Property management Nightmare

[Matt Friesz]

I thought I’d give a try at being an out of state investor.I  purchased two duplexes in Davenport, Ia this year, One in January and one in April. Both of these properties are STILL vacant. I’m on my second property management company, and I’m just forking out money. The properties have needed some work, but it’s taking them sooo long to get them ready, and they keep charging me for management fees. I’ve been paying two mortgages, utilities, their third party contractor (handyman). My hands are tied because I have to run my business down here in Florida. any insight or help would be appreciated.

[Nathan Gesner]

Quote from @Matt Friesz:

I thought I’d give a try at being an out of state investor.I  purchased two duplexes in Davenport, Ia this year, One in January and one in April. Both of these properties are STILL vacant. I’m on my second property management company, and I’m just forking out money. The properties have needed some work, but it’s taking them sooo long to get them ready, and they keep charging me for management fees. I’ve been paying two mortgages, utilities, their third party contractor (handyman). My hands are tied because I have to run my business down here in Florida. any insight or help would be appreciated.

IT doesn't take six months to renovate a rental and it sure doesn't take that long to find a renter. You need an honest PM that works for their money and you need to stop letting people walk all over you. If the PM says it should rent in 30 days, then you need to put your foot down when it hasn't happened after 30 days.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!