All Forum Posts by: Robert Gilstrap

@Amber Gonion, I'm totally stealing that last sentence because it's so true. 

Katherine,

Self showings are increasingly becoming the standard in the PM world. It's not just the cost savings to the brokerage it's really about what consumers expect in our "instant gratification" world. If I pull into the driveway of your property and want to view it right then but you have an old school agent who only does personal showings and next Thursday is the soonest I can see the unit you tell me who wins in that scenario? The prospect drives to the next house they can see and they rent that one. 

That being said your PM should be visiting the unit regularly because of the inherent problem in self showings which you described: trash, thermostat messed with, toilets with "surprises" in them, lights left on, doors left unlocked, etc.

4 months on the market is crazy long. Something is not right and when you mention they are advertising on "postlets" I have to question is this company a real property management company or someone doing this part time?  The only two reasons a property doesn't rent are price and condition. Who set the rent price for your unit, you or them?  How does it show; i.e. curb appeal? 

I can refer you to a good PM in that area if you decide to jump ship with your current company, just call or email me.

Alex,

Property Managers almost universally control the flow of money in and out. THey are required by law to setup trust accounts for cowner/tenant money being held.

You should expect the rents to be paid to the management company and those funds deposited into a trust account. All bills including management fees will be paid out of that account and the balance of funds (minus any minimum reserve amounts) will be paid out to you each month.  Tenant security deposits are typically held in a separate trust account although many states allow them to be held in the same aforementioned trust account as the rents.

You would always be required to hold some minimum amount of money in the account for maintenance reserves, etc.

This stuff where you setup the account with them as trustee is completely foreign to me and just adds unnecessary complexity. That being said perhaps Indiana law requires a specific setup. I would check with a couple more just to be sure. 

Yes, my lease runs circles around anything 99% of self-managed owners have in place. I'm embarrassed by what most clients show me as their lease. 

Most experienced PM's would never allow an owner to use their own vendor without proper vetting.  PM's choose vendors based on many factors and most don't fit the bill.

No doubt insurance is important but I've yet to meet an owner who actually understood what a PM's insurance does and what questions they should be asking regarding insurance. 

Asking someone do they have "hidden fees" sounds great but how many vendors do you think will volunteer "oh, I have 4 hidden fees we didn't talk about..."   None is the answer.

Are they a NARPM member?

How many rental properties do they personally own?

How long have they been doing 3rd party management?

How do you handle X or Y or Z situations?  (unauthorized pets, evictions, slow pay tenants,etc.)

and a myriad of other questions...Experience is the number one indicator of success.

To all owners who think their PM company is not marking up maintenance...Are you stupid? of course they are marking it up, do you think it is free for them to:

take the tenant call

evaluate the complaint and troubleshoot

locate, train and properly vet a vendor

coordinate that work order with the vetted vendor and tenant (4+ phone calls minimum)

follow up on its completion with before and after pictures and archive that data.

process the vendor invoice and pay the vendor.

account for the money and handle all the backend accounting.

stand behind the work that was done and warranty it.

and take the liability and risk associated with the maintenance call in the first place?

You are delusional if you think otherwise. We markup maintenance on every work order and still lose $5K - $10K a month in our maintenance department. Maintenance is not a profit center for PM's; it is a necessity for staying in business.

Always interesting to hear what they see as "standard" from people who live a 1000 miles away from a market...

Leasing fees = 1 months rent are totally common in this market. Get a warranty on the tenant they place.

Activation fees are usually ******** unless you count an existing tenant in place in which case they are totally legit. I absolutely charge a fee for me taking on your deadbeat tenant on some BS lease (instead of mine).

A repair markup (like it or not) is totally normal but the key is they should be getting you pricing 10%-15% below market so their markup is invisible and doesn't cost you anything.

A $65 renewal fee is a godsend because you must be dealing with an inexperienced PM. Normal renewals range from 50% of 1 months rent down to a few hundred dollars.

Pay or quit notices won't matter much since they are infrequent and should be recouped from the tenant.

Tianna,

Sounds like you are on the right track, if I can help you in any way give me a shout. I've been in the game for 20+ years and started with zero$. I'm no zillionaire but I've done quite well and have a fair amount to share.

Recognizing your own strengths and weaknesses up front puts you years ahead of most new investors.   A good PM will actually prefer to handle everything and for you to stay out of the picture. Your job should be managing the manager (politely) and nothing else.  Keep solid communication but stay out of the way and let them do what they get paid to do and you'll have a positive experience. 

If your manager is not NARPM accredited you better look very close to make sure they actually know what they are doing. 

Not knocking you for taking over management of your property but this is a prime example of why professional management matters. PM's have leases professionally drafted to protect the interests of the owner and client already. My lease has been tested in court hundreds of times and runs circles around anything a homeowner could produce on their own (unless they spent thou$ands in attorney fees).

In any case since you are in Texas, the TAR lease agreement is incredibly thorough and covers a ton of stuff. Get a copy from any Realtor in Texas and use that as your starting point.