Getting Clear on Property Management Expectations

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One of the first tasks landlords choose to outsource is property management. This is really the nitty gritty of being a landlord and if you don’t enjoy dealing with tenants or the day to day operation of your property, you might quickly look for some help from a property manager.

Often times investors will just hire someone based on the fees without much discussion on what is included or what the expectations are. To have a good working relationship with your property manager, it is important to be clear on the expectations on both sides of the table.

Pricing

The first thing many investors will look at is the pricing. Each property manager has their own rates, and some may be all inclusive while others may charge extra for additional services. Most typically the fee will be a percentage of gross rents with an additional lease-up fee for filling new units. Other managers may use a set price per unit.

The most important consideration with pricing is to know what is, and what is not included in that fee.

Services

With a handle on the pricing structure, you’ll want to get clear on what services are included. Here are some services to ask about to get started:

  • Lease-up / tenant location
  • Move-in services
  • Rent collection
  • Accounts payable / bill payment
  • Monthly updates
  • Co-ordinate building maintenance
  • Consult with owner for expensive repairs
  • Landscaping and/or snow removal
  • Evictions and tenant disputes

When looking to hire a property manager, make sure you know what is included, what is not, and what is available for an extra fee.

Investor Involvement

Another key thing to get clear on is the level of investor involvement expected by your property manager. Some managers like for their owners to be somewhat hands on, while others will feel micromanaged if you become too involved in the details. Be sure to clear this up early on so you can setup a harmonious working relationship.

For more details on selecting a property manager see 8 Tips for Hiring the Best Property Manager and Things to Consider when Interviewing Property Management Companies. Be sure your manager has experience working with investors and look for referrals from other investors as the easiest way to locate the best managers.

Creative Commons License photo credit: Walt Stoneburner

About Author

Andrew is a Canadian real estate investor and analyst who works with Joint Venture partners to create long-term wealth. With a focus on buying and holding positive cash flow properties in Canada's Technology Triangle, Andrew makes the benefits of real estate investment available to those who lack the time or expertise to buy and manage property themselves.

8 Comments

  1. Great post! I myself own several properties with my father at the moment and we handle each of them individually. We have not had any headaches, thus far, thank God! As we acquire more, I know we will be looking for a property management company. Excellent information! 🙂

    • Hi Daniel, I am told not having any tenant headaches just means you haven’t been a landlord long enough, but you may as well see how far you can stretch your luck. I outsourced PM right from the start since I invest in an area which is over an hour’s drive from where I live.

      • Yes sir, been in the game for a long time to see headaches, but haven’t been a landlord very long. That will change of course…Fortunately, all of our properties are in driving distance where its not that bad. I know we will eventually go the route of PM just because we are building our portfolio very strong this year and we have a lot on our plate at the moment. I believe in outsourcing 100%. I also believe in finding the right PM company as well will make the process that much easier or less stressful!

        • Hi Daniel, Preach on brother. You make your money as an investor putting deals together, not handling property management. Focus on buying and outsource when the PM gets to be too much for you.

    • Hi Daniel,

      Where are you located? Let me know if you need help finding any management companies in the Midwest. I have several QUALITY contacts, let me know if I can be of assistance.

      Drew

  2. Mike McKinzie on

    Good article Andrew. I currently have seven property managers across six states and personally only manage two properties, the two properties that rent for over $2,000 a month. My biggest key with my PMs is COMMUNICATION. I want to be told immediately if a tenant is late, or a large repair is needed, or a vacancy is filled, or a tenant gives notice, etc…. I have all sizes of Property Managers, from one who manages only 40 units to one that manages around 3,000 units. My lowest cost is 6% and my highest is 8%, so folks don’t have to pay 10%, which you see a lot of. No matter the size, not matter the cost, I need good communication. Sometimes, I have to direct their actions to get things done. Having managed over 100 units decades ago, I know what it takes so it is easy to explain to them what needs to be done. And even a few times, I will take care of the repairs because I have a better contact for a service. Your relationship with your property manager(s) has to be dynamic and very open between both parties. Again, good blog.

  3. Hi Mike, This is similar to the approach I take. I like to be kept in the loop, know all of the details and make decisions, but I also like having someone else who is local to the property and who can execute. I pay a flat fee which currently works out to about 6.25% of gross rent plus 1 months rent to fill vacancies and have what I consider to be a great manager.

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