How was your experience on rental management company?

[Mahdi Mike]

Hi

I am very new to rental property investing but I would like to start by buying my first rental. One of the main question or concern is to deal with  renters and I like to reduce it the risk and maybe all the hassle on find a good one or anything that would relate to that subject by passing to a rental management company. I am fine if the property doesn't create extra cash flow for me or if I have to pay say 200-300 every month extra from my pocket but like to know your opinion on working with rental property management? did you get a comfort of having peace of mind if not 100% at least most of the time?

Who would recommend?

Thanks

Mike

[Nathan Gesner]

Welcome to the BiggerPockets forums!

Why would you be OK with losing money every month? The only reason you would invest in a property that loses money is if your market is projected to appreciate. That's highly unlikely since the market just skyrocketed for two years straight and is now heading down.

If you want to spend $200 a month with nothing to show for it, PM me and I'll send you my bank account information. Unlike renters, I'll never call to complain about a plugged toilet.

Property Managers are a lot like renters. You need to know what a good one looks like, then interview some until you find one that meets your criteria. Then you have to supervise them, at least until they've proven themselves stable. 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!