Property Management Companies-Investor Perception & Practicality

[Vijaianand Thirunageswaram]

Howdy,

I want to hit on this topic in local forum since I saw related hot topic in the BP main forum.  I know many have said that they don't like their property manager and complained and shared their expectations. I am sure many Houston & Texas Investors have similar thoughts so may be it's good to talk about it.

I am an Investor turned Realtor and Property Manager. I started managing property for my investors with my own experience in managing my properties. I have been burnt as an investor handling Tenants and learned my lessons hard way and now currently have streamlined process to manage them effectively and efficiently. So I know what I expected off of a property manager should be and do. My main motive is to deliver the same kinda of service to my investor clients. 

Let me share my thought about PM from Investors and Property manager perspective.  As Investors, we think Property management company should manage properties like you as a person will do. That itself is a wrong mind set. As investors we tend to put emotions when handling Tenants. That screws up the whole deal. I have lost lots of dollars just because of this single reason. Rental property is a business. 

When you work with PM, You need to set expectation and expect them to work with you in line with your expectation. So you need to find PM company or Property manager who shares your interest and work to satisfy your expectation. That only happens if the PM Company is not handling hundreds of properties or have more staff to accommodate it. There are many big companies who does PM and they might work out well for cost perspective but they see the properties and Tenants as numbers and not as person. It's important to respect the Tenants and also work with them to take care of their needs to certain extent to avoid turn overs. There  is no harm in working with smaller PM companies or Property managers who handle fewer doors. It's similar to supporting local businesses. They are better in many ways compared to franchise stores. 

Communication is another aspect Investors raised concerns. Here is the thing, you opted to work with PM company to get freedom from all the hassle. If you expect them to call or email on every issues, that's going to be time consuming on their side and also adds complication and they going to charge more.  You need to step aside and let them take care of the smaller issue under contract if it's below $250 or whatever it is and expect them to communicate at the end. If its above that limit, they should contact you for approval. 

Coming to fees, some charge 10% of rent and others flat charge, it depends on the area and so forth. 10% PM fees doesn't mean great service, and flat charge doesn't mean media core service. Price shouldn't judge the service but it's one of the factors. Obviously, PM takes time. Just one call will eat up 3-5 hours of time and even if you put $10/hour, it's $50 worth. Just for one issue. What if you multiple issues that month for the same unit? Investors say, they don't get calls at all many months and still have to pay the same amount. Yes, agree why don't you just pay insurance just when there is accident happens and not pay for other months. Does that work that way? Not really. PM is similar to you. You are assured to have some one to take calls and make sure it's been attended properly and problem is getting resolved. You have to consider the cumulative effect. PM expense should be also added in your numbers during analysis. 

At end, my point is PM should work for your growth and security of your asset and at the same time grow their business. You need to understand they are in business as well to help you and grow. I don't agree about PM taking percentage on repairs.  As investors, we also need to choose the right PM company which can work with you to match your expectation and let them do their job and don't expect to micro manage it. It should be Fiduciary relationship. You(PM) will make money when I(Investors) make money.

Just my 2 cents.. Do share your thoughts. 

[Vijaianand Thirunageswaram]

@Tony Castronovo Service contract you mean home warranty. Don't ever buy it. It's waste of money. It doesn't work for any old properties because they want to make money out of you by selling things to you. I would recommend. I know 10% or flat fee might seem lot of money but as you said your time is worth more. Instead of spending 10-20 hours with tenant, you would rather spend it analyzing deals and grow your portfolio.  You have delegate to grow and scale. 

@Roshan Koppuzhayil If it's going to be first investment property, there is no harm in trying it out like Tony so that you will understand the intigrities of the property management and when you grow it would be easy to understand what the PM is telling you instead of just taking their word. I usually mentor investors to take the leap and try out landlording for one or two properties and that's it. I do full time IT job myself till today and I used own 3-4 rentals myself but reduced to get some money out. Now I still own couple and 10 more of investors. With help of assistant, I am managing them all. You should also be able to do it if you buy it close to you and make it good rental. It's all within the reach.