4 Hard Lessons I Learned When Working With A Property Manager

Managing Your Property
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4 Hard Lessons I Learned When Working With A Property Manager

Paul Thompson
Investor · Little Rock, AR · Member since 2015 · 130 posts · 119 votes

4 Hard Lessons I Learned When Working With A Property Manager

Many of you know that I've been investing full-time for 6 years. However, I've experienced something I never had before over the last year, and it was a hard lesson to learn.

I had hired a property manager to take over a few of my properties, but I didn't do my full due diligence, and because of that, it was a horrible experience.

Here are some key takeaways that I learned:

1) Be cautious and thoroughly read contracts

- The contract between the property manager and I was a state contract. Typically, these are pretty balanced to protect both parties. In this case, It wasn't. It covered the property manager more. It was outlined with penalties on me, recourse, obligations on me, and if I chose to sell, they'd get a % of the sale.

2) Use an Attorney

- Here's where I'm kicking myself in the leg. I got comfortable. The property manager was a referral and someone I had known. This was on me for blindly trusting and allowing myself to get comfortable without using an attorney. So please, use an attorney at all times, regardless of the friendship or referrals.

3) Communication Is Important

- When taking on a property manager, ensure that they will communicate. That was a struggle with this particular property manager, and it affected things. I'd get notices from the city about the lawn not being mowed, or it would take weeks for them to get back to me.

4) Quality

- This is a tough one. The only thing I can relate this to is being at a restaurant. You're waiting on your water to be refilled, as your cup is sitting there empty. After quite some time, they come back, fill your cup up with no apology, and leave again. Then it happens again - your cup is sitting there empty again - and the only way you can get the waiter to notice is when you get squeaky wheeled. Quality isn't something you should be lax about, even if they are someone who was a referral or someone you had known previously.

So, my recommendation is to consider all of these steps when looking for a property manager. This is still business. #propertymanagement #realestate #property #investing #business #experience #quality #hiring #family #realestateinvesting #realestategoals

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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
5y

Thanks for sharing that. We hired the best property manager we could afford. "Us".

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  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    Thanks for sharing that. We hired the best property manager we could afford. "Us".

    2Reply
  • Joe Martella
    Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
    4y

    I manage my 4 rentals in addition to a full time job.  I had a property manager for one of my properties and it was not the greatest experience.  I waited for the 1 year to be up and didn't renew.  I now manage all of my properties and reinvest that 10%.  I know that getting a PM is a touchy subject on here - especially for all the PMs that are on BP.  

    Perhaps I am blind, but with all the resources out there, I don't need to pay someone 10% to collect my rent or take phone calls. I can easily take phone calls or collect rent using a free online service or have a check mailed to me. The issue that comes in is having repairs done or showing the property if you are out of town. I don't have any out of state properties, yet, but finding people out of state has to be the same way you find people locally for you. You just need to build up your contacts for repairs and a local REIA can help with that.

    I know that you need other people to do work in order for you to scale, but in my situation, I would be spending $745 a month just because and that $745 doesn't cover anything other than  someone to answer a phone and call someone to come fix the issue and add another 10% on top of that bill.  

    $745 a month or $8,940 per year is a good amount of money to reinvest. I hope I am not spending that much in repairs every year, but that is the cost of a new roof on one of my properties.

    1Reply
  • Allen McGlashing
    Investor · Cambridge, MA · Member since 2017 · 195 posts · 106 votes
    4y

    @Paul Thompson

    Thank you for your input on this topic and sharing your experience. I am currently looking for and vetting PMs to manage the rehab as well as manage the property once it’s done. I am following David Greene’s guide and am asking all the right questions(I think). One thing I do require is I can terminate the contract if I’m not satisfied with the quality of work that way if I don’t like the way they are handling things. I can just part ways without having any consequences.

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  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    4y

    Managing one's properties is one of the many choices real estate investors need to make a decision on. We are do it yourselfers in every aspect of our REI from finding properties, fixing them, finding tenants, doing all repairs, doing our own books and taxes and so forth. About the only thing we pay other people to do is some HVAC, septic tank pumping and sewer work if it requires deep digging. I have a lifetime of experience in many areas of construction and maintenance and I realize the average person doesn't have many of those skills. That said, many management companies are basically handling service requests, placing tenants and collecting rents. ie, there's a plumbing problem at the property. They call a plumber and it's fixed. You get a bill. If you self manage, the tenant calls you, you call a plumber and it's fixed. You get a bill. Although we do REI full time, most of the time is working on houses (refurb/remodel) and a small percentage is the actual management. We sometimes go more than a year without a service call on a property.

    Not everyone has the personality or temperament to do landlording and if that's you, find a good management company. We consider our REI to be our full time job and we put in full time hours but once the properties are stabilized, I would expect to spend much less time doing the management portion.

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