How to manage a PM? My PM keeps my rentals occupied but no cash flow

[Holly N.]

I live out of state and she has been managing my 3 investments for several years. Even when they are fully rented, I rarely show any positive cash flow, rather I just stay afloat after mortgages are paid! I feel like I should at least be making some cash flow, but after the mortgages are paid, PM collects her fee (8%) and any repairs,maintenance, taxes or insurance are paid, I'm left with no extra income. something seems amiss here and when I ask PM she says this is normal and to be expected the first few years of owning rental property. Pay PM can backup the income and expenses on my monthly owner statements, but after 5 years of owning and only being able to say I'm breaking even, something is just not right here!

[Tiger M.]

@Holly Nole

Know I have 500 properties in management so I see this concern often with new accounts. I never spend more than $250 on an emergency repair without having the owner on the phone. 95% of the time, repairs aren't an emergency. If nothing else calling the owner just so they know whats going on and don't get a surprise. I only consider fire and water flood an emergency(a snake once too), most items can wait until I call the owner and get an approval anytime there is a repair. If it is a large job, we will provide up to 3 bids from outside vendors upon request. We require the tenants to pay the first $75 of any service call in the lease. This prevents calls on items that usually can be completed by the tenant, like light bulbs, sprinkler heads, etc. Ask for pictures of the before and after the work. Then you can know it was completed. We use in house handymen to control quality and cost and its not unusual. Set limits with your PM so they don't just do whatever they want. I have owners that fix everything and owners that I must fight with to keep the homes in habitable condition. Communication is the key and we do what they want unless they slumlord.

I have to disagree with contacting the tenant. Given the chance, many tenants will bash the PM thats responsible for the enforcement of the lease. The issue you need to work out is between you and the PM. Contacting the tenant can open pandoras box and diminish the capability of the PM to do their job. Often once tenants have the owners number, they call then with every complaint and circumvent the PM entirely. I have seen many owners try and befriend the tenants, only to become the next tenant charity. Not always of course, I have owners that park their RV at the rental and go party with their tenants while in Vegas. But if it goes bad, the owners get sucked into the drama needlessly.

I wish you the best.