Transitioning from Self Management to Property Management

[Wendy S.]

Good Day everyone!

So house hacking is talked about a lot and even serial househacking. Ok, I agree it has served me well with the few I've done and allowed me to quit my day job with income left over to save a tad monthly based on a very modest lifestyle.

I have been fortunate to have great tenants, amazing even, with just 1 that was a nuisance to the other roommates and I was able to get rid of with minimal cost. ( Mark you, this tenant I didnt completly vet except for the background and credit checks, then handed him over to someone else to complete the process). Lesson learned, if it aint broke dont fix it and stick with your systems.

Now what I don't hear talked about as much is moving from self managing those properties to hiring a property manager to do it.

How do you get a property manager to take over, bearing in mind the model is rooms rented MTR to LTR? Is this like student rentals and what's a viable way to move forward? Each roommate is on a separate Rental Agreement.

I asked a similar question before and only had 1 question vs a suggestion, which I still appreciated.

So for those that have scaled and gotten a property manager, how did you do it?

Properties are in B+ and C+ areas, remodeled before tenant placements so just regular maintenance. Little turnover, after PITI, Capex, etc with generous allowances monthly, cash flow is between $1,200 to $1,900 per property, so I'm willing to take a reduction on this so I can scale.

So please, I would appreciate any input on how to move forward.

Any recommendations for licensed Property Managers?

[Drew Sygit]

@Wendy S. You'll have to come to grips with the fact that NO ONE will do everything the way you do it.

Somethings a PMC will actually do better, but they won't do the extreme hand-holding of tenants that many DIY landlords do. PMC's also typically take a more pragmatic approach to maintenace.

Here's our standard advice about finding a PMC:

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊