All Forum Posts by: Jim Lynch

This is largely my opinion and it's based on observation and experience as a PM BDM...as an owner listing a rental property in this market, you'll need to consider the two "options" on your lease that will help you stand out int he crowd (and pay off later). A. Lawn Care (if applicable). Yes, you can make it tenant responsibility pretty easily, but I'd say you should strongly consider arranging it yourself, picking up the cost, and baking all or a portion back into rent. Here's why: 1. What applicant doesn't love that you're handling the lawn care so they can chill on the weekends? No one! 2. Especially if your property is in an HOA development, you'll have control over the appearance 3. Assuming you raise the rent over comps (with justification), you should be able to break even or come out ahead because of the seasonality in the Mid-South...too hot to cut in the summer, too cold for growth in the winter. Win-Win. You'll pay for 8 mos. of care (tops) and receive bonus rent for 12 mos. B. Pet Policy. Yes, you can (try to*) not allow pets. But here's why you should: 1. the pool of applicants with pets is multiples larger than those without 2. you'll make bonus rent via pent fees and pet rent 3. you won't be able to stop a bonafide Emotional Support Animal (ESA) anyway. So bite the bullet, don't sweat about those hardwood floors, collect the cash and touch it up later. :)

As an investor and self-manager, I "rolled the dice" when it came to tenant acquisition. A quick credit report and I was satisfied. Times were booming and rents were high (2108-2023) here in Nashville. In retrospect, I got lucky. Very lucky. From my newer perspective in PM, I would place proper and thorough tenant screening #1 as a benny to using a professional PM, and reducing/removing risk as benny #2. You don't know the real estate and fair housing laws. It can get sticky with a savvy tenant who does know them and leverages that. I don't want to be "scary PM" here, but I've seen it. Those folks are the PM's problem to handle, not yours. It's not a bad tradeoff. 

I'm curious as what y'all consider to be the minimum criteria for approving a tenant, assuming you don't have access to professional tools. If I am self managing my portfolio, what do I need to check/confirm, and what easily available tools are at my disposal (online, other) to help me do this? 

I don't want to rehash anything already written in this thread (955 of which I agree with). I would maybe add that, with your portfolio spanning several states, you may want to research/interview a national PM that could cover all your properties with one contract. That would certainly provide added leverage should problems arise with bookkeeping, receipts, estimates, etc.

I think you answered your own question...if you don't want to do the legwork/don't have the skillset to do the legwork, it's worth it to have a PM do the marketing, qualifying and leasing of a new tenant. And that's a pretty standard fee structure. You're saving all the monthly management fees, don't skimp on the most important part of the process, the tenant qualification (assuming they do a thorough vetting).

@Steve Stanley I'll comment first as a former self-manager of a Nashville property, and then provide some insight in my role at a national PM firm in Nashville. I managed remote from NY for one year. Visited the property after purchase, took a quick look, got some contractors lined up to paint, do some mechanical work, lined up a realtor to list for rent, had him run the showings as a favor, had an attorney draft up a good lease, had that attorney and the realtor run credit checks, awarded a lease to one of the first applicants, got him in 30 days after we bought the place. Piece of cake, right? Knowing what I know now, this is NOT the norm and we got SUPER lucky to find a great tenant and keep the property running remotely for a year (when we then moved down into the area). #1 my wife was the real estate attorney helping out so that was the only real "piece of cake" from my end LOL. We weren't guessing what a good lease looks like or how fair housing laws would or wouldn't apply to this rental #2 the tenant was well capitalized and "handy" #3 my realtor jumped in as needed because he lived close by and knew we would have more business for him in the future. #4 I got lucky with vendors. So, now a little of my new perspective being with a PM: you most likely don't have the skills or the bandwidth to do the underwriting/qualification of an applicant sufficiently to bring the risk of delinquency and/or eviction down to where your stomach can handle it. If you could see the volume of applicants we reject (and the crazy things they do), you would be astonished. A good PM will filter those applicants rigorously and you'll pay for it via the leasing fee (which, IMHO, shouldn't be more than 50% of 1st mo. rent). All the things I had to do running around at the start of my rental process are handled by a PM, and ALL THAT is also included in the leasing fee. I'd say you get what you pay for. **The upfront work to find, qualify and place a tenant is absolutely critical to a successful rental experience. As far as management goes, I will make one broad statement that may or may not be completely true, but I see it from a pretty good angle: the tenant dynamic changes instantly when a tenant goes from "landlord/owner" management to a professional PM. They know we are there to represent the owner and, as a fiduciary of that owner, we're going to act in their best interests (with no emotional link to the property). Sure, we communicate a lot with tenants and tackle maintenance issues quickly (to keep them happy...so they pay on time...and renew). But that dynamic is gold. On that alone I would never self manage remotely again, even if I were underwater on day one. It's simply not the best use of your time with an investment property.

I'll chime in here as someone inside a pretty large, well respected PMC and handling daily inbound calls from property owners and investors. The themes above relating to "going after the low rates instead of service" are really key. I'm astonished about how little I'm asked about important issues like 1. are your maintenance techs "on staff" (vs. 3rd party handymen) and how many do you have to cover the market? 2. how many staff so you have in-market and what are their roles? 3. what's your "breakage fee" if we don't like each other? 3. how quickly do you respond to maintenance requests and DO YOU VET THE REQUESTS before you dispatch a tech at $X per hour? 4. exactly what is your underwriting/tenant qualification process? 5. Are there any other fees I should expect in addition to the typical leasing and management fees? The discussion usually starts and ends with pricing, invariably because folks are "shopping". That's fine, but I'd reocmmend diving in a little deeper and looking at the corporate structure, footprint that is covered in the market and reputation. As far as pricing goes, I think you get what you pay for. It's super tough to run sustainable margins at flat rate management fees...managing a lux $6000 rental is more work than a $900 duplex, trust me. And watch for nickel and diming on fees to boost those skinny margins.