We've used a property management company to handle our D/FW 3/2/2 SFR for the last three years. (It was formerly our personal residence and this has been our first experience as landlords.) I am not completely happy with the PM company for a few reasons.
One is that they charge tenants what I have come to believe is under-market rent. In fact, a line in our PM agreement says they reserve the right to lease the property for as much as 10 percent under market and they will make an "effort" to communicate the price reduction to the owner. The upside to that is there is literally never a period of vacancy -- it was leased three days after we put it on the rental market and hasn't been empty more than a day since.
After two years of the property leasing at $1,150, for this last lease, I specifically instructed the company (in writing) to lease it at $1,200. When the time came, I was sent a lease for $1,175 with a self-congratulatory note about getting an extra $25 for us. When I complained, they apologized for forgetting my instructions and offered to tell the new tenant -- who was already on the road from California with his family to sign the lease and move in -- that the price had changed. I declined because I felt it was not fair to the tenant.
When I started lurking on BiggerPockets, I checked our rent on rentmetrics.com and rentometer.com. We are almost the only 3-bedroom property within a 2-mile radius that rents for less than $1,300.
Anything we're saving on no periods of vacancy, we're losing on re-leasing fees. Not a single tenant has stayed past his one-year lease in three years. I am wondering if the tenants don't like this management company; a friend I referred to this company said she had to switch after her tenants complained about the way they were treated.
Also, I worry about the quality of our tenants. The last tenant moved her formerly estranged husband into the house without putting him on the lease. When I brought it up to the management company (who was aware that he had moved in), they put him on the lease, but I'm irritated that I had to ask. These tenants also incessantly parked on the grass. After two warnings, they finally stopped. (Our old neighbors told us it was maddening and made the street look awful.) The current tenants seem nice, but during a visit to the house for reasons unrelated to the tenants, I realized they had two adults living there who were not on the lease (one of the tenants' parents, I think). I haven't brought it up with the management company yet.
Lastly, after three years, I'm still disgruntled by how little input we have into decisions about our own property. The PM company decides on the tenants and just presents us with a lease. They ultimately decide on the rental amount. They make fixes and charge us beyond the $300 threshold in our PM agreement. They even made an appointment with a foundation company without asking us when the tenant reported cracks (at least they told us at all -- we had them cancel it because we have a lifetime warranty with our own foundation people). I've been unsure if this is normal and I'm expecting too much communication.
The day-to-day stuff is fine. They file the correct paperwork, they direct-deposit the rent, they respond (kind of slowly) to emails.
Anyway, here are their costs:
5% management fee (I know, super cheap. I happened to be looking for PM while they were having a special, and, being completely new to renting, that's the reason I chose them)
75% of a month's rent for leasing to new tenant
No charge to re-sign tenant
No penalty for canceling contract
So they have their issues, but they have reasonable fees, at least.
Today I called another management company who has great Internet reviews on Angie's List, etc.
I talked to the owner for a while, and came away pretty confused. He completely dismissed my research about neighborhood rents and said those sites are not accurate (which may be true) and said his company would not run comps until we signed an agreement with them. He sent me a sample agreement, and here are their numbers:
10% management fee
100% leasing fee for new tenant
25% leasing fee to re-sign tenant
If we change management companies at any point during an existing lease, we pay them the equivalent of the rest of the lease's management fees
This seems quite high to me. If they are better, are they SO much better to be worth so much more money?
I would appreciate input (as well as recommendations for amazing property managers in D/FW).
The bottom line is that I don't feel like we have much control over our property when using a PM company. We are paying them to collect rent and handle maintenance requests, but not make important decisions about the property such as the amount it will be rented for. Yet that's exactly what they do. So who sets the rent -- them or me? Who decides on the tenants? Do I just need to be more assertive? Is this experience typical?
(Managing the property ourselves is not my ideal solution. My husband and I both work full-time and we have two little kids. Handling maintenance requests and worrying about collecting rent is not something we really have the energy for.)
