Long distance landlord

[Amran Musaid]

I live in California but all of my investment properties are in Michigan  and so far the biggest hurdle has been finding a good property manager. I’m on my 5th property manager right now and at this point I’m seriously considering self managing and just installing smart locks and nest thermostats on all my properties that way I don’t need a property manager to pick up or hand out any keys or do I need them to make sure the heat is on when a tenant leaves in the winter. I’d love to get some feedback from all of you long distance landlords out there.

[Drew Sygit]

@Amran Musaid sorry to hear you've made poor choices on your 5 PMC hires:(

Hoping your properties are NOT Class D, as not aware of any local company that could successfully manage the nightmare tenants that are the only ones willing to rent those types of properties.

The number of properties you have will affect your scales of economy and what is cost effective for you to do.

Some thoughts:

1) Nest thermostats require wi-fi. How will you address this on vacant houses? How will you keep access if you have to tap into tenant wi-fi?

2) Smart locks also require wi-fi, so same issues as with Nest.

3) How will you show vacant properties?

4) What maintenance help do you have lined up?

5) Who will do Annual and MoveOut Evaluations to monitor property condition?

6) What contacts do you have for evictions?

Suggest you make a list of all the issues you've had with your 5 PMC's and analyze what they all have in common - both pro and con. We often find owners have expectations that don't align with the properties they've bought - i.e. expecting Class A results from Class D properties.

Here's some other advice:

Even if someone give you a referral, what meets their expectations, may not meet yours.

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😊

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