Hiring a Property Manager

[Shawn Walters]

I've decided to hire a property manager to find tenants and also manage properties for me.

I've narrowed down to two, one is a local real estate agent who also does property management on the side. His references (other investors) had good things to say when I called them. Although he only manages 3 homes right now, as he says the others all sold them. The way he works (good and bad) is the money doesn't go through him at all. He just find tenants, screens them and then sends me the apps to decide upon. Once rented he becomes the front man for the tenant, all calls go through him. But he does not do any evictions and such himself, he said the owner still needs to be involved. The money is paid directly to me, and then I pay him his fee. Which is the equivalent to 8% gross rents.

The other is a very large property management firm who does everything from set up utilities in their name, to screening tenants to evicting tenants, to suing tenants in need be, to making repairs etc. However they charge more, and they even charge for supervising maintenance issues. The money goes through them and then they deduct their fees and any expenses they incurred and then I am paid. Their fee, once you account for all of them is around 13% of gross rents.

Thoughts on which to choose? And to answer - yes I've negotiated with them a million times, the big firm originally wanted the equivalent of 20%!

Thanks

[Mark H.]

I manage my own properties because of all the horror stories out there, so I'm definitely biased, but - I would lean towards the little guy who doesn't pretend to know everything - it may cost you less to have him refer you to actual specialists if you need them & not have his fingers in every pot.

With only three rentals to take care of myself (and I haven't been doing it very long), I have developed a decent list of cheap & reliable contractors. I've also got an attorney who specializes in evictions, if needed. Does the 8% include the lease-up? Around here, if you post on MLS you need to pay a co-broke to the tenant's agent which is usually $300-$500 ~ish. If he's eating those costs 8% is a good value. Finding great tenants is where the magic happens. There just isn't much incentive to find great long-term tenants in most standard property management contracts.