property management for one duplex-cost effective?

Question

With the buy/flip market is so tight in our area (Waukesha County), We recently decided to change our investment goal for the time being. Buy and hold, single unit duplex for income stream. while we postpone our desire to fix/flip for a better market cycle.  As we will not be occupying. and have no experience as landlords, we are wondering if it would be cost effective to use a property manager. Although we are looking within our area, we see a benefit to having someone else do screening, collections, etc. How much can we expect to pay for our. thus far, miniscule investment property portfolio? Any advice?

Account Closed · Answer

First I'll say I'm a property manager and this is coming from my point of view.

I've been in the business for over 30 years and currently manage over 800 single-family units and duplexes.

A bad property manager will cost you money, but a good property manager is well worth more and the cost to use them.

We have a proven track record of renting properties 3 to 4 weeks quicker, thereby the owner receiving income 3 to 4 weeks sooner which actually covers most of our fees to manage the property.

We also have some of the most thorough and toughest tenant screening in San Antonio. Avoiding one bad tenant can save an investor hundreds of dollars in lost rents and even thousands of dollars in repairs and damages and the cost and headache of going through evictions.

Good property managers have lots of experience with all the different issues that can arise when renting to tenants.

Good property managers make sure that your properties in compliance with the local property codes and laws and have well tested lease agreements and forms.

It's really not a question of whether a good property manager is costs effective, the question should be how do I find a good property manager.

One of the best websites to go to to look for a good property manager is www.NARPM.org (National Association of Residential Property Managers).

Investors can enter their local area and see what property managers are members of NARPM and further screened them by what designations that they have obtained such as MPM (Master Property Manager) or RMP (Residential Management Professional).

Using a professional property managers will help you maximize your investment.

Kevin

Steve Vaughan · Answer

Finding that quality PM is key as Account Closed!

Anthony Gayden · Answer

If you accurately calculate the expenses for the property and include management, it can indeed be cost effective. In the case of some single family homes it is cost effective. As others have said, screening your PM is crucial.

Also your job is not over once they are hired. You need to stay focused on making sure they are doing their job. I'm not saying to do their job for them, but if you want your units inspected monthly, call and make sure they are doing it. Have them send you pictures. Go over the financials, and scrutinize them. It is your money after all. If you want more than one estimate for a repair, tell them you need more. You have the final say on the tenants that are placed, so if the manager tries sticking some crappy tenant in there, you can reject them. If possible drive by and check your property out.

Remember that no PM is going to take care of your property as good as you, but I am a strong believer in them doing good enough to get by. The whole purpose for me was to allow me to continue working in my extremely demanding full time job while still investing.

Bill S. · Answer

@Terry Hoefer a couple of thoughts

1) You are in the right place by asking before you actually own your property. That gives you some time to learn.

2) You said your husband is already looking for property. Slow up first and figure out what kind of tenant you want to deal with. Then, only purchase property that will attract the kind of tenant you want. Don't think that hiring a PM will insulate you from that. It will actually make it worse.

3) to "mention" someone. Type the @ symbol and then the first three letters of their name. Below the "post a reply" box will appear a list of possible people. Select the one you want and then their name will be highlighted in blue and they will get a text notifying them that you "mentioned" them.

4) finding and selecting good tenants is not difficult. The biggest challenge IMO is getting yourself set up to do background checks. Read Brandon Turner's Guide on Screening Tenants (click the link to read). It will lay it out for you step by step. You should read it anyway as it lets you know what your PM should be doing.

5) While I agree with most of what Account Closed said. I disagree with implication that a PM will do a better job than an owner (ie find a tenant quicker). NO ONE will look after your property better than you do. Unless you are negligent, managing your own will come out better for you if you do it yourself. Now, you have to learn and there is a learning curve. You will make some mistakes but if you are careful and read and learn your mistakes will be small. After you manage for yourself for a couple of years then you can hire a PM. You will know what they do and value their services more. You will also be able to spot a bad one a lot sooner.

6) If you are worried about time, know that it takes about 3-4 times more work to find a good PM in most cases than it does to find a good tenant. Your first time out the gate you are no further ahead by using a PM then finding a new tenant yourself. Both take time and lots of learning. There are lots more good tenants than good PMs. Some towns don't even have one good PM.

Dax Middlebrooks · Answer

Account Closed

Thanks for the info about NARPM.org.  I was wondering if you know of something simliar for management companies that handle vacation rentals.  We are considering buying a place in Canyon Lake or New Braunfels as well as a couple of places in Colorado.  We would use them as much as possible, but would want to rent them out short term when we are not on vacation.  I have no plans to try to manage them remotely.  Any insight you could offer will be greatly appreciated.

Thanks,

Dax

Terry Hoefer · Answer

@Bill S.: Thanks, I finally got the "@" thing right! You gave me excellent advice and we'll definitely use the link for screening tenants. Our offer was accepted today on a nice duplex on a neat, well-kept street of mostly large single family homes that I would live in myself, if I didn't like my own house so much. 3  bdrms up & down, natural woodwork, built-ins, arched doorways, 2 car garage. The current owner lives in the lower and we will have to tone down the paint colors. The tenants upstairs are long term, pay $800/mo on time and would like to stay. They keep their unit neat as a pin, nice furniture, etc. We close at the end of September, so we have time to learn as much as possible about screening tenants. Thanks so much!

Terry Hoefer · Answer

@ Anthony Gayden

Thanks, we are in the same situation in that we both work full time jobs. Fortunately, we are also experienced DIY-ers, my husband being self-employed and flexible/mobile. He can stop over there any time. My problem is, I have to keep reminding myself that this is a rental. My constant mode of rehab needs to be tempered with some restraint.

Terry Hoefer · Answer

@Kevin Knight and @ Steve Vaughan: Thank you both for your suggestions. Now we know where to start looking for the right PM, and Steve, we'll be sure to contract for notification of repair requests.  I would have overlooked that as a necessity to be addressed in our initial contract. The screening and lease handling are what we need most. We put in an offer on a duplex today, we'll see how it goes! Thanks, again

property management for one duplex-cost effective?

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