Property Management. what to ask and how to pick a property management company

[Jordan Jaramillo]

I am currently looking for a property management company for my 16 rental units in FL. 

I am having a hard time figuring out what I'm looking for. Is there a list of specific questions I should be asking?

Is there specific systems or questions I should be on the look out for?

One of my biggest fears is having them take over the property and not being able to fill the unit.

[Randall Alan]

@Jordan Jaramillo

Filling units is actually really easy.  We broadcast our empty units on Zillow and literally the next day we have 30-50 inquiries and can have 5-7 applicants within 24 hours.  Filling them won't be an issue if your property manager does their job.  

As for what to look out for - my first point is always the expense of PM.  If your 16 units are financed, you are going to likely be losing about 1/3 of your income to your property  manager after principle, interest, taxes, insurance, and a maintenance reserve. (Average profit for us was about $300/door on a $1,000/month rental.  10% of the $1,000 is $100 of your $300 in profit)  So I always promote self management for that reason... but depending on your situation that may either be something that does or doesn't interest you.  You have to do a self-assessment and balance out your skill set / tolerance level for people with your time availability and need for more income. If every one of your units rented for $1,000 a unit, that is about $1,600 a month you are gong to be paying a PM.    If you can be good with paying for property management, it is of course easier.  It just comes with a steep cost once you boil it all down.

Questions:  Costs are number one.  Including:  Is it just a percentage of gross rents, or do you charge a fee to place the new tenant?

Ask to be able to speak to a couple of other landlords that use their services.  That will likely tell you a lot about how they take care of their customers.

How do repairs work?  Do you have your own maintenance people or do you just call a retail repair place for the issues?  We have found that property managers often don't shop rates - they just call the people they call - which sometimes means you are paying a higher rate than if it were shopped.

We self-manage 37 units, and frankly it is pretty easy on a day to day basis.  We self-managed 20 units while still working 2 corporate jobs.  At 20 units we were able to start looking at phasing out of our corporate jobs and moving to full time real estate, which is what we do now.

All you really need are a few vendors on speed dial for each of the major things that go out most often - AC, plumber, an electrician on occasion; and a couple of handy-men that can do the odd jobs that are needed.  Collecting rent, screening tenants, broadcasting your units can be handled very easily through a good online platform.  We use Rentec Direct and love it! (It is actually what markets our properties for us).   Costs us about a dollar or two a unit a month and does so much!  Definitely worth checking out.  Everyone has their own opinion.  Property Management companies will look to scare you with their stories of nightmare things that have gone wrong when not using PM.  Those things are possible with or without a PM though (ie. tenant tore up the property, evictions, etc.)  Your $1,600 / month translates to $19,200 per year in PM at $1,000 a unit.  In my book that is doing some serious damage to my wallet before the tenant even gets a chance... so I'll take my chances.  We've been managing our own units for 5 years now and have had very few issues beyond needing to repaint a unit and patch some holes in walls from intentional abuse.  There are the off situations... tenant tried to sell our appliances as they exited.. but wouldn't have been different with PM.  

Wish you all the best!

Randy