RentRedi vs Property Manager

[Carolyn Mazzola]

Hi All!

I'm brand new to all things rental properties, I'm gearing up to by my first property OOS in Ohio and live in California.  As I'm working on underwriting my deals, one question that keeps coming up in my mind is the use of RentRedi vs a Property Manager.  I'm not sure how to decide when to use what? As I reach out and interview property managers, it seems like they do many of the things that RentRedi does and charge fees for them. For example, I found a property manager who charges $10/month to process the payment from the tenant, charges fees on processing late fees and charges for tenant screenings. It seems like many of these things could be taken care of by RentRedi for a much lower cost.  I'd prefer to use RentRedi for those things, being from the Bay Area it seems highly logical to me to use a digital platform for everything, it is much more efficient and cost effective. However, the property management companies I have spoken to have said that they require you to use them for everything I listed above. It seems to me like really what I want a property manager for is to show the property for me, to deal with late night calls and coordinate repairs. I don't think I should have to pay individual fees for each transaction, but am I wrong in this? How do most people do this? It seems like some folks like the idea of having a property manager handle everything for them, but I'd really like to be involved and have say in who lives in my property, not let a property manager decide. Am I just looking at the wrong property managers? These are folks recommended by a few realtors and the largest property managers in the area.  What do other folks do?  Has anyone successfully found someone who will just do showings and coordinate repairs? Am I looking at the wrong type of person for the job and should be focused on handymen instead of property managers? Thanks in advance for all the advice!

[Nathan Gesner]

Quote from @Carolyn Mazzola:

Keep shopping around. Most property managers I know don't charge rent or owner payments fees.

The important thing to remember is that a good PM does much more than collect rent. You are relying on their market expertise, problem-solving, lease enforcement, legal compliance, and so much more.

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!

[Patrick Drury]

@Carolyn Mazzola  
Definitely use a property manager if you are planning to invest out of state. Unless you are managing a turnkey single-family in an A location from out of state it's a recipe for disaster. 

[Samantha Fedor]

Hi Carolyn, I agree with Nathan, not sure there is actually much to add. I will DM you though, as we are here in Ohio!

[Bryan Montross]

First, I would agree with the previous posts and you should get a property manager for an out of state property. I did manage a couple of my properties while I lived overseas, but I already knew the tenants before I left and I knew good people in the area to look after the property and help with repairs if needed. I also had a real estate agent that would list the property for rent and fill it for me if it went vacant. Because I had everything in place, it wasn't that bad, but even now, I always use property managers for my out of state properties (and a couple local one's as well).

Second, You just need to search around for a property manager that meets your needs. Some charge a bunch of fees, some don't. They may charge lower percentages, but make up for it in the fee, or charge higher percentages to include everything. Fees are also negotiable. Tell the property manager your intent and maybe if you bring them more business they will remove fees or adjust fees. Just calculate based on how well you think the rental will do and choose the manager you think will best look after your property, even if they do charge a little more.

[Drew Sygit]

@Carolyn Mazzola unless I'm missing something, appears you are confusing Property Management Software (PMS) with a Property Management Company (PMC).

PMCs employ PMS to better manage properties & tenants.

If you invest OOS, who will be your boots on the ground? You'll need maintenance people, inspectors, agents to show the property, etc.

RentRedi doesn't handle any of that.

Regarding finding a PMC:

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

[Sean O'Keefe]

Quote from @Carolyn Mazzola:

Hi All!

I'm brand new to all things rental properties, I'm gearing up to by my first property OOS in Ohio and live in California.  As I'm working on underwriting my deals, one question that keeps coming up in my mind is the use of RentRedi vs a Property Manager.  I'm not sure how to decide when to use what? As I reach out and interview property managers, it seems like they do many of the things that RentRedi does and charge fees for them. For example, I found a property manager who charges $10/month to process the payment from the tenant, charges fees on processing late fees and charges for tenant screenings. It seems like many of these things could be taken care of by RentRedi for a much lower cost.  I'd prefer to use RentRedi for those things, being from the Bay Area it seems highly logical to me to use a digital platform for everything, it is much more efficient and cost effective. However, the property management companies I have spoken to have said that they require you to use them for everything I listed above. It seems to me like really what I want a property manager for is to show the property for me, to deal with late night calls and coordinate repairs. I don't think I should have to pay individual fees for each transaction, but am I wrong in this? How do most people do this? It seems like some folks like the idea of having a property manager handle everything for them, but I'd really like to be involved and have say in who lives in my property, not let a property manager decide. Am I just looking at the wrong property managers? These are folks recommended by a few realtors and the largest property managers in the area.  What do other folks do?  Has anyone successfully found someone who will just do showings and coordinate repairs? Am I looking at the wrong type of person for the job and should be focused on handymen instead of property managers? Thanks in advance for all the advice!

These two things aren't mutually exclusive. Can't you use RentRedi and still have a Property Manager(PM)? There are PMs that use RentRedi to manager their clients properties 

[Carolyn Mazzola]

Thanks for the replies everyone! I think at this point I am very hands-on as a person and was hoping to use RentRedi for most things, but based upon these replies it seems like I should just keep searching for a property manager that better meets my needs.  My significant other is a developer, so in general we are pretty hands-on people and I thought that I might be able to do more hands-on with all of our property management! Maybe in the future that will be possible, but I agree with everything you all have said.  

I've contacted several who have lower % charges but then have tacked on fees, so I'll just keep looking! I'm grateful for all of your replies, thank you so much!

[Drew Sygit]

RentRedi is a property mangement software.

What experience do you have in the things you want to do yourself?

How well do you know the laws regarding rentals and tenants?