Property Manager willing to float the rehab

[Joe Wright]

Last month I purchased my first rental (2hrs away) and the property manager I chose handled the make ready via her husbands construction/rehab company.  She charged 10% of the rehab/make ready cost to manage the rehab 100%.  So far I really like what they's done.  After the rehab was completed I expected to pay for the rehab plus her 10%.  Instead she said they typically keep the tenant rent until they're paid back.  Is that normal?  She said they built that into their business model but would be fine if I wanted to pay it all up front.  Of course cash preservation is a priority so I've decided to follow her suggestion. As we're about to purchase our second rental I wanted to get some advice if this is a reasonable approach or is there a downside I'm not seeing.  Appreciate anyone's insight.  Still a newbie and figuring out what to expect.  Thanks!

[Ross Denman]

It sounds like you have found a heck of a deal. Essentially, they are loaning you money at 10%. They are probably taking the biggest risk. If the tenant ends up being problematic, they are not getting paid for their work until it's performing again.