Should I hire my handyman as my property manager?

Question

I am remodling a townhome I inherited and am looking for property management, since my mom's manager just retired. I found a company that will manage it for 7%. However, when I told the remodling guy that someone might be stopping by the property, he said he had been planning on asking me if he could manage it for 5%. I am looking for opinions & advice on what I should do.

Bill S. · Answer

@Annette Homewood - pretty simple to answer your question. Call up the Colorado Real Estate Commission (303) 894-2166 and ask them the question. They might also be interested in the person who told you otherwise. That company will be getting a visit from the commission enforcement office. The commission position on it is pretty clear IMO.

CP-27   Commission  Position  On  The  Performance Of Residential  Property Management Functions

Adopted August -1998

Pursuant to C.R.S. 12-61-101(2)(a)&(b), the leasing and subsequent management of real estate for a fee or compensation, is included among the activities for which a license is required.

The complete wording is found here.

Hope that helps.

As for what can go wrong. There is a reason that errors and omissions insurance is required for licensees. Keep in mind, they are trained in compliance. Still, it doesn't mean they do what's right or even are good managers. Based on what is posted in the Commission disciplinary actions, most of their enforcement time is spent on the property management field. That in and of itself should be enough to point you in the right direction.

If you still are not convinced, find a lawyer specializing in real estate and ask them what can go wrong.

Thanks @Kyle J. for the shout out.

Fred Heller · Answer

Does he have a real estate license? If not, he can't legally manage your property in California.

Annette Homewood · Answer

J. Beard, could you elaborate a little on how I might set up an account wherein the tenants make a direct deposit? How would the PM get paid?

Jeff B. · Answer

• "Does he have a real estate license? If not, he can't legally manage your property in California."

That's the litany.  The PM must have a Broker relationship but does not have to have an RE license and it's for the reason of "having an accountable person to manage the deposits" (in Calif).

CAVEAT (my unqualified opinion) Have the owner receive deposits written directly to them to be held in a savings account solely for this purpose.  The PM can then do the day-to-day stuff.  PM signs everything as Agent for <owner>.

A bigger exposure is lack of training in Fair Housing Regs - - he needs to get up to speed and to know what  can not be asked or said, less you get a discrimination suite.

Rachel H. · Answer

I've heard some who have done this. Though, you have to be careful when others are managing your money. I tend to just stick with property management companies, if the need arises. Best of luck!

Annette Homewood · Answer

Once I get the property up and running, I plan on being as hands off as is reasonable.

Sterling White · Answer

@Annette Homewood I would go with a reputable PM company. However if the handyman you speak of has had experience in managing properties then I would go with him.

Also do you plan on collecting the rent and dealing with the admin work of the property?

Annette Homewood · Answer

Bill S., I did go ahead and call the Colorado Real Estate Commission, and the guy with whom I spoke did say that for contracts and leasing agreements, a property manager does need a RE license (but not for collecting rent and interacting with tenants). So thank you for guiding me in that direction. He was also able to direct me to more literature on the matter in the CO RE manual on their website.

David Faulkner · Answer

Sorry, just realized property is in CO and the handyman was the one that just moved from CA to CO, not you. So, you won't realistically be able to manage it yourself. All of my other recommendations besides that are still true. To that, I would add to get a recommendation for a PM from another investor here who is a disinterested 3rd party with no affiliation other than having properties under management with the PM. Your handyman may be the best PM on Earth, or he may be scum, and all shades of grey in between ... but I'd be highly skeptical that he could make a decent, honest living putting in the attention needed to do a good job at 5% on a small portfolio. Same may be true for the PM company you're looking at for 7%. Finding a good, honest, reasonably priced PM out of state, especially when you have little experience, is hands down the hardest part ... speaking from experience, choose carefully, be patient to choose but quick to replace if they don't perform, and prepare yourself since it may be a long & rocky road before you find one.

Kyle J. · Answer

I think you got some bad info there Annette, or you misunderstood the requirements.  Here's some more info on the topic:

Do you need a Realtor license to be a property manager in Colorado?

Property Management requirements in Colorado

There are some exemptions to the license requirement, but from the sounds of it your handyman wouldn't fit into any of them.

Maybe @Bill S. can weigh in again because he's actually a Realtor in Colorado.

Should I hire my handyman as my property manager?

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