Property management

[Trent Fisher]

I currently don't have any properties that i have hired a property manager for. With the direction i am looking to go in now that is going to be a necessity. How do property managers figure what they are going to charge you for there services. What all services do they provide for you? Has anyone found it profitable to buy a property, have a property manager, also with HOA fees? Even with borrowed money to be able to buy the property.

[Account Closed]

Look really closely at all fees in the contract.  My daughter hired one and was thoroughly ripped off.  They even charged her for "supervising" their own maintenance people.  I wouldn't agree to any clause that gives the PMC the right to make any decisions about spending any of your money if it's an "emergency."  This was what the PMC mainly did to deplete my daughter's funds.  She had no idea they were spending her money on "emergency" repairs and maintenance until they'd spent all of her reserves and then called her for more.  The short ending to that story is she fired them and they agreed not to enforce the "termination fees," etc., and she agreed not to sue them.

Just read every little possible way they can charge you anything - and don't believe them if they try to minimize the possibility of those fees occurring.

If I was to ever hire a PM, I'd look for one that would agree to my own contract.  And that would be where they simply get a percentage of the rent, and that's it.  They get paid when the rent starts flowing.  And I'd give them a generous percentage - even 15 or 20 percent.  You'd have to run your numbers.

The thing is, a normal PMC does not make most of their fees from the rent.  This is where they "get" you, in my opinion.  The monthly fee usually sounds really reasonable.  But, add on the higher maintenance costs when they overpay their own people or hire people they have kickback deals with, and their other fees, and you end up paying a lot more than just their 6% or 10% rental fee.

Their contracts also often have increased fees when there are problems - fees when tenants move in and out, fees if there are evictions, on and on.  They profit if there are problems, in other words.  Where is the incentive to just find you a great tenant who stays and pays on time?

Personally, I'd look for a real estate agent willing to take my contract as a job they'd do on the side, with a list of my own maintenance people.  Offer them 15% of the rent with no other fees.  Now there is an incentive to find great low-maintenance tenants who will stay and pay rent on time.

As a former property manager, I'd be happy to take that deal.  I'd screen like crazy, and collect that fee every month :-)