All Forum Posts by: Michael Smythe

What data do you have to support #3 please?

@Johnny Drago what in your management contract required your PMC to get your permission for a MTM lease conversion?

@Alyssa Alayvilla

Encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone give you a referral, don’t make the mistake of assuming that PMC will meet your expectations, just because they met the expectations of the referral source.

We also can’t believe how many owners hire the first PMC they speak with!

Then they complain their expectations aren’t being met!

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

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!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

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😊

Recommend you learn the differences between Class A, B & C properties.

There is no ONE definition for these, and they often vary depending on location.

Also, definitely research the ROI on Class C STR.

@Darsh Patel

Encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone give you a referral, don’t make the mistake of assuming that PMC will meet your expectations, just because they met the expectations of the referral source.

We also can’t believe how many owners hire the first PMC they speak with!

Then they complain their expectations aren’t being met!

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

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!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

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😊

@Varun Kalyan if you hired a PMC, why do you have to collect rents, pay the PMC and track expenses?

Your PMC should be doing all that and providing you with monthly statements, as well as a year-end statement for tax purposes.

They also make money via "slow rejections" - taking so long to approve something that the homeowner is forced to pay for it themselves.

Think about a failed hot water heater. How long will an occupant go without hot water for showers?

@Al K. 

1) Pretty sure you would have mentioned they were in violation of their contract. Go ahead and post the contract language they violated. Otherwise, why are you trashing them?

3) Please show us any national or state reference for, "certain standards that are common in the field of property management which are expected". Not aware of any. We are members of NARPM, which has some member suggested standards, but there are no national or state laws requiring a PMC to join them.

While there are MANY terrible PMC's out there, in our experience there are also a lot of naive and penny-pinching owners that still hire these terrible PMCs and keep them in business.

Again, you typically get what you pay for.

From our experience it depends on the Housing Agency!

We've heard horror stories here on BP about the Pittsburgh area HAs. One outside the city is great, but the one located in the city is so terrible many landlords won't accept tenants with vouchers from it.

In Detroit, it's a mix. Here 's some bullet points to consider from our market:

1) Unfortunately, most HAs no longer take away tenant vouchers for program abuses, including property damages. So, we have to deal with tenants that don't take care of their homes and call about every little maintenance issue. Why? They know the HA won't hold them accountable and the landlord will have to fix everything and cover the cost:(

2) While you can get top of the market rents, it's really up to where the tenants want to live. We're seeing a lot of newbies thinking they can buy a $50k house in a crappy neighborhood and get top of the market rent for it. NOT HAPPENING!

3) Many S8 applicants don't want to or can't come up with security deposits. This can be a tough decision, especially with challenge #1 above in our market.

4) S8 tenants do tend to stay longer.

5) We think it's important to evaluate a S8 applicant's current home. How it looks is how yours will look once they move in.

6) One of the biggest HAs in our area is also a nightmare to deal with. It can take 3-4 months to get them to process paperwork and start monthly payments. Even getting the S8 inspection done can take weeks.

Hope this helps!

It does depend on the Housing Agency!

We've heard horror stories here on BP about the Pittsburgh area HAs. One outside the city is great, but the one located in the city is so terrible many landlords won't accept tenants with vouchers from it.

In Detroit, it's a mix. Here 's some bullet points to consider:

1) Unfortunately, most HAs no longer take away tenant vouchers for program abuses, including property damages. So, we have to deal with tenants that don't take care of their homes and call about every little maintenance issue. Why? They know the HA won't hold them accountable and the landlord will have to fix everything and cover the cost:(

2) While you can get top of the market rents, it's really up to where the tenants want to live. We're seeing a lot of newbies thinking they can buy a $50k house in a crappy neighborhood and get top of the market rent for it. NOT HAPPENING!

3) Many S8 applicants don't want to or can't come up with security deposits. This can be a tough decision, especially with challenge #1 above in our market.

4) S8 tenants do tend to stay longer.

5) We think it's important to evaluate a S8 applicant's current home. How it looks is how yours will look once they move in. 

6) One of the biggest HAs in our area is also a nightmare to deal with. It can take 3-4 months to get them to process paperwork and start monthly payments. Even getting the S8 inspection done can take weeks. 

Hope this helps!