The in's and out's of Property Managenment

[Anthony Liguori]

I manage my own properties but recently I been interested in investing out of state. So I was wondering all my out of state investors: how much does a property manager cost? what is it do they actually do? Does a W2 form get filled out by the Pm? How do I get paid? is there an account just for damages/maintenance ? I can't think of any more questions but I'm sure I'm leaving out some more.. any and all insight would be great!!

[Filipe Pereira]

Originally posted by @Anthony Liguori:

I manage my own properties but recently I been interested in investing out of state. So I was wondering all my out of state investors:

how much does a property manager cost?

what is it do they actually do?

Does a W2 form get filled out by the Pm?

How do I get paid?

is there an account just for damages/maintenance ?

I can't think of any more questions but I'm sure I'm leaving out some more..

any and all insight would be great!!

Hi Anthony, 
I own and manage CT Property Management, a full service PM firm based in Hartford County. My response below is based on my experiences and how we operate. Obviously there will be some variation between each property management company. 

1. Property managers costs 8-10%, typically. We charge 10% of the collected rent. If the apartment isn't rented, or if tenants don't pay, we don't get paid, because you're not getting paid. (Make sure your PM's financial interests align with yours.)

2. We tell our clients that they can be as hands on or hands off as they would like to be. Some clients want nothing to do with the property and ask us to address everything, others want to be more involved. Either is fine and both have worked. We take care of the management of tasks, not the "doing" of tasks. We don't mow lawns, as an example, we manage the company that mows the lawn. We get bids, agree to contracts, request W-9s and certs of insurance, pay invoices, etc. We're not actually mowing the lawns ourselves though.  

3. We don't fill out a W-2 because we are not anyone's employee. 

4.Owners get paid through a monthly distribution. ACH transfer straight into their bank account. Check is an option, but those are usually more hassle than they are worth. 

5. No separate account although we do maintain an emergency account of $1,000 per property. It's not much, but when combined with the rental amount for the month it's usually enough to cover most emergencies that come up. Expenses are paid out of the operating account each month. 

Have fun and find a PM that will help educate you!