How to plan for property manager transition to self management?

Question

Hi, this is my first post. I have looked through the forums for advice on the above question but was hoping for more advice, pitfalls to be aware or things members whom have gone through this transition wish they would have done but didn't before the transition from property manager to self management.

My wife and I own ~80 units spread out over 6 buildings.  We are trying to get our portfolio more profitable and are tired of all the fees beyond the management fee that are impacting returns. The property management company has been professional but we need to make more money. We are OK to trade our time to self manage (for the time being). Our buildings under current management will be terminated one by one over the next 6 months (we don't have one date for contract renewal for all buildings which seems was a mistake now).

I would love advice on how to form a plan from anyone that has done this before to take over this portfolio in a way that is the least disruptive for tenants and smoothest for us, most importantly not impacting revenue. I have signed up with Buildium and am in the beginning stages of setting up that property management system.  I am worried about many big and small issues like; getting a website set up (any recommendations or anyone interested?), accounting set up, lease transfer, payment processing, getting the photos of the units back since we paid the property management firm to hire a photographer for us, parking signs, etc.

Any advice on any of the following: (1) a transition plan, (2) things I might easily miss doing, (3) actions you wish you would have taken before the transition to self management and (4) mistakes made and lessons learned.

Many thanks in advance for your thoughts.

Will Gaston · Answer

@Matt Sullivan seems like you're already asking yourself and others the right questions. Here's a few more thoughts:

1) I would over-communicate to the tenants upon the transition.

Do it via snail mail, email, and text if possible. Even leaving a letter on each door is helpful. You want everybody to be on the same page.

2) Expect hiccups.

There are going to be rent payments, maintenance issues, vendor payments, etc that are going to slip through the cracks with that many units. Hope for the best but plan for the worst.

3) Check with Buildium and ask what they recommend.

I am sure there is a forum or some type of checklist out there that Buildium could provide to make it more seamless. I use Appfolio and I'd bet they have some version of this.

This is a big transition and I would put a ton of thought into it before pulling the trigger. Planning will go a long way into easing the headaches on a big switch like this.

Timmi Ryerson · Answer

We do this often for subscribers.  Whereas we service many property management companies, there are those who want to increase the bottom line for their valuable investement and self direct the management.  The change over should be seemless.  I am vaugly familiar with Buildium.  Do they have templates that you can use to transfer your data from the property management spread sheets to the software?  If so, then start with that.  Set your properties up first and then add the leases.  I was confused by the setting up of the accounting. In my software it is set up automatically, but you may have meant set up by adding data.  Hopefully you can upload data and once the leases are activated, all of the accounting for rents and income should be automated.  Since you are doing it one building at a time, it should not be very complicated.  But be sure to contact your tenants first and let them know that you are changing management and send them instructions about how to make their rent payements.

Greg Weik · Answer

Hi @Matt Sullivan, phew, that's a lot to unpack!

I have to ask "are you sure?"  Before going further.  Is there another PM company that might be able to offer pricing more in line with what you need to be more profitable?  That could potentially save you an enormous headache. 80 doors is a lot of doors to manage on your own.

If you insist, I would not use Buildium, but use Propertyware (both owned by Real Page) - Propertyware is more robust and more customizable.

1) Your transition plan has to have a checklist for each door.  You have to get the tenant's information, their payment history, any relevant lease notes, repair history on the door including open work orders, all into your management software.  You need to enter that data 1 door at a time into your new system.

2) Make sure to coordinate the transition with your current PM, right after rents are paid.  The data entry part will take longer than you might imagine.  I suggest with 80 doors, making sure you have 2 escrow accounts, 1 for security deposits and 1 for the draws to yourself or the entity that owns the doors.  Your property management software will make this easier, but you will need to do monthly reconciliations to make sure the numbers match (I strongly encourage outsourcing this part.)

Make sure you have the security deposits from your current PMC that match up with your leases.  This should be part of step 1, your spreadsheet should have a column for this number so it can easily be added.

Make sure you get the contact information for any vendors doing/have done work on your 80 doors; particularly any ongoing maintenance, so you can enter those vendors into your new system.

Make sure your current PMC notifies tenants of the transition of their security deposit and of the management of the units. Make sure the PMC gives out the number/email you want to be fielding calls/emails from.  Highly suggest a dedicated line and email address.

After the current PMC notifies the tenants of the transition, you will notify them of the transition.  This is where I would suggest making sure you have up-to-date contact information for all your tenants; and if possible, get all of them to pay rent online via the tenant portal (most software has this functionality.)

Last, pay attention to lease end dates.  You need a process to make sure you're not letting all the doors slide to m2m.  If you use a software like Propertyware, it's easy to run reports monthly with leases coming up for expiration, and then to track where you are on the renewal/non-renewal process.  It would be terrible to do all this work to save money, only to lose it on vacancies that sit on the market.  Good luck!

Timmi Ryerson · Answer

@mattsullivan

Ok,then.  Sorry to hear that but am not surprised.  It just does not give them a very good name in terms of owner support. I recommend that you specifically ask them for copies of the spread sheets they have, or if they use software, ask them to download the data for the buildings you are taking over now.  I assume that you have copies of the leases.  So you can use that info to upload to your new software.  Contact the software company you are using and ask them to upload the data from the spreadsheets.  Hopefully they have that ability.  The management company will need to continue to provide you with the financial data on your properties so just start your new ledger with the day 1 of the time you expect to take over and collect rents etc on the new software.  Good luck.  Don't let them make you so frustrated that you get mad.  That never helps.

Dave Spooner · Answer

@Matt Sullivan If you're particularly cost conscious, there's plenty of software out there that's free and will likely offer everything you need. These more modern platforms tend to be a bit more user friendly as well. With the amount of work you're taking on, you don't want to spend hours training on something.

I'd also recommend seeking out a management system that offers phone support and direct training when needed.

In the past, you needed to pay a premium for the features required to manage that many units, but that's really not the case anymore. Let me know if you'd like any recommendations.

Matt Sullivan · Answer

Timmi, very kind of you to follow up and great advice like others on this thread. I loved your "should be seamless" statement.  Unfortunately, the prop management agent is not being helpful in the transition.  They will not speak to me over the phone, are not providing me basic information requested, wont follow up on insurance claim questions and I have just found they have been charging me a "releasing fee" even though my contracts expressly state they should not. I can sort of understand their position, they must be upset and feel they have done tons for us, its a big loss for them but I have to produce a greater ROI or I risk my business.

Matt Sullivan · Answer

Thanks Drew.  I am kind of a all or nothing person.  The properties will transition over many months allowing me to learn along the way. Any big mistakes you think I should look out for?

Drew Sygit · Answer

@Matt Sullivan you might want to try DIY on one building to both find out if it's what you want to do and as a learning experience.

Matt Sullivan · Answer

Thanks Greg. Incredibly valuable.

How to plan for property manager transition to self management?

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