How much autonomy do you give property managers?

Question

I recently purchased my second multi-family rental unit and hired a property manager to manage it. (I managed my first rental myself, and still do.)

So far, the property manager I hired has acted with more autonomy than I expected. He found tenants and signed leases with them without consulting me at any point, apart from discussing rental rates. I don't even what the lease terms are or whom I'm renting to. He also told me that when maintenance issues arise, he plans to address them without bothering me (either by fixing the issues himself, or hiring them out) and will send me the bill afterwards.

I don't want to be involved in the day-to-day operations of my properties (collecting rent, changing lightbulbs, etc.), but I would like to be involved in the big decisions, such as who to rent to or how to approach the repair of major issues (like a furnace that needs to be replaced). When I told the property manager this, he was touchy about it and said if that's what I want then I shouldn't have hired him.

Is the level of autonomy that my manager wants normal? Or should I find someone else?

The property in question is in my town, by the way, so it's feasible for me to be involved in finding tenants and overseeing significant maintenance work.

Ondrej Gargula · Answer

@Gusatvus Johnson I am a property manager myself and to be honest every owners/investors is different. As @Rich Baer mentioned I always discuss how our cooperation is going to look like and adjust to what the specific owner wants. With some I am on the phone about every bill and every little thing, with others I am in contact monthly because we have already established a working relationship where we trust each other and know what to expect.

Few things that I do with every owner:

- Maintenance limit (everything over needs to be approved by the owner or if there is multiple little bills)

- Discussing each new applicant/tenant

- Discussing a change of the rent or advertising move-in specials.

In general, with every new owner I am in contact more often (usually weekly calls) just to get to know each other, of course if it's okay with the owner.

Thomas S. · Answer

As a investor it is your responsibility to manage your manager. This often involves as much effort as managing a property. Finding tenants and signing leases without first having your approval is unacceptable, however that was your mistake not his. The maintenance issue is something again. His policy would not be acceptable to me without placing dollar values on work.

First there is no way you should ever "trust" anyone. Determine exactly what you want from a property manager, lay it out clearly, have them give you feed back and then decide if you want to hire them or not. You do not hire someone that is not willing to meet your requirements.

Your PM gave you very good advice when he said you shouldn't have hired him. You did no research, asked no questions and were not qualified to hire a PM.  If I were you I would let him go and  self manage until you can clearly define what you want from a PM and find one that meets that requirement.

Gusatvus Johnson · Answer

For the record, I did interview other property managers. I went with this one because the building he is managing for me is near a university and I wanted to rent to students. He was the only person I interviewed (and really, the only one I could find) who had extensive experience with student rentals; the other people I talked to claimed to be able and willing to rent to students, but didn't seem to have experience with that particular type of tenant.

I suppose the fact that we discussed students as tenants means we did discuss tenant expectations to some degree. My only big surprise was when he started signing leases with students without communicating with me first.

Henri Meli · Answer

@Gusatvus Johnson .

Did you interview the property manager?

How did he/she become the property manager of the property you own, without even  a contract? An interview?

Does this property manager know and understand your vision ? Do you communicate your vision to your property manager? Did you tell him the types of tenants you want? (Credit score, Job history, ... etc)? Does this property manager understand your retention policy? ... etc.

See, when you purchase an asset like that, you MUST have a vision, a business plan, and an execution plan. NO, you shouldn't be involved in the day to day activities, but without the things mentioned above, how would you judge if the PM is on track or not? Assuming you did borrow money to acquire the asset, how do you know you are on track?

Good Luck.

Chad Hale · Answer

As a PM, I tailor the communication/autonomy etc to what the owner wants.  I work for them.  Most owners want to know about the tenants in their properties, we discuss rent rates, spending authorization, preferred way to communicate (phone, email, text etc), how involved do they want to be.

Everyone gets a monthly report and accounting regardless.

Gusatvus Johnson · Answer

Thanks for the replies. It sounds like it's normal for my property manager to want full autonomy for most operations as long as we discuss expectations ahead of time. I was under the impression that property owners were typically more involved in things like selecting tenants, but I can see how that would be impractical to scale, so I should instead make it clear what my expectations are for these things and then trust the property manager to handle them.

Rich Baer · Answer

@Gusatvus Johnson

The property manager is an extension of you. Going forward you need to discuss each property in advance with him/her. Discuss what the rent should be and the type of tenant you wish to be placed. Discuss who to use for repairs, if you have your own people, and what amount the thresh hold is before the PM needs to call. I tell my PM not to call unless it is something serious in terms of price or liability.

Andrew B. · Answer

Did this property manager discuss applicant criteria with you? If so, I don't think its unheard of to manage applicants when you approve the minimum standards. I would be concerned if you weren't aware of his standards. As far as repairs, he should have a dollar threshold, where any repair under $XXX can be done without approval.

How much autonomy do you give property managers?

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