Does real estate get tiring fast

Question

Hi all,

I have a couple of house rentals. One of the houses is been managed by a property management and feel like it has been a nightmare. I thought once you pay someone things will get easier from a rental standpoint.

Initially there was a lot of paperwork and getting all set up and all that. Then I was encouraged to allow pets and I did.

Property management rented to someone with a dog and a cat. Then I asked them what is the dog rent and they tell me that they keep pet rent in addition to the 8% plus other fees. Pet rent is $70/month in this case.

After talking to them they agreed that they will only hold 8% of total and give me pet rent back.

I paid property management close to 5k to get rent ready. This was to do touch up and few things they recommended to get rent ready.

New tennant moved in and I have have close to 10 maintenance requests in two weeks since tennant moved in.

First complain was that washer was rusty. Property management told me they agree and purchased new one for about $500

Second request involved cracks in refrigerator drawers and one of the bars. Property management paid someone $91 to inspect refrigerator and they told me I need to pay $500 to get fixed. I was shocked that property management would even recommend fixing where I could buy a new one for $500.

Third complaint is that one of the stove tops is not turning on and is dirty. I paid $600 for cleaning to contractor hired by Property management. Property management asked me to pay another $130 to send tech to inspect. Not sure what they will recommend.

Fourth was a tree that reds to be trimmed. Property management sends me quote for $600. I called a random guy and quoted me $400 and decided to proceed.

I feel that every estimate I get from property management can’t trust and is so unreasonable and I still have to get involved with all and coordinate all repairs.

I feel that this property management is a hinderance more than help given that I have to get all the estimates, but now have to go through them do they coordinate time with tenant.

I feel that I need to pay money not to have this property management and I had thought up to now that would be easy to manage if you hire someone.

I have wanted to purchase more but getting a little discouraged since I thought things could be easier once paying a property manager.

I feel that this property manager doesn’t consider any costs or doesn’t do anything to ensure that I am paying a reasonable amount for the anything. I am shocked.

For this of you that have done this for a while please give me hope. Have been investing in 401k and had to do nothing.

JD Martin · Answer

Your PM sucks. That's just the plain fact. Ripping you - or trying to rip you - on the pet rent is proof positive. When an owner charges for pet rent, that is to compensate the owner for additional wear and tear and insurance costs. That's not to make the job of the PM easier and to reward them for doing less work. Everything else the PM should have known about on the turnover, unless the new tenant suddenly made the washer rusty, the fridge drawers broken and the tree hanging down.

Get a new PM or do it yourself. Self-managing is not hard unless you want to take shortcuts, cheap out everywhere and cater to C or below tenants. Then it gets hard. Think about how hard you want to work for your money and your return, and focus your efforts that way. Want to work hard for a great return? Get lower-income places and barely maintain them. Want to work easy for lower return? Get better properties and keep them up properly.

Jimmy Hodges · Answer

@Arta Montero

The first thing I would do is find a new property management company. There are some really good ones out there and some really bad ones and it sounds like you simply have a bad one.

Hiring￼￼ a property manager only moves your management roll from managing the property to managing the manager. With over fifteen years of experience managing people I can say with utmost confidence that the hire slow fire fast quote would certainly benefit you.

Take what you have learned from this experience and use it as part of your interview process when vetting your next management company. Also, there are some really great posts on BP about what to ask when interviewing property management companies.

Jim H.

Arn Cenedella · Answer

@Arta Montero

Sorry, your investing career is off to a rough start.

Yes, your current PM does not seem to be working in your best interests.

Your story also indicates even with a PM, an investor still must be actively involved.

I have owned and been actively involved in managing my rental portfolio that at times exceed 20 properties at one time, for 40 plus years. It takes a lot of work, no doubt. Since real estate brokerage was my primary activity, managing my properties just fell seamlessly into my day to day brokerage activities. I believe being actively involved is harder for corporate 9 to 5 corporate employees.

Owning rentals has been very good for me.

That being said, I am in the middle of a transition from active management of my SFR rental portfolio into larger multifamily properties both in an active role and also in a passive role. Scaling up provides economies of scale and lower cost PM. Investing passively frees up my time and releases me from the day to day management responsibilities - letting the operator do the hard work while I still enjoy the benefits of real estate investing.

I would encourage you to determine your investing goals and ask: how involved do you want to be in managing these properties? Is your time better spent elsewhere?

Todd Dexheimer · Answer

Real estate takes hard work and dedication like any business. The only way to take the "easy" rout in real estate is to take a passive investing approach, by putting your money into other peoples deals.

It sounds like you have a management problem and possibly a property condition problem. Both are solvable and likely need to be done right now.

I learned along time ago to spend money up front on improving the property and making it "bulletproof." This not only gives my residents a better place to live, but it increases my cash flow and reduces my headaches.

Same with management. If they aren't doing a good job, then it is time to move on. Look at yourself first though. Are you doing a good job with open communication? Are you holding weekly calls? Did you give them a business plan and explain what you're trying to achieve?

Evan Polaski · Answer

@Arta Montero I can sympathize.  I never had luck with property managers, and went through 4.  In the 18 months I had third party management, I was barely making any money AND working harder to try to get my managers to actually operate the properties well.

It takes a lot of time to get a manager to understand what your priorities are and how you want them to manage the property.  And even then, you still have to check in on them consistently.

That being said, when you find the right manager, things really can be much easier.  I didn't have the time or desire to find that person, but know many here that have seen success with PMs for SFRs.  If you put in the time, you should be able to find that person, but I imagine it will take many interviews, references, and training before they get there.

Darius Ogloza · Answer

Property management firms are in the business of making money.  They may be friendly but they are not your friends.  If you have a SFR rental with a three figure or low four figure monthly rent the property manager's monthly take is peanuts.  Would you agree to supervise someone's rental for 30 days for $65? (10% of $650).  That's not enough for a cup of coffee a day.   Under these circumstances, trust that there will be fees upon fees.

If you have a specialized need, say, a vacation rental that is located somewhere on the other side of the country and generates substantial annual rents, property management can be a useful and often valuable tool.  Hiring someone to watch over a SFR in the same town makes no sense.  If you do not have interest or time to self-manage, go back to your 401k is my advice.

Jim Kittridge · Answer

Hey @Arta Montero. Sorry you have had a bad experience with your property manager. I would recommend reaching out to other property owners from local REIAs or on BP and getting recommendations from them.

Interview each one and select who is best. It’s also a good idea to use two (on separate properties) so you can get a feel for which management you like better.

Chris Levarek · Answer

@Arta Montero In the case of property management, interviewing multiple and finding alignment relative to goals and core values is key. There are many out there but typically not so many good ones. The good ones will also be more particular in choosing their clients and so it's more of a partnership instead of a payment for service.

Out of the gate, you should be getting reviews from clients of the property management company. Find out who else is using them and if they are enjoying the experience. Ask :

what property management software they use?

what other properties they have under management and drive by them?

what are some reasons they are different then other property management companies? What separates them from the competition?

How will they react in X situation? What actions will they take?

Nice thing is you now have quite a bit of experience in what you don't want, which will only further clarify what you do want for the next property.

We've had similar experiences with smaller property management teams and have had to transition to more suitable teams. Relationships and the right team or partnership becomes truly important the larger the property or investment gets.

Arta Montero · Answer

@Jim Kittridge totally agree. Talked to owner and then it was a mess after that, but didn’t interview anyone else.

Arta Montero · Answer

@Jimmy Hodges thank you. Agree. Have a one year contract. I did interview quite a few for a property in Texas after this incident. They seem really good so far.

Does real estate get tiring fast

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