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Managing friend's property
Hi, everyone; I'm looking for some general advice and resources on best practices for managing a property for someone else.
I own three single-family houses that I rent, and I've been managing them myself since I acquired the first one in 2011. I have another one under remodeling that I plan to do as a short term rental (no experience yet, but this house is next door to my home).
I have a dedicated website that I maintain myself where I publish the details, applications etc, also list it on zillow and do the screening through mysmartmove. I also have a dedicated LLC that I have not really used much in terms of changing my contracts to use the comapany name instead of my personal name. (houses are titled in my name)
A friend of mine recently moved in with her daughter after her husband passed away. She's asking me to manage the house for her in exchange for a $200 monthly fee (for example, I could list the house for $2700 and give her $2500).
This would include finding tenants in the same way I do for my own tenants, and managing the property after it is rented as it is only 4 min away from my home. For now this is based on trust (no contract between me and her) as we are very long time friends and for me is not really about making money at this point as I'm busy regardless, but more of a help to her. And more importantly to gain some experience doing this for others in case I want to take this more seriously in the future with other clients.
In my 12+ years of managing my own, I had no big issues. I'm pretty handy, and over the years, I accumulated a lot of tools and can do a lot of things myself (minor and major plumbing, HVAC repairs, major remodels, I've done it all, but sometimes I prefer to pay someone else to do it). So I'm not too worried about this part. I'm not thinking to include any repairs, just the managing part of getting them fixed, but might need some advice here.
I should mention that I have a full-time job working from home in IT. I'm thinking of this rental and rental management business as a way for me to retire in the future and possibly grow it, especially if I leave or no longer have the W2 job.
I'll list below some questions I have, but feel free to give me any advice and educate me about what I should be aware of.
1. I'd like to know what are the normal rates this is usually done in this rental price range and how usually management companies charge.
2. It would be nice if someone could share a contract between a management company and property owner that I could use as a base to review and make my own, if not no, maybe in the future.
3. Any tips to keep my good relationship with the owner and not ruin it in the future because of this business?
4. Is there any other thing I should be aware of when renting someone else's property vs my own?
5. What is usually included and not included in the managing fee?
6. What things should I make clear to the owner that I'm not responsible/liable for? (squatting, renters leaving, specific repairs, insurance verification (I usually recommend and do not mandate renter's insurance for my properties), inspections..)
Thank you in advance!
Quote from @Alex Cardaniuc:
I can't read the entire post and answer all your questions, but I can give some quick advice.
1. Your state may require you to be licensed to manage properties for others. Talk to the state licensing board to verify.
2. You have some experience, but that's not equivalent to a professional property manager that is always current on the laws, insured, with experience managing 400 rentals. Know what you are worth, but also be aware of your limitations and charge accordingly.
3. Get it in writing. Be very clear about what she is paying you to do, and what you are not paid to do. For example, just because you are handy doesn't mean you should be unclogging a toilet at 2am as part of your monthly fee. Make sure you are both very clear on expectations and put it all in writing so there's no disagreement later.
@Alex Cardaniuc it's all fine and great - until something goes wrong and you get sued.
Quote from @Michael Smythe:
@Alex Cardaniuc it's all fine and great - until something goes wrong and you get sued.
That's what I'm trying to avoid with some advice from here. I already accepted it and can drop it later, but I'd like to go through with this one, or at least help her find tenants.
Quote from @Alex Cardaniuc:
Quote from @Michael Smythe:
@Alex Cardaniuc it's all fine and great - until something goes wrong and you get sued.
That's what I'm trying to avoid with some advice from here. I already accepted it and can drop it later, but I'd like to go through with this one, or at least help her find tenants.
Check your state laws. Most states require you to be licensed to manage property for someone else. There may be exceptions for relatives or if you are a salaried employee, but I doubt those situations apply.
Know the law before you get yourself into trouble.
@Alex Cardaniuc here are some other guiding questions for you:
Do you have E&O insurance?
How airtight is your lease?
Do you even have a Property Management Contract/Agreement?
What licenses do you have to meet state/local requirements?