Property Manager Expectations, what's realistic?

Question

What should you expect from a property manager? What are realistic expectations? Let me know if I am expecting too much and if you have any recommendations for Phoenix, Arizona.

Is it unrealistic to have a manager drive by the home once every few months to see if the landscape is dying or over run with weeds or beer cans? It’s depressing and expensive to remove old dead trees.  I had one manager tell me they visit the home once per year, additional visits are $70 each.

Wholesale Prices vs Retail for Repairs:  Should a property manager have a handful of repair people that they can call upon who charge wholesale prices rather than retail prices?  My thinking here is that a manager should be able to negotiate lower repair costs since they can offer the service person more business.

Good marketing:  Bright, clean photos of the home. Ability to post the home online on multiple venues if needed and drive applicant interest and take applicant calls. My first property manager somewhat lax at marketing and answering the phone.  This created increased vacancy times and lowering the rents.  Eventually I had a friend call the manager to express interest in a rental and she never returned his call.  I realized this was happening all of the time

Good judge of character:  Screening applicants but also looking at the unwritten things such as sloppiness or the condition of the applicant’s vehicle.

Financially Responsibility/fiduciary:  Honest accounting, timely payouts and paying of rental taxes. My second property manager was great… or at least I thought they were until they were shut down by the Arizona Department of Real Estate for embezzling all of the security deposits.

Thanks for your input.

Doug McVinua · Answer

@Michael S. Hello Michael, I don't think your expectations are out of line with potentially one exception. On repairs, I have a number of vendors that do work for us and I think I get great service and rates for the work performed. Is the pricing wholesale, not sure about that? Don't get me wrong we try hard to use vendors with good pricing and I believe we accomplish that most of the time, again just not sure it always wholesale prices. I don't use big national players with high rates by any means, most of our vendors are very small business people with low overhead, etc so maybe in your world, it would be wholesale pricing.

Your expectations otherwise are pretty darn reasonable! Happy to share some Chander addresses of properties we manage that you can drive by for yourself to see the condition.

Mario Valenzuela · Answer

Is it unrealistic to have a manager drive by the home once every few months to see if the landscape is dying or over run with weeds or beer cans? Not if they agreed to do so in the property management agreement. If this is something the agent agreed to do, then they'd be expected to. We rely heavily on HOA inspections for this, if there's no HOA we rely on neighbors and the city's compliance enforcement. We would do drive-by inspections if there are red flags we're made aware of, such as you have expressed here with the mess in front. Placing good tenants and providing them with clear expectations helps with this not being an issue.

It’s depressing and expensive to remove old dead trees. I had one manager tell me they visit the home once per year, additional visits are $70 each.If this was agreed to or put in writing as a notice to you then the $70 after the first visit would be allowed.

Wholesale Prices vs Retail for Repairs:  Should a property manager have a handful of repair people that they can call upon who charge wholesale prices rather than retail prices? My thinking here is that a manager should be able to negotiate lower repair costs since they can offer the service person more business.PM's should have vendors on hand for contracted work, the prices might be negotiated to provide a discount since the PM most likely gives the vendor continued business. However this is not mandatory unless agreed upon in your PMA.

Good marketing:  Bright, clean photos of the home. Ability to post the home online on multiple venues if needed and drive applicant interest and take applicant calls. My first property manager somewhat lax at marketing and answering the phone. This created increased vacancy times and lowering the rents. Eventually I had a friend call the manager to express interest in a rental and she never returned his call. I realized this was happening all of the timeA PM should be able to get vacancies filled in a timely manner and will usually have their own processes for filling vacancies that work. We ask for autonomy in this area but definitely take suggestions from our clients. Not answering back potential tenants is not professional, there should be systems in place to insure this does not happen.

Good judge of character:  Screening applicants but also looking at the unwritten things such as sloppiness or the condition of the applicant’s vehicle.Our landlords make the final decision on accepting or denying applicants going by a summary of the application we provide. We include all pertinent information found during the application process in the summary along with our thoughts on the applicants. We're always careful of what we specifically deny for to stay in line with Federal Fair Housing laws. Sometimes it may not be as simple as denying someone for having a dirty vehicle, as they may be borrowing the vehicle, it may be their second vehicle, or maybe they were just unable to clean it for some outside reason and it's a one off, etc. We've honed our application process and we feel it's resulted us in getting good tenants, but even then there's no guarantee since even the best tenants can go bad.

accounting, timely payouts and paying of rental taxes. My second property manager was great… or at least I thought they were until they were shut down by the Arizona Department of Real Estate for embezzling all of the security deposits. It is not too much to ask for a property manager to be honest, this is not negotiable. An PM who is honest then they're not going to be perfect, if they claim to be perfect then they're not honest. Property management requires a huge level of trust. Mistakes will be made, it's how the property management office deals with them. It also takes diligence on the side of the landlord to check their statements regularly to find mistakes or in the worst case scenario to find signs of embezzlement or other nefarious activities.

Drew Sygit · Answer

Drivebys: Every owner wants their property watched 100% of the time. The problem with that is it takes time. When a PMC only gets $80-$120/month management fee, how many hours do you expect them to invest in your property each month? What do you want prioritized?

Wholesale Prices vs Retail for Repairs:  It depends on the repair work. Maintenance: yes, assuming handled by handymen.Repairs: often, as they should contractors for most, but not all, types of projects.Rennovations: rarely, unless they do a lot of them.

Good marketing:  Our opinion - you get what you pay for. Your intial PMC was probably a one-man-band or otherwise small operator. Or maybe they were one of the discount shops using only overseas customer service reps. Either way, when you go for the cheapest price, you get corresponding cheap service. We've invested in automation that allows showing scheduling 24/7 and self-showings. Not cheap or easy to do well.

Good judge of character:  What percentage of people do you think are truly, "as good judge of character"? The divorce rate is around 50%, so half the population right there doesn't qualify. Why don't you better spend your efforts looking into HOW applicant screening is done and WHAT their approval criteria are?

Financially Responsibility/fiduciary:  There is always risk with this. Just ask Wall Street about Bernie Madoff. Property owners, just like stock investors, need to pay attention to their investments and not put up with excuses.

Many of your issues seem to be with choosing the wrong PMC's.

To be very blunt - it's amazing to us how purposefully ignorant and borderline stupid real estate investors are. We just had a prospective owner tell us yesterday they went with a competitor because their management contract was shorter and easier to read! TRANSLATION: I don't want to invest the time into going over management contracts myself or pay for an attorney to do so, but when I get screwed by this PMC over something not covered in their shorter contract, I will post online that all property managers are crooks.

Dick Rosen · Answer

@Michael S. I totally agree with Doug's comment. We certainly shop our vendors but you also have to expect great service and I really haven't ever seen or heard of wholesale pricing in the contractor business.

Also as Doug said, I think you are pretty spot on with everything your looking for. You are just one of the many that got caught up with the wrongundefined

Joshua Adlam · Answer

@Michael S.

Michael this is a very good question

As a fellow property manager and real estate investor I definitely understand both sides.

Great Property management companies  should do all those things and more. The issue is most don’t understand the view point of the investor.

Our role is to act in the best interest of the investor. We cover all the blinds spots the investor can’t see so he or she can do what they do best INVEST! I think on the most basic level they should

1. Have a great network of vendors for best pricing on maintenance

2. Take nice marketing photos

3. Go the extra mile to find a great resident

These basic things alone can help the owner out tremendously. I highly suggest you keep your high standards for property managers but start to vet them by asking important questions

Ask do they own deals themselves? How long does a property stay vacant ? What’s the expense ratio on the properties? Where are the escrow accounts for the security deposit being held. All of these things will allow you to understand the mindset of an property manager and assist in your understanding of their level of professionalism

AJ Shepard · Answer

@Michael S.

Ricardo R. · Answer

@Michael S. Yes reasonable and No not reasonable or legal.

Michael I think most are reasonable and I certainly understand where you are coming from. Here are my few cents:

Wholesale vs. Retail for repairs: Yes reasonable but may not be practical; the PM may be able to get a bundle deal on certain vendors but as in most service industries many times you get what you pay for... cheapest is not always better.

Good Marketing: Yes reasonable with one caveat what is ‘good’ marketing? if you mean working within the PMs system and that system conforms industry standards that yes... if your definition of ‘good’ means requiring the PM to meet everyone that calls in than no... they have a system (at least the good ones do)

Good judge of character: Yes reasonable but has limits... again what is ‘good’ judge? Additionally because your PM is a real estate professional they are bound much tighter to fair housing than a private landlord... looking inside ones car; or going with the ‘gut’ to decline applicants or any other subjective item which really has no recorded impact on a tenant’s qualification for housing is the same as rolling out the red carpet for fair housing violations and lawsuits; this is unreasonable and to be honest any PM which allows you to make applicant approval/denial decisions prior to the decision being made is just opening you and them up to HUGE liabilities... they are the RE professionals remember... that is why you hired them.... that is how it is viewed and that is how a judge will view it too; fair housing violations will fall onto the PM’s shoulders which is why they should be the ones approving and declining (you should however certainly review their approval/decline criteria before even listing)

Financial responsibility/Fiduciary: Yes... financial responsibility yes not even a question here. Fiduciary yes but also know it’s limits specifically when it comes to the PM’s fees and what you expect. If the PM service includes paying your taxes then sure; if the PM charges a fee for the additional work to do that for you then you need to know that; if the PM just doesn’t offer a service to pay your taxes because it is just not worth the additional time then you should know that as well.

Most the items above are reasonable but it really depends if you working ‘within’ the system your PM has sent in place for their 100+ units or if you are asking your PM to have exceptions for outside of their system... it’s usually a much better experience to just vet your PM initially and ensure that what is important to you IS part of their current system already.

Property Manager Expectations, what's realistic?

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