Rental Owners with Property Managers: How much are you hands-off?

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First time renting out my place and using a property manager. Do you just sit back and let the property manager take care of everything and just wait for the direct deposits go through? Do you even have a copy of the lease?

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You could have called an HVAC repair guy without the warranty, had the tenant schedule the repair and got the same resul... (more)

gnopgnip (May. 10, 2017 @ 1:38p) |

My brother and sister-in-law had HVAC failure on a house they recently bought. The seller included a home warranty (I th... (more)

taylor0987 (May. 10, 2017 @ 4:28p) |

For this reason, that you're stuck with the contractor the warranty company chooses, if you have a number of rentals, yo... (more)

rufflesinc (May. 11, 2017 @ 10:17a) |

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I'm nearly completely hands off.  They get 8% of the rent and everything is managed online from their website.  I can see the lease from their website and I know all the necessary information about the tenants. As long as the direct deposit is the usual amount minus the management fee, I don't check the website.  When it's lower, chances are, there was some random expense and then I'll ask questions.  I have an office call with the management company once a year.  

I'm rarely in the US and I work a ridiculous schedule so I don't have time to manage it from afar.  My properties are on the east coast and I live between Hawaii, Seattle and SE Asia and Australia.  For me, it's worth it to pay the management fee.  

Yes, I have a copy of everything. I pay them 5% and the only time it affects me is during tax season.

qcumber98 said:    I pay them 5% and the only time it affects me is during tax season.
  how does it affect

8%? 5%? Where do get these managers? That's just $75 a month for example on a $1500 a month rental. Do you really think they have your best interests in mind? If the A/C goes out, do you think they will be on the phone 2 hours getting estimates like you would? Last time I checked, most places around here get the 1st months rent plus 15% a month.

atikovi said:   8%? 5%? Where do get these managers? That's just $75 a month for example on a $1500 a month rental. Do you really think they have your best interests in mind? If the A/C goes out, do you think they will be on the phone 2 hours getting estimates like you would? Last time I checked, most places around here get the 1st months rent plus 15% a month.
  15%? unless it is vacation rental, you are getting hosed. i charge 7% to 10% based on rent amount and location. if AC goes out, I call my guy that does ALL my ACs. I won't call around.  I know they are reliable and do the job right.  If your manager has to "call around", get a new manager. Most of the time there are no issues and the 75$ just comes in.  If there are issues, it is one quick call to my team. Anything additional will have more charges and my clients understand that.

atikovi said:   8%? 5%? Where do get these managers? That's just $75 a month for example on a $1500 a month rental. Do you really think they have your best interests in mind? If the A/C goes out, do you think they will be on the phone 2 hours getting estimates like you would? Last time I checked, most places around here get the 1st months rent plus 15% a month.
  I had a great manager (now retired) at 7% who fought harder for my money than I did. She knew exactly who to call for the best all around service at the best price. She kept me well informed but I just let her make all of the decisions.

Smaller town or big city?

We have a mediocre property manager that needs a lot of supervision. We approve all repairs, approve tenants and often find our own contractors. She charges 7%. Her documentation is inadequate.

Some of our micromanagement is probably on us wanting to be involved with the decisions. But seeing the general quality of work from her it is warranted.

Yes we should fire her and get a better manager. I don't know how to find a good one. At least she doesn't steal from us like the last one.

My property manager charges $115-125 per single family and about $75-100 per duplex units. It's worth to offload 7-8 properties and focus on your job and keep hunting for new properties. On maintenance, he has enough contacts to get things done cheaper and faster than me doing it as it becomes a full time job to collect the rents and take maintenance calls. He do update me on the maintenance requests and approval for larger repairs to keep me in the loop than surprise cuts from the rent.

There are usually separate fees when the place gets re-rented after a vacancy. It was my experience that maintenance was reasonable compared to what I could have found. I paid 10%/month. I moved out of state and was completely hands off, other than depositing monthly payments from the manager.

How about Home warranty for rentals instead, give the tenant the #.

vickh said:   How about Home warranty for rentals instead, give the tenant the #.
  This is interesting on the surface but for some reason I don't think it would work.  I assume someone with more experience on this than me can explain why.

JermS said:   
vickh said:   How about Home warranty for rentals instead, give the tenant the #.
  This is interesting on the surface but for some reason I don't think it would work.  I assume someone with more experience on this than me can explain why.

  https://www.landlordology.com/buy-home-warranty-rental/

If my landlord made me jump through the hoops of dealing with a home warranty I'd be looking for a new place. They also don't nearly cover everything a landlord is responsible for (and even if they did they'd be prohibitively expensive.

Several posters with good property managers are spot on, they often save money by having one based on an established network of good repair folks who are priced better than you could easily find (for similar quality) given the volume of work the property manger steers their way. They also know they only get paid when the property is paying rent (not empty or filled with deadbeats) and have their incentives VERY closely tied to mine. Only issue I've ever had is where the property manager was trying to save me "too much" money by continually repairing the condenser on an air conditioner instead of biting the bullet and replacing...wasn't even really an issue, they were just trying to avoid large capital outlay for me, which while appreciated, probably cost more in the long run given the age of the unit.

To the OP: This is a new business relationship in which the property management company (in most states?) has a fiduciary duty to you. Given it is a large asset and a non-trivial amount you're paying them each year, I'd recommend you watch you monthly statements and track expenses beyond their X%/flat fee. Ask for receipts if they don't provide automatically. As your trust with them grows over time, you can relax how often you check-up on them. A good property manager understands this and will work with you to grow this trust. In addition, when I've rented out units and had property managers, if there was ever a concern I'd have some third party check up on the unit if there was any doubt...and if there is doubt, might be worth finding another property manager. Good luck!

sharpie130 said:   
atikovi said:   8%? 5%? Where do get these managers? That's just $75 a month for example on a $1500 a month rental. Do you really think they have your best interests in mind? If the A/C goes out, do you think they will be on the phone 2 hours getting estimates like you would? Last time I checked, most places around here get the 1st months rent plus 15% a month.
  15%? unless it is vacation rental, you are getting hosed. i charge 7% to 10% based on rent amount and location. if AC goes out, I call my guy that does ALL my ACs. I won't call around.  I know they are reliable and do the job right.  If your manager has to "call around", get a new manager. Most of the time there are no issues and the 75$ just comes in.  If there are issues, it is one quick call to my team. Anything additional will have more charges and my clients understand that.

  I've also seen more and more property managers pushing tenants into ACH pulls for rent that reduces their effort to collect rents.

JermS said:   
vickh said:   How about Home warranty for rentals instead, give the tenant the #.
  This is interesting on the surface but for some reason I don't think it would work.  I assume someone with more experience on this than me can explain why.

  I thought home warranties were basically scams.

vickh said:   How about Home warranty for rentals instead, give the tenant the #.
  A lot of tenants rent simply because they like having someone else tend to repairs. Even with great tenants, I would never allow my tenants to control repairs on my properties as too much could go wrong or not as I would want.

In NW FL Panhandle - management companies charge a management set up fee plus 10-12%/month for 1-year rentals. I had new tenant complain about the garbage disposal not working. The management company said a plumber would be out to replace the disposal for $350. I called the renter and asked them to push the red reset button on the disposal and wha-la it magically started to work again. I had several other bogus repairs that were done poorly and at high cost. My guess is 50% of repair cost go into the management companies pocket. If you can manage repairs/maintenance - do it and avoid getting ripped off. Also, ensure your lease says that renter is responsible for repairs up to $75 to avoid frivolous calls.

rufflesinc said:   
qcumber98 said:    I pay them 5% and the only time it affects me is during tax season.
  how does it affect

  C'mon man!

qcumber98 said:   
rufflesinc said:   
qcumber98 said:    I pay them 5% and the only time it affects me is during tax season.
  how does it affect

  C'mon man!

  oh i see, they 1099 you, and you can't shave your income

Just starting out I would recommend being completely hands on until they have proven trustworthy and competent. Verify everything no matter what. Your new manager may have given you high confidence in their organizational skills when you filled out all their paperwork, but for example just think about at what moment you will realize that they neglected to get the septic tank pumped on the schedule you gave them. And, how much effort it will take to get made whole again. So if you have stuff like that set a few google calendar reminders to make sure it is getting done.

I also agree with the comment above regarding high cost of some repairs like the garbage disposal... make sure you have some mechanism to make sure you don't get ripped off especially on larger repairs. Whether that be an approval threshold, making them get 3 quotes for something above a certain $ amount, etc.

So yeah, at least in my situation there's no such thing as completely hands off... but I can't do it myself either so there's that.

stanolshefski said:   JermS said:   vickh said:   How about Home warranty for rentals instead, give the tenant the #.This is interesting on the surface but for some reason I don't think it would work.  I assume someone with more experience on this than me can explain why.I thought home warranties were basically scams.They kind-of are if you are a homeowner and already have a network or know how to find a repairman. They kind-of aren't if you are a landlord and need someone else to take care of problems quickly. A few prominent FWF resident landlords have used home warranties on their rentals. Here's a thread with links to some other threads on the subject: https://www.fatwallet.com/forums/finance/1175160

I'm not sure about giving the tenant the #. You'll then need the tenant to submit receipts to you and either withhold the amount from rent or have you reimburse them. One problem is that the tenant won't care how much it costs to fix something, because it's not coming out of their pocket. They may end up paying for multiple service calls where one would suffice or not ask all the right questions or insist on all the right coverage.

I would think a decent size PM would have a full time handyman-type guy doing things like disposal resets and cleaning p-traps and resetting GFCIs and breakers, rather than calling a plumber or electrician

My duplexes are local and I do all my own maintenance supervision except for hvac servicing twice a year. I have contractors I trust and get their input as well try to get 3 other quotes. I have found many folks do not solve the root cause and inflate expenses. One example was a "sink leak" above the toilet. Wallboard, paint etc was expensive. I found the vent pipe cover on the roof had a hole in it after wall board was wet again. Renters have tried to call my hvac folks due to cold/hot rooms that had bookcases blocking the return. I have found I like to MBWA = manage by walking around. I like to have contractors do the work after they submit quotes and I interview. Sometimes I get tied up in Magistrates courts due to unsavory contractors keeping deposits, but hey thats part of managing.

In my case I can't see forking over a penny to a PM. My properties are all local so I manage them myself. Mostly it's just texting a tenant or a handyman once in a while. Occasionally I'll get a plumber involved. I have several good handymen and craftsmen I can use nearby. On the rents, several just DD into my account and others do online bill pay to my address I have great relationships with all my tenants so we're able work through issues pretty seamlessly.

The far bigger issue is getting tenants. There's a total and complete conflict of interest regarding the the PM's agenda and yours. Their goal is to get someone in there as fast as possible with as little effort as possible. Yours is to get the best tenant in a reasonably timely manner. You think they will show it to 20 people to get the right one?? NFW. If a great prospect says they want to see it in 30 minutes you think the PM will respond?? NFW. Think they will get you the optimal rent or a below market rent that will get someone in there sooner? This is your baby and you just can't expect an outsider to give it the same time and attention as you.

RedCobra said:   In my case I can't see forking over a penny to a PM. My properties are all local so I manage them myself. Mostly it's just texting a tenant or a handyman once in a while. Occasionally I'll get a plumber involved. I have several good handymen and craftsmen I can use nearby. On the rents, several just DD into my account and others do online bill pay to my address I have great relationships with all my tenants so we're able work through issues pretty seamlessly.

The far bigger issue is getting tenants. There's a total and complete conflict of interest regarding the the PM's agenda and yours. Their goal is to get someone in there as fast as possible with as little effort as possible. Yours is to get the best tenant in a reasonably timely manner. You think they will show it to 20 people to get the right one?? NFW. If a great prospect says they want to see it in 30 minutes you think the PM will respond?? NFW. Think they will get you the optimal rent or a below market rent that will get someone in there sooner? This is your baby and you just can't expect an outsider to give it the same time and attention as you.

  once you have too many babies or out of state babies, getting help is your only choice. I am a PM and I manage my own properties but I do try to find the best tenants for everyone. If I find a bad tenant, I lose my client's business and my reputation goes down the drain. also if the PM lists on the MLS most of the times other people are showing it anyways.

I don't know why people hate on home warranty. My gf pays $450/year for home shield warranty, which gets pretty good reviews online. So far it has worked out well. We have used the service once in the first year. It saves her the management fee, which at 10% would be $190/month = $2280/year, and we reasonably cap the cost of maintenance on the place. For that one use, time to take care of the issue was not significant. Filed a claim online (air conditioning repair), and gave the tenant's phone # so they can schedule repair with them. The issue was resolved, but ac stopped working again after a couple of days. Filed another claim and they sent repair guy again, and the second visit was free, even though it was a separate issue.

Home warranty is cheaper than management fees and it caps your cost of maintenance and time spent on issues.

rufflesinc said:   I would think a decent size PM would have a full time handyman-type guy doing things like disposal resets and cleaning p-traps and resetting GFCIs and breakers, rather than calling a plumber or electrician
The one property I rented with a property manager had that. I believe they charged $45/hour to the condo associations and landlords they managed.

jsssm said:   I don't know why people hate on home warranty. My gf pays $450/year for home shield warranty, which gets pretty good reviews online. So far it has worked out well. We have used the service once in the first year. It saves her the management fee, which at 10% would be $190/month = $2280/year, and we reasonably cap the cost of maintenance on the place. For that one use, time to take care of the issue was not significant. Filed a claim online (air conditioning repair), and gave the tenant's phone # so they can schedule repair with them. The issue was resolved, but ac stopped working again after a couple of days. Filed another claim and they sent repair guy again, and the second visit was free, even though it was a separate issue.

Home warranty is cheaper than management fees and it caps your cost of maintenance and time spent on issues.

  You could have called an HVAC repair guy without the warranty, had the tenant schedule the repair and got the same result. You have to follow the warranty companies procedures to get them to pay anything, and often this leads to poor outcomes compared to hiring someone directly. The warranties are riddled with exceptions and your costs are not capped.

jsssm said:   I don't know why people hate on home warranty. My gf pays $450/year for home shield warranty, which gets pretty good reviews online. So far it has worked out well. We have used the service once in the first year. It saves her the management fee, which at 10% would be $190/month = $2280/year, and we reasonably cap the cost of maintenance on the place. For that one use, time to take care of the issue was not significant. Filed a claim online (air conditioning repair), and gave the tenant's phone # so they can schedule repair with them. The issue was resolved, but ac stopped working again after a couple of days. Filed another claim and they sent repair guy again, and the second visit was free, even though it was a separate issue.

Home warranty is cheaper than management fees and it caps your cost of maintenance and time spent on issues.

  My brother and sister-in-law had HVAC failure on a house they recently bought. The seller included a home warranty (I think American Home Shield as well). The warranty company chose who provided the repair which included replacing the outside unit. Besides it not working right, the work was sloppy and they sited/oriented the outside unit in a way to make it hard to work on. (the access panel was facing the house)  My brother tried to get the warranty company to hold the repair person accountable but the warranty company said there was no problem and would not help.
Brother and SIL ended up paying someone else to make it right.
It seemed like the warranty company chose a repair company that would accept their low payouts and who probably has a hard time getting business otherwise.
 

taylor0987 said:   
 
It seemed like the warranty company chose a repair company that would accept their low payouts and who probably has a hard time getting business otherwise.

  For this reason, that you're stuck with the contractor the warranty company chooses, if you have a number of rentals, you'd be better off self insuring and finding a few cheap contractors , plumbing and heating are my big ones



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