Where are the quality PMs?

[Ryan Boltman]

Please please please, if anyone has a good PM that is good with communication, sticks the their word and doesn't give up on finding a tenant, keeping the tenant and being a partner please let me know. I am so disappointed with al the PMs i have come across in Chattanooga its forcing me to want to leave the market. I have a Duplex, one side rented in Hixson, looking to get the other side rented and its been so hard to get someone i can trust and that will make this happen. Please please PM or respond to this post if you know of or are a PM that can make it happen.

[Nathan Gesner]

I'm sorry to hear of your troubles. Good property managers can be hard to find. I recommend finding a good one before investing in a particular market. I will share my generic tips and hope you find something useful.

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. Try interviewing at least three managers.

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

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, 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, a 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. Consider 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. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest 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!

[Eliott Elias]

Good property managers are a rarity. They are most likely found via referrals and charge the most.
In my experience, they are worth it.

[Cristen Marcotte]

We've had a horrible time with property managers. As we grew we had to try new managers.  It's so bad, I'm starting to take back some of mine a few at a time and manage them myself.

[Michael Smythe]

@Ryan Boltman there's a significant correlation between how much effort you put into screening a PMC and how good they end up being.

[Ian Dyer]

"Location, location, location" is NOT the first rule for investing in rental real estate. Finding a great property manager is. No matter how great the property or location, if you don't have a great, trustworthy property manager, you've bought yourself a big job. ONLY once you have a great property manager, should you invest in an area more than 15 minutes from your home. Within 15 minutes, you can drive by yourself, whether you want to or not. Farther than that, it'll suck your life dry, unless you have a great, reliable property manager. We've learned this the hard way numerous times. Good property managers are HARD to find. Nathan's advice above is excellent. Yelp & Google reviews are super helpful too. 

[Christian Morsing]

I have 20 doors in Chattanooga, TN
Im using Doorby and they are doing a good job for me. 

DM me and I can give you more details if needed.

[Russell Brazil]

The good property managers are managing the Class A properties. Why deal with the headaches in class C and D? (No idea what class your property is in, just making general statement)

[Lisa Hammond]

We started our own company after interviewing many PM companies. I asked very pointed questions about their operations and finances after we had a very bad experience with a PM company. The number one question I asked was when they pay the Owner Distribution out and if they required reserves. Most proudly told me they paid out on the 10th or 12th and never required reserves. That was a HUGE red flag and I immediately did a full stop. If they made it past that question, I then asked how many bank accounts they used and were their company funds mixed in with the operating funds. If they were, that was another full stop. I couldn't find a single one to pass even those two questions so we gave up and started our own company. 

[Josh Benner]

Quote from @Lisa Hammond:

We started our own company after interviewing many PM companies. I asked very pointed questions about their operations and finances after we had a very bad experience with a PM company. The number one question I asked was when they pay the Owner Distribution out and if they required reserves. Most proudly told me they paid out on the 10th or 12th and never required reserves. That was a HUGE red flag and I immediately did a full stop. If they made it past that question, I then asked how many bank accounts they used and were their company funds mixed in with the operating funds. If they were, that was another full stop. I couldn't find a single one to pass even those two questions so we gave up and started our own company. 

 this is good advice, I will definitely be using this when interviewing PMs thank you

[Danny Arnold]

Quote from @Lisa Hammond:

We started our own company after interviewing many PM companies. I asked very pointed questions about their operations and finances after we had a very bad experience with a PM company. The number one question I asked was when they pay the Owner Distribution out and if they required reserves. Most proudly told me they paid out on the 10th or 12th and never required reserves. That was a HUGE red flag and I immediately did a full stop. If they made it past that question, I then asked how many bank accounts they used and were their company funds mixed in with the operating funds. If they were, that was another full stop. I couldn't find a single one to pass even those two questions so we gave up and started our own company. 

 Good day, I am curious about the statement above.  What is a normal reserve amount and why is not having one a red flag?  What should be a reasonable pay out date?  I assume having company funds and operating funds would make for a mess?

[Lisa Hammond]

Quote from @Danny Arnold:

Quote from @Lisa Hammond:

We started our own company after interviewing many PM companies. I asked very pointed questions about their operations and finances after we had a very bad experience with a PM company. The number one question I asked was when they pay the Owner Distribution out and if they required reserves. Most proudly told me they paid out on the 10th or 12th and never required reserves. That was a HUGE red flag and I immediately did a full stop. If they made it past that question, I then asked how many bank accounts they used and were their company funds mixed in with the operating funds. If they were, that was another full stop. I couldn't find a single one to pass even those two questions so we gave up and started our own company. 

 Good day, I am curious about the statement above.  What is a normal reserve amount and why is not having one a red flag?  What should be a reasonable pay out date?  I assume having company funds and operating funds would make for a mess?

 PM companies should always have a minimum of 3 checking accounts: 

1. Tenant - these are tenant deposits and never touched -- this money belongs to the tenants

2. Operating - rents and fees collected goes in here and PROPERTY expenses are paid out from here, after mgmt fees are paid out, owner disbursements come out of this account -- this money belongs to the owners and no company expenses should EVER be paid from this account

3. Company - mgmt fees, maint, leasing, etc all get pulled from Operating into here to pay the PM company then company expenses (payroll, office supplies, etc) get paid from here -- this money belongs to the PM company

Say $1,000 in rent is collected into Operating and there wasn't any maint or expenses that month so only a mgmt fee of $100 is collected on the 10th and paid out to PM company leaving $900 for owner disbursement. On the 12th the HVAC goes out and needs a service call of $120 and on the 13th the PM maint guy goes out to repair a sink leak for $100. Where is this $220 dollars going to come from? The PM company already paid out the owner disbursement for the month so there's no funds available in the Operating acct. This is just one unit, what about the other 100 or 800 units the PM company manages? How are all their Operating costs getting paid from the 11th-30th of each month if they pay out and don't require reserves? I'll tell you how, either the money is all mixed together and they're not keeping a wall between their own Company funds or they're using Tenant Deposits to operate or, out of the kindness of their hearts, they personally cover all these expenses each month at the risk of a tenant not paying the following month so they are personally in the hole (do you think that's happening??).  This means they are doing some very sketchy financial practices and don't have a good Controller or CFO in place so I wouldn't trust them to walk my dog. And when you ask about this scenario and they don't have an answer or get red and flustered, walk out. 

A reasonable amount of reserve, held in the Operating account by the PM company, is one month's rent but even that is a red flag because we all know a single month can easily go over the amount of rent received for a large repair. 

We do not hold reserves and I pay out owner distributions at various dates depending on what day it falls on, usually the 24th-26th. By that date, we've received enough prepaid rent or have a leeway with the vendor that we can fund any Operating expenses from the Operating account. 

[Danny Arnold]

Quote from @Lisa Hammond:

Quote from @Danny Arnold:

Quote from @Lisa Hammond:

We started our own company after interviewing many PM companies. I asked very pointed questions about their operations and finances after we had a very bad experience with a PM company. The number one question I asked was when they pay the Owner Distribution out and if they required reserves. Most proudly told me they paid out on the 10th or 12th and never required reserves. That was a HUGE red flag and I immediately did a full stop. If they made it past that question, I then asked how many bank accounts they used and were their company funds mixed in with the operating funds. If they were, that was another full stop. I couldn't find a single one to pass even those two questions so we gave up and started our own company. 

 Good day, I am curious about the statement above.  What is a normal reserve amount and why is not having one a red flag?  What should be a reasonable pay out date?  I assume having company funds and operating funds would make for a mess?

 PM companies should always have a minimum of 3 checking accounts: 

1. Tenant - these are tenant deposits and never touched -- this money belongs to the tenants

2. Operating - rents and fees collected goes in here and PROPERTY expenses are paid out from here, after mgmt fees are paid out, owner disbursements come out of this account -- this money belongs to the owners and no company expenses should EVER be paid from this account

3. Company - mgmt fees, maint, leasing, etc all get pulled from Operating into here to pay the PM company then company expenses (payroll, office supplies, etc) get paid from here -- this money belongs to the PM company

Say $1,000 in rent is collected into Operating and there wasn't any maint or expenses that month so only a mgmt fee of $100 is collected on the 10th and paid out to PM company leaving $900 for owner disbursement. On the 12th the HVAC goes out and needs a service call of $120 and on the 13th the PM maint guy goes out to repair a sink leak for $100. Where is this $220 dollars going to come from? The PM company already paid out the owner disbursement for the month so there's no funds available in the Operating acct. This is just one unit, what about the other 100 or 800 units the PM company manages? How are all their Operating costs getting paid from the 11th-30th of each month if they pay out and don't require reserves? I'll tell you how, either the money is all mixed together and they're not keeping a wall between their own Company funds or they're using Tenant Deposits to operate or, out of the kindness of their hearts, they personally cover all these expenses each month at the risk of a tenant not paying the following month so they are personally in the hole (do you think that's happening??).  This means they are doing some very sketchy financial practices and don't have a good Controller or CFO in place so I wouldn't trust them to walk my dog. And when you ask about this scenario and they don't have an answer or get red and flustered, walk out. 

A reasonable amount of reserve, held in the Operating account by the PM company, is one month's rent but even that is a red flag because we all know a single month can easily go over the amount of rent received for a large repair. 

We do not hold reserves and I pay out owner distributions at various dates depending on what day it falls on, usually the 24th-26th. By that date, we've received enough prepaid rent or have a leeway with the vendor that we can fund any Operating expenses from the Operating account. 

 Thank you so much for your detailed response,  it is very clear now and I appreciate it.  

[Steve K.]

Quote from @Ian Dyer:

"Location, location, location" is NOT the first rule for investing in rental real estate. Finding a great property manager is. No matter how great the property or location, if you don't have a great, trustworthy property manager, you've bought yourself a big job. ONLY once you have a great property manager, should you invest in an area more than 15 minutes from your home. Within 15 minutes, you can drive by yourself, whether you want to or not. Farther than that, it'll suck your life dry, unless you have a great, reliable property manager. We've learned this the hard way numerous times. Good property managers are HARD to find. Nathan's advice above is excellent. Yelp & Google reviews are super helpful too. 

I agree with the sentiment here but location, location, location is still the golden rule because it's a lot easier to find good property managers in good locations. They go hand in hand. I wouldn't base a buying decision based on a manager because managers come and go. The one thing you can't change about a property is it's location. 

[Ryan Van Rensselaer]

Quote from @Ryan Boltman:

Please please please, if anyone has a good PM that is good with communication, sticks the their word and doesn't give up on finding a tenant, keeping the tenant and being a partner please let me know. I am so disappointed with al the PMs i have come across in Chattanooga its forcing me to want to leave the market. I have a Duplex, one side rented in Hixson, looking to get the other side rented and its been so hard to get someone i can trust and that will make this happen. Please please PM or respond to this post if you know of or are a PM that can make it happen.

[Ryan Van Rensselaer]

Hi Ryan, I just joined an incredible property management company who has been in business for 30+ years and manages 5,000 apartment units.  We only operate in California and New Mexico.  Happy to be a resource for you and help in any way I can.  Blessings,

Ryan Van Rensselaer

[Ryan Van Rensselaer]

Quote from @Eliott Elias:

Good property managers are a rarity. They are most likely found via referrals and charge the most.
In my experience, they are worth it.

 Spot on Elliot.  As an owner and property manager, a strong property management company can be the difference to utter failure and huge success.  Blessings

[Spencer Abeyta]

NARPM is a huge organization in the property management space. I would recommend starting with companies who have earned a Certified Residential Management Company (CRMC) designation from NARPM. There are under 50 companies with this designation nationwide. In order to achieve this, you have to have a Master Property Manager (the highest individual designation) on staff and you have to meet high standards for business practices. If those companies are at capacity in your area they would be a good place to ask for referrals.

[Wyatt Wolff]

Found mine @Lorien Rollins

[Peter Tverdov]

It's a 2 way street guys. Often times we get calls from slumlords who don't want to spend a nickel but want someone else to take the bullets from the town and tenants. No thanks.

If you have a good unit that's updated and you're not a micromanager you'll find a great company, they're out there. If you own a slum or a property with Home Depot discount special all over the place then you are going to get what you pay for, just like anything else in life.