Typical property management fees/responsibilities?

Question

We have 4 small rental properties (3 condo units and 1 single family home with minimal landscaping) and we have always managed them ourselves pretty easily. However, we are going overseas for a year and now have to hire a property management company. I have not had much experience with local companies but what I have seen doesn't impress me...lots of For Rent signs for months on end (our properties rent in 2 weeks or less), lots of complaints about service, etc. Here's the thing...we have a friend with zero property management experience BUT we trust him, and he is extremely responsible and intelligent. Honestly, 70% of what we do is collect & deposit rents, and fill one or two vacancies per year--not a big deal. But we have been taken to court once, and we had one tenant die, so we know there is potential for complicated issues.
          Question-- We want to leave the country without worrying about our properties, so which is better...leave the job to someone who is smart and we trust OR to some staff person at a property management company? Also, what is the standard fee for what type of responsibilities? Should the person/company we leave this to have some special insurance/liability coverage?

Account Closed · Answer

My suggestion: have your friend manage the day to day for you. Give him a list of workmen to call for repairs. Leave him with a stack of all the forms he will need

Unless you are going to a deep cave in Mongolia, you will be reachable by cell phone. Take your emergency phone numbers with you, and have your friend call you with questions when he is uncertain what to do.

Here's the professional help part: find another local landlord who wants to swap managing with you for vacation times. As long as you are just expecting help with the more difficult situations and not full time hands-on, it shouldn't be hard to find someone willing. Every one of us landlords would like to have an experienced back-up for our own vacation times.

Give a retainer to an eviction attorney and hand it all over to him if you have to evict.

Your friend won't need to be licensed if you aren't paying him anything.

I suggest that you do not let your tenants know you are out of the country. Just give them the new phone number to call for problems.

Will Barnard · Answer

We Never pay repair and maintenance mark up! We have always been able to negotiate an 8% per month (of collected rents) fee. The placement fee should be no ore than 1/2 of the first months rent.
Most property management contracts have all kinds of charges built into them and we make sure these are all N/A or $0
Many also state that if the renter buys the property at a later date, the management company (who are RE sales agents in most cases) get a 3% fee. We feel that they already got paid via the placement fee and as such are not entitled to another 3% of the sale price. On the other hand, if they market it to sell for us to a non current tenant, then they are of course paid.

To answer your question as to what you should do, I would suggest using your trusted source. Although they may not be licensed, you may be able to speak with your attorney to draft a document giving them limited power while you are gone. If you have no experience dealing with property managers and hiring them, you may find that you will in fact have worries and responsibilities while out of the country which defeats the purpose. Hiring and negotiating, and managing your property managers is an art form if you will.

Hope my OPINION (not to be construed as legal advise) was helpful.

Jon Holdman · Answer

Most state require property managers be licensed real estate agents.

I've spoken with several here in the Denver area and several in a college town north of here, Greeley.

Here in Denver, they charge 10% of the collected rent, and between half a month and a month to fill a vacancy. They will also charge to advertise a vacant unit.  They most likely make a cut somehow or another on any maintenance.  They may have their own folks do maintenance, and charge you a higher rate they they pay; hire handymen to do work, then mark up their charges; or charge you what the handymen charge, but then get a rebate from the handymen.

I've seen cases where there seemed like a LOT of maintenance going on.  The tenants said they were very happy with the PM, and once I saw the APOD, I'm sure they were.

In the college town, they don't charge the leaseup fee.  Not sure why, but none of them charged that.  Otherwise, the charges were about the same.

Account Closed · Answer

PS: instruct your friend to tell the tenants he is just the handyman and if they want any changes he'll ask you and get back to them. Otherwise they will drive him crazy trying to convince him that you always allow them to pay a month late or that you already gave permission for a new puppy.

Eddie Ziv · Answer

I use two different property managers in Texas and in Alabama. My Texan deal is very similar to Will's (Nationwidepi). They don't even have someone to do the maintenance. If there is something to be done, they usually give me the bids for the job and I deal directly with the vendor. On and all, maintenance requirement is fairly rare and they mostly collect rent. The one in Alabama charge me also 8% (License is not required) and they do charge me for maintenance. Most likely they mark up and possibly make up. But the numbers are so low that overall it worth it (It is mostly low income, section 8 type which I could never deal with directly).
My only advise should you opt for hiring a PM, is in a form of three words: references, references, references!! Also, make sure you have an adequate liability insurance but I'm sure you know that one already...

Just Don · Answer

Manage them yourselves from where ever you are.  They probably wont even catch on if its a no problem tenant.

Leave your 'friend' be called a handy man,for lack of a better term,cause he will be handy when and if his services are needed.  NOBODY needs to know how handy.  For this limited management, a company WONT do as good as you from afar!!

There isnt a decent management company HERE either.  if they talk the talk,,,they cant walk the walk.

Had one once who was managing a property for me as i lived out of town,,,after 6-9 months of NOT renting the house,it was rented within a few days of actually trying to.  They wondered WHY I was canceling my rental with them after that 6-9 months of no showings even!!(and I used to WORK there) so knew them TOO well I guess!!)

YOU can do it!!

Shari Posey · Answer

We will be paying our friend so that might be a problem because he is not licensed. I'll have to do some research on this becaues if this is the case, I'll have to find a Realtor friend instead. 
Gosh, over the years I have helps so many clients rent and maintain their properties for small flat fees and about 2% tenant finder fees, it shocks me when you throw around 10% of gross rents. In my experience with our own rentals and other people's, it is not that complicated or time consuming unless you get a problem tenant. I guess I should consider the fees as an "insurance policy" in case of future problems, otherwise, there's just not that much to do most months to justify 10% in my opinion.

Jeffrey K. · Answer

If it is legal use your friend and have a lawyer ready incase he gets over his head.  You are a reltor, dont you have someone who covers for you?  Would they like to earn some extra money?

Shari Posey · Answer

Jon,
Humm...so exactly what do they do for 10%? I've set the rents, I already know my operating costs, I would want them to use my own maintenance people. Is it unheard of to pay PM companies an hourly fee ($25/hr) for work they actually do?

Jon Klaus · Answer

What is APOD?

Typical property management fees/responsibilities?

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