Property Managers what will or will they not do?

Question

Hi all,

(First BP post)

I’m new to the scene of REI, but have been really doing my best to engulf myself in the knowledge, between BP forums, podcasts, YouTube’s etc, but one of the areas that I’d like to know more about is property management companies.

As I’m starting out and looking into my first property, I’m not near the “nirvana” of property management and leaving my corporate job. Because of this, I will most likely want to look into having a property management company oversee the day to day.

My question is, where is the line between a property management company and the land lord usually drawn? Where are their variables? How do those variable impact cost of a property manager?

For instance, I live in Massachusetts, where we get every type of seasons, from very hot sunny days to nor’easter blizzards with whiteout and freezing conditions.

So we have the normal break/fix stuff but also the lawn care, shoveling and plowing.

Therefore, I’m curious what would I typically have to do and what would a PM company typically do?

(Knowing everything has a price)

Thank you everyone for your feedback and the great “BP” community we are in.

Filipe Pereira · Answer

Why won't you write a check for the taxes and mortgage @Tracy Streich, @Jennifer Ruelens? I've never heard of a PM not doing that. @Bryan Whelan this is a great question, especially since it really does vary from one property management company to another. When someone asks what I do as a property manager, I tell them "we cover A to Z". Anything that needs to be done around, on or for the property, we can have it done. However, that doesn't necessarily mean that we do the work ourselves. There is a big difference between property maintenance (think lawn care professionals, snow removal, etc.) and property management (those managing the activities happening at the property). Some property managers do the maintenance stuff as well, but I've always found that to be a conflict of interest.

I'm in Connecticut, where are you in MA?

Aaron W. · Answer

@Bryan Whelan

There are different types of property managers out there. There are some that do only property management. They will take care of interfacing with tenants, repairs, and maintenance of the property.  There are others that do full service management that include a real estate brokerage, property management, and construction.

As an out of state investor, I need my PMs to be my eyes and ears so I need them to run the entire property for me. I have to have extreme trust in them that they are doing their job well. Most of the PMs will also pay bills for you if needed, but may charge an extra fee to do it.  I have a couple PMs that do it all but am working with one that does none of it unless I pay them $15/invoice. I'd rather save the money and spend 5 minutes a month to log into my account and pay the bill.

Your PM is a very important part of your real estate team. They can make or break the profitability of a property depending on how well they are managing it for you.

Tracy Streich · Answer

@Jennifer Ruelens nailed it.   Everything but pay your taxes and mortgage.   How they charge for all the other stuff varies from Pm to PM.   Make sure read the contract and ask lots of questions.

Jennifer Ruelens · Answer

@Bryan Whelan I’ve owned my PMC for over 8 years and I tell people we do everything a landlord needs to do for the property except: write a check for the taxes and mortgage and approve repairs and maintenance. Clients need to respond to our requests for approval and review their reports. Some clients want to be more involved, others want less. In our case we don’t customize much but are very successful with our large portfolio. There are all kinds of PMCs and some boutique ones that will do a la cart pricing.

Jennifer Ruelens · Answer

Yes, most PMCs work like I described.  The advice you are getting is right, you have to vet PMCs very thoroughly.  They are your agent working as you in your investments.  However, when you find the right one it is like magic how much easier and more profitable REI becomes.  Kind of like dating, dating isn't that great, good relationships are amazing. Same with PMCs!

Kevin Hunter · Answer

@Bryan Whelan, welcome to BP.  You are going to learn a ton here.  Regarding property management, all the comments above are great.  I would tell you to be very careful screening the contract.  That is key.  Also, be open and up front with any company you are interviewing regarding what you expect and need.  There are a lot of BAD property management companies out there, I call them rent collectors because that is all they do.  Then you get to the end of a lease and there is a bunch of deferred maintenance or worse.  Avoid those PMs like the plaque.  You do that by interviewing and screening multiple PM companies.  Good luck!

Jason Regan · Answer

Welcome to BP!  I agree with several in here.  I do some property management (looking to get out of it) and I feel the only thing the owner should do is write the check and watch the expenses.  Collecting the rent is the easy part.  Dealing with evictions, the 4000 unqualified renters that call you all day, and dealing with the repairs is where the real value is to me.

Drew Sygit · Answer

If you've ever screened a tenant, you will want to screen a PMC 10x as well:)

Calvin Ozanick · Answer

I currently run a property management company in Janesville, Wisconsin. We have set up our business to create a truly hands off experience for investors. We work with 90% out of state investors, so we have built our business to be able to handle just about everything that gets thrown at a property. We offer investors the ability to pay their property taxes, handle all maintenance tasks, obviously fill vacancies and answer tenant calls. We also handle things like snow removal, fall cleanup among other things in the properties.

Craig Bellot · Answer

If your long-term goal is to invest in more properties it is worth it to invest in a solid property manager.

Your time as an investor is infinitely better spent analyzing markets and deals.

You want to move up the 80/20 leverage curve from technician to investor/entrepreneur.

In Bridgeport, CT the investment is about 10% of rents collected.  This frees you up from taking resident phone calls, coordinating maintenance, leasing vacancies, accounting P&L's, conducting inspections and making property payments to focus on higher leverage activities.

-Craig

Property Managers what will or will they not do?

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