All Forum Posts by: Greg Weik

@Courtney McCall, I appreciate the motivation behind your post and where you are coming from.

I started my company from a similar perspective.  I found that every property manager I encountered was a washed-up Realtor who couldn't hack it in sales and reluctantly resigned themselves to "slumming it" in property management.  They are the ones who give the industry a bad name.

Fast forward 15+ years later and I find myself a landlord of many single-family homes and an owner of a property management company managing nearly 1,000 doors.  

Without making this post a book to read, I want to remind you that time is money.  I know no other industry where this is more true than property management.  Every minute spent with a client comes with an opportunity cost.  Your lofty ambitions of helping investors with every aspect of their rental property better come with a hefty price tag, or you will find yourself in the poorhouse.  

I suspect you will quickly realize there is a ceiling on what owners will pay for property management.  The "half assed rent collectors" you alluded to - while I don't advocate for that approach, and it's not what we do - have figured out that there is a market for exactly what they are doing.

The real question is, is there a market for what you're proposing?  

I pay very close attention to the details of my firm.  I pay attention to our competence, responsiveness, effectiveness, and other internal metrics.  But I also look closely at minutes spent per door.  If doors are over-utilizing our resources, we cancel management.  Usually, a warning is provided first.  This is a business, first and foremost, not a charity.  Doors (or clients) that require extensive and constant attention from my staff are not long for this world and will be cut loose.

As @Richard F. mentioned, clients fall into those two categories (micromanaging, time-sucking parasites who place zero value on the value of your time, or the "don't bother me unless the house burned down" clients).   Obviously, there is a spectrum, but those are pretty representative groups.  The former group will bleed you dry, and the latter group is only good if the property is in good shape when you take it on and keep it that way. 

Your standards need to drive the property management company.  Your values need to drive process and procedure.  Your competence will ultimately drive your reputation.  

As a new PM, you will take any door you can get.  It takes a long time to build a portfolio and a reputation to the point where you can call the shots. 

@C Michael Sundius A lot of your original post veers into "it depends" territory. 

Here's what I mean. 

-In Colorado (and increasingly in other states), if a tenant has a balance of $2200 and $100 of that is late fees, the PMC is legally required to accept a $2100 payment and apply it towards rent in full if it covers the rent owed.   

-States are increasingly moving to a view of "you can't evict based on late fees," and you are also required to apply funds received to rent.  This leaves little recourse for PMCs and Landlords.  The only material recourse in a situation where a tenant is chronically late but ignores late fees is to non-renew their lease when it expires and take the late fees out of the security deposit (but this also can get sticky if there is damage to the property, and the cost of repairs exceeds the deposit.)

-Ultimately, the "who gets late fees" question is answered by your PMA (Property Management Agreement).  The lease is the lease.  It should be between the landlord and the tenant, even if a PMC is involved.  There are some anomalies to the lease parties, but in general, the lease is between the landlord and the tenant.  The PMC can be listed as the point of contact.  All fees collected pursuant to the lease terms are handled based on that PMA. 

-Last, I agree with most posts here that PMCs should keep late fees.  The PMC puts in the work to collect the late fee and often still comes up empty-handed. The "but I have a late fee on my mortgage" argument doesn't really hold water with me.  If you're a landlord, you have a duty to be prepared to withstand late rent payments, repairs, and vacancies.  I say that as a landlord and a PMC.  

 I just want to caution you that this is probably one of the biggest mistakes you can possibly make - drafting your own lease. 

My background is that I went to Law School before starting my PM Company, I've been doing it 15 years, I have my ear to the ground on every legislative change, and I'm STILL tweaking my lease constantly.  

If you try to go it alone and figure it out, you simply won't.  No offense intended.  

“If You Think It’s Expensive To Hire A Professional To Do The Job, Wait Until You Hire An Amateur.”

Get paid to learn and become a professional property manager.  

It's the only job where you can walk in the door on day 1 and make money without experience.  You won't make much money until you develop your skillset, but companies like mine will pay you a decent salary off the street, offer benefits, etc. if you interview well and show some level of dedication and professionalism.

There are not a lot of stable, predictable forms of income in real estate - property management may, in fact, be the only game in town for true stability. 

If you have the aptitude and drive, you'll realize unlimited income potential and you'll learn what you need to know to buy and manage your own future portfolio at the same time.

Also - don't underestimate the value of W2 income.  When you're ready to buy rental properties, you'll be glad you have a W2 job.  It makes underwriting much easier than the people doing house flips trying to prove their income to an underwriter.

One could (and probably should) pay many thousands of dollars to acquire the education we teach our team members daily in our property management company... but if you get on with a reputable firm, you'll be getting paid while learning everything you need to know. 

We list properties on the market about 30 days before the lease end date.  Here are some techniques we've developed:

1) Our lease has language indicating that we will provide 24 hours written notice for entry (standard) but further, that if tenant refuses entry, they will be charged $150 from their deposit per occurrence.  This is what we call "teeth" and we've never had a problem since this clause has been in our lease. 

2) You won't be able to control human behavior, in terms of the condition the departing tenants keep the home in.  But this is exactly why you hire professional property management.  Our biggest value add is predicting human behavior -and I don't mean whether tenants will pay rent.  I mean how they will LEAVE the property.  Statistically, well over 99% of our tenants pay rent on time each month, so it's the turnovers that pose the biggest potential problem (or solution) to the landlord. 

3) Tenant placement and setting clear expectations save the day most of the time at turnover.  We typically have good relationships with our tenants, and they are happy to comply and tidy up for showings.  Our lease is very clear and we send move out instructions prior to lease end, reminding tenants of the standard for which the property is to be left.  Some tenants, however, couldn't care less and live like slobs.

4) If we have a showing of an occupied property and it's a train wreck, we will pull the listing and advise our client we have to wait until it's vacant, clean and we know we can make a showing count.  

5) Our standard "listed availability date" is 5-7 days from the day the lease expires.  Ideally we have a new lease in place, with tenants to move into a property with only 7 days of down time. We put a lot of pressure on ourselves and the contractors with whom we work to make sure the move-out is done, turnover work is done if needed, and a move-in inspection is done, all between tenants.  We do this with nearly 1,000 doors, but it usually goes great based on the careful work we do for tenant screening and placement. 

@Jay Sing a photo would be helpful here.

It's hard to say how obvious or egregious this is without seeing it firsthand. 

I'm a little biased, being in the PM industry, but I will tell you that not everything that CAN be claimed at a move-out, always IS claimed.  It's not an exact science. 

We manage a lot of doors.  I have to send my agents to do move-out inspections on a tight schedule, typically allowing about 30 minutes to walk, see, smell, type up a template and take a lot of photos. The data the agent acquires is processed back in the office, where we can compare move-in and move-out photos and details.  While my field agents have a very specific list of things to look for and photograph and document, it's never going to be perfect. Maybe they miss a stain on a granite countertop.  

I also don't believe that a mistake of this nature should put the PMC on the hook for financial liability.  It's my view that a security deposit claim or non-claim can probably be modified if new information comes to light.  Whether or not to travel down that road would depend on the severity of the newly discovered issue. 

I love the people on here who say "Charge your PM."  Ha, ok.  Let's play that out logically. If you want my PMC or any other PMC to make a perfect move-out analysis, be prepared to pay about 10X what we charge.  There simply is no market for a PM to spend hours pouring over every fine-grain detail of a property.  

I think we represent the state-of-the-art at my firm when it comes to turnover analysis.  We have sophisticated systems and processing and we discover most issues.  But depending on this ink stain on your granite countertops, I will tell you straight up there's a good chance we miss it if it's not obvious.  

Remember that ultimately, you're not paying your PMC for "perfection."  Chances are, you would see no value in paying the amount of money you would need to pay to demand perfection. 

You're paying them to manage your asset effectively and to add value.  What that means in practice encompasses a lot more than whether they performed a perfect move-out evaluation. 

Thanks @Jordan Malara!  And @Thomas Carter, we would be happy to help you with your property management needs.  

I see that you contacted us from our website and we've reached back out to schedule a call, so looking forward to that! 

 Now your tenant knows a little something about you.  I wouldn't be surprised if she moves out even if you back off the renewal increase.  

If you have a great tenant, the smart money is on keeping rent a little under the market, not pushing for "top of the market."  

 Hey @Jennifer Ndunda, I agree with @Matt Devincenzo that this is a tenant responsibility (new locks).   I think there are two takeaways here though:

1) Make sure your lease clearly addresses this scenario, as it's not uncommon, and 

2) I highly recommend installing DDL's (Digital Door Locks) and giving tenants only a user code and no keys.  We started doing this about 10 years ago and we've never looked back.  We change codes between tenants, and there are never lockouts and never rogue keys.  We keep the master key in our office in case the lock fails (which is rare.) 

 Hey Ben, as a 15 year professional in the field, I would stress that property management is not something anyone can simply start doing.  I'm consistently surprised at some responses I see on BP acting like property management is just something one starts doing.  My background is in law and I consistently draw upon that in the daily execution of my duties.  

No offense intended, but I strongly believe that no Realtor without experience and training should try to handle PM.  It's one of those things where maybe you get lucky and everything works out, but quite possibly things can go off the rails.  People can end up hurt if properties are not appropriately rent-ready, and it's the area of real estate people are most likely to end up in court. 

It's an incredibly difficult profession in which to become an expert.  The legal landscape alone is daunting to those paying attention to existing laws and proposed legislation. 

My advice for you and your friend is twofold:

1) Hire a property manager. They are not that expensive and it is worth every penny.  Check google reviews, find one you're comfortable with. 

2) Never rent to a friend unless they are thoroughly vetted by the property management company.  I've seen so many relationships implode over renting houses.  The PM in this scenario is a much-needed filter to ensure the lease goes smoothly.  After all, who knows if this will just be a 12-month gig or much longer.