Questions concerning the use of a PM

General Landlording & Rental Properties
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Questions concerning the use of a PM

S. Perry
Central, OH · Member since 2013 · 40 posts · 0 votes

**Tried to correct the typo in my title but was unsuccessful.

We own a SFH and will be renting it out in the near future. We have decided to utilize the services of a PM. I am far from an expert but with some research it seems that the current charges are in line with similar areas.
$150 fee to set up service, advertise and find tenant.
First months rent (they determined the monthly rent of $1400) paid to PM.
7% monthly of rent going forward.
10% up charge for maintenance/repairs and anything over $500 would require approval.
**I would like this to be lower, perhaps $100 or possibly $250.

I have a few questions about the owner-PM relationship and will be asking the chosen company these things as well but thought I might get some insight here from those who are far more educated in this matter.

How much control does the owner maintain over their property?
Do we have any say in who is chosen as a renter or does it merely come down to who has the best "passing" application? A family of 6 isn't really suited for a 2 br home but I can't count the number of inquiries I have had which are similar (total strangers ask us all the time when it will be available).

When I asked about doing yearly or even a bi-yearly walk through I was told they didn't offer this only because it had the potential to become problematic. Translated to mean the renter would have a list of wanted items done which were not needed items. This is a bit concerning to us but perhaps we are trying to be too hand's on?

We can't be the first LL's who wish to have their property maintained.....I am not trying to be overly optimistic and I know things can and will happen. I am fully prepared for worst case scenario in that area.

We are offering to provide the lawn service (about an acre and we have the equipment). We would provide snow removal when necessary, if desired, to a very large driveway - 15 cars or so, again we have the equipment.
There are other things we would like to have done annually (fireplace inspection/cleaning) - on us - and other things done more frequently (replacing furnace filters for example).

Is it even a remote possibility that we can be responsible for various items and opt out of having the PM company take the reigns in those chosen few areas hence eliminating a few maintenance fees and up charges here and there? We have no desire to make midnight runs for a backed up toilet or a clogged sink but other areas will be easily handed over and happily.

Rumor has it that *some* PM companies will nickle and dime you to death. I fully realize they are in business to make money and to be successful. I don't begrudge them for that in the least. They will provide a service that we are not willing to undertake so I know there will be some give and take. Having never done this before I just don't know what my options might be or what battle I should fight or let go.

Any insight would be much appreciated.

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Jeremiah B.
Investor · Portland, OR · Member since 2012 · 266 posts · 128 votes
13y

I use and value a pm, but I do so because I dont want to control or manage the property. If you want that control but your big concern is midnight calls, I would seriously think about not hiring a pm. My understanding is that those calls are very rare.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    One of the biggest things I would say is the EXPERIENCE of the property management company.

    You want a company that does it full time and specializes in it and has systems in place to maximize your ROI and pick from the best tenant pool.

    You do not want a company that does this on the side between regular sales which is what you can find sometimes with renting the little houses.

    Their contract you might can change some things or it might be company policy that their forms can't be changed. be sure and ask for multiple current and past client references so you can hear the good and the bad about them.

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  • Amie D.
    SFR Investor · South Bend, IN · Member since 2013 · 342 posts · 56 votes
    13y

    Like you said, you have to ask the PM - have you called and interviewed several reputable ones and compared their terms? Agree with Joel, you want someone experienced and that has policies you can live with. Most things are negotiable in my experience but again you have to ask.

    In one state I own a SFR it is state law that they must present all applicants to me and I say yes/no. In the other state there is no law for this, the PM does the screening and I just say yes/no at the end, frankly I prefer it the latter way (less work as long as they are picking qualified people). So you would need to check.

    One of my property management companies will not do inspections on their own, I can opt for it though at extra charge. I don't know that I will as I'm pretty well tied in with the neighbors. The other PM happens to drive by the other property on his way to work everyday anyway. His maintenance guy does a yearly HVAC check and we use that as the visual inspection as well. If you want those regular service items done (fireplace, furnace filters) you could possible double-duty those as a visual inspection. It doesn't take a professional home inspector to look around to see if the property is being cared for.

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  • Jeremiah B.
    Investor · Portland, OR · Member since 2012 · 266 posts · 128 votes
    13y

    I use and value a pm, but I do so because I dont want to control or manage the property. If you want that control but your big concern is midnight calls, I would seriously think about not hiring a pm. My understanding is that those calls are very rare.

    1Reply
  • Adam Gerig
    Investor · Fort Wayne, IN · Member since 2012 · 276 posts · 77 votes
    13y

    Just received a text at 11:15pm from a tenant. Goes with the job! If you don't want the hassle I would suggest finding a good PM company that PM is their only business. Too many fly by nighters and agents who do it on the side that don't have the time to devote to managing it correctly. Just my 2 cents!

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  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    If your main concern is answering potential late night calls, it might be better for you to try managing on your own first, especially if you are planning to do so much work on your own already (you mentioned doing lawn care/snow removal yourself), as you'll find that doesn't happen as often as you'd think. Then hire a PM if it gets too stressful for you. Tenant screening is the hardest for me, but with online resources (BP has one under Resources tab, for instance), it's easier than it used to be. If you already know good electricians, plumbers, etc., it's a plus. I still manage one of my own out of state because if they do call at night, I have the plumber, electrician, handyman, etc., that knows me and will come out when needed and bill me later. The PMs I use allowed me to change it to $200 for repairs or they contact me, and they let me inspect when I want to (with notice, of course). We take a weekend, drive down, inspect and fix the things we can fix, then schedule repairs for any big things we can't. Tenants don't usually report things like outside trim needing paint, the tree growing through the deck, the vinyl starting to come up in the bathroom, etc., and we've found property managers miss all kinds of things even if you pay for their inspection as they are not as invested in the property as you. Plan on inspecting & repairing yourself at least once a year, even if it means nit-picky repair requests from the tenant, as it cuts down on costly repair trips from the PM company's people.

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  • S. Perry
    OP
    Central, OH · Member since 2013 · 40 posts · 0 votes
    13y

    Thanks to all who have responded. The main reason we decided to use a PM is because we will be using a portion of the property ourselves and will be there on a daily basis. We thought there would be a possibility of a tenant taking advantage of that with such easy access to us. A portion of the property is zoned commercial and one of our companies rents the buildings from us. It appears as if the properties are two separate lots. If we are involved with the home rental it would be easy to know otherwise and we wanted to avoid that. We also don't have the time to manage a 3rd business.
    I didn't intend to come off as as owner who didn't want to relinquish control. I am happy to give that to a PM. I was more so wanting to obtain information on how it works (using a PM). What things are set in stone, so to speak, and if the possibility is there for a bit of give and take. No intention of trying to persuade a PM to change their business model. I was unsuccessful in locating many PM companies in my area that only do property management. I am sure they are out there but my Google searches were very limited. The ones I did find had too many negative reviews for me to be comfortable with. The one I have chosen is a privately owned realty office with a handful of the staff who focus more on the PM side. We have met in person and have had a couple of phone conversation (they are wanting us to rent it already) but have not had a legitimate sit down to discuss more details than what I have already shared here.

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  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    Ask if they will e-mail a copy of their management agreement so you'll have plenty of time to read it all thoroughly before you meet. I ruled out several who sounded great over the phone but their contracts were ridiculous (one actually had a window blind cleaning fee of $50 per window using their blind cleaning company once per year and wouldn't remove it from their agreement, another wanted one month's rent per year fee even if tenant stayed in place, etc.).

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  • Amie D.
    SFR Investor · South Bend, IN · Member since 2013 · 342 posts · 56 votes
    13y

    For me I am out of state, but it wasn't just the actual late night calls, as there aren't too many of them. It was the "possibility" of late night calls. I never felt as if I could shut off my phone. I was also a photojournalist at the time and being on call was part of my job. I don't think I slept well until I hired a PM and changed shifts... Also I traveled internationally so there would need to be coverage during those times as well.

    I can say the tenant can only take advantage of you if you let them. Sometimes you just have to draw the line. Still if you want to go with a PM definitely read their contract and have them give you a list which spells out all their fees in advance.

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