Taking property management in house

[Mike A.]

We have a few properties about 150 miles away, so we currently have a property management company that is managing the buildings for us. We recently switched over to Appfolio for our buildings we manage directly, and I was thinking of taking the property management in house with the other ones as well. They are technically already in the system as they submit payments directly to us, but we do not like the way the property management company is working; and this is our second one.  They can open up a support ticket through the online ticketing system or call a toll free 1-800 number to page us and someone would reach out. We then call in a service technician and have them contact the tenant to setup a service call; which we pay for. We'd keep a realtor on to fill the vacancies, but we'd save 8% of the property management fee as well as any BS charges they they charge us. The biggest issue we have is they cannot produce original receipts, so we have no idea what is a real charge or an upcharge. They just claim they pay their contractors by the hour. It's just strange when we have charges for 100, 200, 650, etc, and they have no proof to back it up.

Does anyone else does this?

[Mike A.]

Originally posted by @Nathan Gesner:

I don't think you can do a good job managing rentals from 150 miles away but that's your choice. Personally, I would do a better job of screening until I found a good PM. Driving 300 miles to deal with an inspection is probably more than you would pay in monthly management.

You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Agreed, but believe it or not, there are not many decent PMs in this area. I checked the site you recommended, and we used one of them before. We gave them two buildings fully occupied and within the matter of months, they were vacant. The management fee is negligible, but the additional fees on questionable items are becoming an issue. The other issue is the current PM is hard to get in touch with. Sometimes they'd respond fast, others, not at all. I've requested repeatedly, just provide an acknowledgement or response within 1 business day. They say yes, but then, goes back to the standard operating procedure.  Both buildings are in downtown and bring in around 250k a year in rent; so they are not small. The only leverage we have is that we collect the rent, not them. Myself or my partner can get there in about 1.5 hours, so it's not that bad. I am just trying to get better transparency; similar to what we have with the units we manage directly.