How to manage the Property Manager

[Michael G.]

I may be the only one with these property management issues but it seems to be a recurring theme.

I've owned 4 rental units in a particular farm area. Almost without fail every single property management company I've hired has had issues with at least one of the following:

a) Creating repairs and invoices for ficticious repairs.

b) Charging us for repairs done to another property.

c) Not managing the tenants properly in terms of them paying the rent late. ie - US- What happened to Mays rent? Them - Oh, we forgot to tell you that the tenant is having some issues and said they wont be able to pay til June.

d) Not communicating the cost of repairs and charging us for them unexpectedly. ie - the stove broke we had to replace it.

Im sure I will think of some other things after I write this memo but Ive learned that the property managers need managing. I thing that if left unattended the tendency is for them to use your rent rolls as a license to print money.

Ive gone through 3 different property mangement companys and it almost seems like there is a common theme amongst them which is that they know you are an out of town investor and the likelyhood of you showing up to inspect your property is very, very low. The further away the better it seems.

I've taken some precautions lately like asking for a phone call prior to making any repair more that $100. Asking for before and after photos of repair work that needs to be done. Closely watching the expense column for charges (hidden, mistaken and otherwise)

Please share your prop mgmt thoughts and experiences with me. I'd love to hear them.

[Marc Freislinger]

It's not hard to run an honest property management company, but there are times when owners can be very unrealistic about costs.

We started our management company for the same reasons you've mentioned. There is a huge lack of honest, reliable, property management in the area. The investors we work with all have horror stories of being billed for phony invoices, having tenants living for free for months on end, and having calls to management go unanswered for days and weeks.

So far, business is great. The only real problem that we have is with owners who are used to doing their own management, or who are unrealistic about costs. Property management is a convenience, and like any other convenience it costs money to use. Like any other business, it costs money to run. To demonstrate, I'd like to use the example of installing a toilet.

Installing a toilet yourself will cost you roughly $100.

$70 for the tank and bowl
$5 for the wax ring
$10 for the stainless steal braided contector
$15 for one hour of your time (You consider your time as money right?)

Having a property management company do the same repair has some additional costs.
$70 for the tank and bowl
$5 for the wax ring
$10 for the stainless steal braided contector
$10 for one hour of install time (paid labor)
$10 for hour of driving to the store and picking everything up (paid labor)
$5 in gas

Add in general overhead costs of plating the work truck, insurance, phones, etc and the $150 billed to the owner for a new toilet doesn't leave much profit. If we pull the toilet, and the flange is broken, your looking at another hour and a half to go back to the store, buy the part, install the part, and the price might go up another $50.

Even honest property management companies can't work for free. One of the posts I saw on the board before was complaining that their PM charged them hourly while going to a store, but someone has to go, and someone needs to be paid for their time. It's a small charge that gets passed on with any company you go with, whether they tell you about it or not.

I guess my point, is that when you go to the store, and see that a toilet is $70, and your PM is asking $150 to put one in, don't immediately jump to the conclusion that you're getting ripped off.

To Michael: I do recommend starting a PM company if you live in the area. There is definitely a need out there for honest managers, and owners who like your services, do tell their friends.