How Do I Let It Go (to a Property Manager)

[Julie Marquez]

My family has managed our own properties for over 35 years, so we have a little bit of experience and knowledge. We aren't perfect, but the forms have been tailored to all our specific issues over the years. I've been talking to professional property management companies over the past couple of years and I am kind of interested in getting some help. I was thinking that I could start with (1) of our (4) fourplex buildings (they are all next to each other, but different addresses).

We have some pretty specific things that we have found work well for us, can I ask that the PM have the same terms (even if it is different than their norm)? Like month to month (instead of year leases), rent late the second day (instead of the 5th), and a limit to the number of vehicles and working on vehicles and storing vehicles. Can one building have completely different terms and rules while a building with the same owner, but managed by myself, has completely different policies? I don't want to get into the issue of discrimination - so is that based on the manager or the owner?

Anyway, I am really reluctant to give up control but am willing to try it with one building. Even though we might be working right next door and see our old tenants, but not be in the place to accept their rent or help them. I'm interested to see if having a property manager is really helpful for us, or just a burden to have to manage. I understand both sides of the PM/owner coin, I guess I won't really know how it plays out in my life until I try it.

[Nathan Gesner]

@Julie Marquez as a professional Property Manager, I will not tailor my management services to the individual owner. First, deviations are a recipe for disaster because it requires me to follow unique processes which increases the likelihood of a mistake. Second, the processes I have in place are already proven with a decade of experience and 350 rentals.

Speaking to your specific examples:

1. Many Landlords want M2M so it's easier to get rid of bad tenants. As a professional PM with 350 tenants, I rarely run into a tenant that I want to get rid of but can't. The last one was in 2014. Instead, I have strong systems in place for screening, training, managing, and evicting tenants. If the tenant wants to break a one-year lease early, I have a system in place that actually puts more money in the owner's pocket 80% of the time. Before assuming your system is better, talk to the PM about why they prefer one-year leases and how they handle early terminations or problem tenants.

2. Is an extra three days of grace a hill worth dying on? If the PM doesn't charge a late fee until the 5th, how will that impact your ability to pay bills, build wealth, or enjoy your children? If you find a quality PM, they'll justify when/why they charge late fees when they do.

3. Any PM worth their salt will already have policies in place regarding parking, only allowing vehicles that are licensed and operational, etc.

4. You can have separate managers for separate properties. Some can be professionally managed while others are self-managed. Do not give only part of a property to the manager (e.g. a fourplex with you managing half of it) as that only adds complications and problems.

It sounds like you're worrying about problems before even interviewing property managers. Learn how to identify a good PM, then start interviewing at least three separate companies. Here are some tips:

Remember: cheaper doesn't mean you'll make more money.

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.

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!