Out of state investor

[Chetan Malik]

Hey all, I am an out of state investor in North Little Rock, Little rock, Conway, Benton, Cabot and Sherwood areas. I own 17 doors in these areas and i am having a lot of challenges with property management companies. A lot of out of state investors in this area have challenges with property management companies. It is becoming harder and harder to cash flow with property management companies in this area. I am thinking about self managing my properties from out of state so that i can cash flow. Is there anyone that has any suggestions or any good leasing agents that can help lease my properties out and help me get them vacated. I would be more than happy to close more deals with you if so. Any suggestions and help are appreciated. 

[Melanie P.]

Quote from @Chetan Malik:

Quote from @Melanie P.:

Is this issue that there is not enough room in your deals to pay the property management fees and still turn a profit? Or are the managers you find incompetent and mismanage the property out of profitability?

What is your average rent on the 17 doors?

The PMC was charging me 12% until very recently and just now reduced it to 10% for all of the above. Average rent is $785/door. I have had to do multiple evictions and fix up after the evictions which have costed me over $2500 each eviction. Also, the repairs that the property management company does, they charge me arm and a leg to do the repairs so now i have started hiring people on my own outside to do my repairs which has helped with costs. 

Now i have decided to take a lot of things in my hand and also removing the PMC from many of my properties that have good tenants in Cabot area and Conway area and do not require much management and only keep them for inner city NLR type properties that have been veey challenging to manage unless it is section 8.  

They are really good with getting property leased and taking care of tenants but very expensive, it is just that. Also, the tenants i am running into in inner cities have not been good. They seem good but than they change after a few months. And it is just a cycle one after the other. 

All my loans are at 8% or more with the bank so that does not help either. 

The bad tenants are the majority in the poorer neighborhoods. There are good poor people who pay their bills and keep a clean house. Learning to find them takes time and practice. Unfortunately for $78/mo you're not going to get the work you need out of the property manager and even without the manager the expensive debt is going to kill any chance of making money for 5+ years. If you're patient it WILL get better and you WILL be happy you didn't give up when the money starts coming in.

Since you're already hiring your own maintenance people the next step it to figure out how to oust the manager completely. You can do a better job on the screening. I'll help you with some processes. What you need is someone to do the showings. Do you have any current tenants that would be a good candidate for this? Someone retired or a younger person receiving social security and leads a quiet, sober life? I have an excellent low income application I'll share with you. When we had tenants show for us in the past we'd send them receipts for a $25 application fee and let them keep those cash fees for their time doing the showings. It was enough extra money to keep them interested and you set all the showings for the same date and time anyway so it's a few hours a week when there is a vacancy. Were the tenants that have been evicted placed by this same property manager? Do they charge any additional for placing a tenant like the first month's rent? 

In the good neighborhoods there are remote showing solutions like Tenant Turner that can let the prospects in and out for the showings. Do not do this in the bad neighborhoods or you'll get a squatter.

Property managers are paid commissions, not for their time, so they smartly use the most expensive vendors who respond quickly and do the job right the first time and then add a commission to the already highest price. I'm not sure if that's better for them or for both of us. We've had a string of vendors flake out or do shoddy work that resulted in additional damage and they're wearing me down to go back to the expensive guys...