Morning Side 2 Duplex Owner with Tenants - Update 5 Months into purchase

[Sara Emmanuelle Dube]

Hello! 

This could help newcomers and I am one also, 5 months in. newbie. BP has been great for me :)

An update here on the Morning Side duplexes we bought in Detroit. Bought Feb 21. Signed with PM March 21st. 

3 out of 4 units are still occupied with only one tenant paying rent and utilities ( Im unsure actually if he's paying all utilities). 

Detroit inspectors gave us some homework to get the place compliant as a rental. That is not done yet. 

Repairs are slooowwww. One team is doing all the work. It appears that the electrician comes to change one plug, and is then hired again the next week to change a plug in another part of the building. Not efficient management. 

Ive run out of time on the trial period of 3 months with PM. We need to pivot now. 

Option 1) Find another PM  

Option 2) Manage from a distance

I've already accumulated many tips so happy to share anyone! But also looking for more advice going forward. 

Thank you!

Sara Moulton

[Nathan Gesner]

Quote from @Sara Emmanuelle Dube:

The fact that you are asking questions tells me your PM isn't doing their job. They should be leading the charge, explaining the process ahead of time so that you know they are large and in charge.

Definitely look for a new PM. Get rid of the tenants. I'm surprised you don't know what the tenants are supposed to pay (e.g. utilities) because that question should have been answered during the purchase process. Empty the units, spruce them up, put in paying tenants selected by your manager.

If you think it's tough dealing with an incompetent manager, try managing them yourself from a distance. Detroit is not a market to play around in without a professional on your side.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!