At What Point Did you Hire Property Management Co.

[David K.]

Just curious for those with 10+ units...at what point did you decide to hire an outside company to manage your rental properties?  I've been self managing for a long time and done well, but wondering if maybe I can go bigger by freeing up more time v. there's not many deals out there now so will my time actually be productive?

[Michael Swan]

Hi @David K.

That is the dilemma as we want to expand.  It was great that you learned and have been managing your rental properties and know all the ins an outs.  Now, when you start to interview PM companies, you will know if they walk the walk or talk the talk.  You know how much it costs to change out a water heater etc....

Me personally, I still push a button whenever I have a vacancy every two to three hours and a new craigslist ad goes out with my PM's phone number. Often, he does not like being inundated with sooooo many calls.  I don't care.  He needs to rent out my place to quality tenants, have 70% collections by the 15th of every month and have 85-100% collected by the 25th of every month, including late fees.  Also, he needs to give 60 Day notices at the end of all leases with new rental increases.  All units need at least a nuisance increase of $15-$20.00 per month at every lease renewal.  What newbies don't realize is that if you go 3-5 years without a rental increase and then you happen to have some big repairs or replacements during those 3-5 years, you are going to need to increase the rents dramatically to make up those added expenses.  When you raise the rents dramatically and you try to explain to the tenants you kept the rents low for them to 3-5 years and never raised it on them in that period, the still want to move because over the course of the next 12 months they are paying $1500-$2,000 a year more and it is worth it to move now.  If you give a nuisance rent of $15-$20.00 a month each year, people don't want to move for the $180-$240.00 nuisance increase for the year.

You need to get your tenants to expect small rental increases each year.  If you don't, my experience is they will leave if all of a sudden you increase their rents $100-$200.00 a month, due to that furnace you had to replace this past year etc...

If you don't know what you are doing and do not have clear expectations laid out for your new PM, you will be like lots of people on BP that contact me saying they are going through their 2nd or 3rd PM and they have only had the rental property for less than a year or so.

Swanny