: Overpaid Vendor.  $240 is a ridiculous amount to pay!  Last week I paid $145 for an electric range to have a new mini-electrical panel be replaced and that sounds more complicated.  That was a $65 labor and $80 part, which seemed reasonable to me.  At $240 you would've been better off buying a brand new dishwasher through Lowes!

Read your PMA to understand what limitations your property manager has regarding costs.  One of the questions we always have the property managers address on their proposals to landlords is their mark-up on vendor invoices and whether their maintenance is internal or external.  As @Dustie Zvolanek indicated, a great quality and trustworthy property management firm should be transparent on their maintenance fees.  Majority of PM's don't have mark-ups on their vendor/maintenance coordination.  Regardless if a PM has mark-ups or not, the more transparent the PM firm is the better.  Such as Dustie having a mark-up but clearly sharing the actual direct cost.

You are very early in this business partnership and it doesn't appear to be starting off strong.  Not blaming either party here.  Some management companies are terrible.  Some landlords are difficult.

How realistic is your "0 evictions" policy given the property?  If this is a C-D class property then perhaps you're setting yourself up for failure with a strict zero policy.  My 1 advice to everybody in real estate: be honest with yourself.  If this is D class property then you must expect frequent late fees and occasional eviction.  Or very high vacancy while you search for the perfect tenant.  If you don't want those headaches, invest in A or B class properties.

Add tenant selection / lease clause to PMA:  If you want more control of the tenant selection then have it in your agreement that Brady makes the final tenant selection.  They can't proceed without your approval and you execute the lease.

Ignore their evictions; 10 in 2019:  Their other landlords are not your worry and concern.  Perhaps they manage 1,000 rentals.  10 isn't bad.  Perhaps they only manage D-class properties, prone to higher eviction rates.  Part of being honest with yourself is knowing why you hired this firm.  Which leads me to...

Understand their tenant placement policy, guarantees and eviction policy:  Landlords want the best value and shop management fees.  That's not the full story though.  We purposely have property managers detail their fees and services on proposal to help expose what the landlords are actually buying.  This property management firm might have evictions but who cares if their PMA specifically addresses a tenant placement guarantee and they cover all eviction policies.  Majority don't offer this but the ones who do might charge an additional 1% higher in fees to cover their liability.  As a landlord we see 8% monthly fees, but aren't exposed and aware that the 10% competitor essentially has a "cap" built into their PMA to protect the landlord.  You need to understand the following:

• How often will I be charged a leasing/placement fee max?  1x per year, 6 months, any and every time for a new tenant.  That's important because what if the tenant moves out in 9 months.  That could be another month's rent to the PM or the liability is on the PM to find another tenant with a year lease.
• Will they cover eviction costs?
• Will they represent me at court?

Understand and re-review your PMA:  Do this before the tenants move in, re-read your entire PMA and highlight questions of concern.  Before you get too entrenched with this tenant, make sure you understand every possible way you might incur fees.  What their limitations are and if they have breached anything yet.

**If still unhappy, find a new property manager:  Take this as a learning lesson and now ask specific questions to other interested property management firms.  As Dustie mentioned, their might be a termination clause for being such a new client.  Do this quick!  Some PMA's have clauses that state they earn all fees from a tenant they placed, so you'll want to avoid their tenant moving in and owing the PM a year's worth of fees if you do intend to terminate them.

This is very long but hopefully helpful.  Understand your PMA!  Be honest with yourself.  Have realistic expectations.

@Keith A., we typically see $100-$500 for lease renewal fees.  It depends on the market and average rent though.

However, that depends on your rental rates and whether it's applicable.  If it's a $500 rental property then I can understand why they charge 50%.  If it's a $2k rental property then they should offer a flat rate.  Typically they just want to cover their cost and time it takes.

The best advice is simply ask them why they charge 50% and then purpose an alternative option to them.  Perhaps they lower the percentage or make it a flat rate.  Make sure you have them explain why they charge their rate first though.  As @Nathan Gesner indicated, it's what services you get and cost that equals value.

I haven't personally hired Matt for my own properoties, but I have spoken with him a few times for helping a client of ours.  I liked him and he defintely comes off as professional.