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Old 03-02-2013, 09:20 PM
 
6 posts, read 9,695 times
Reputation: 10

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Quote:
Originally Posted by PNWGuy View Post


So it sounds like this is your very first rental? OK, maybe you do need a property management company.

Yes, that was my question in the first place, I just don't know which want to choose, since I am new to this.

Also, what are the fees to be expected? Most of them charge 8% per moth's rent plus a 500$ leasing fee and a 300$ contingency fund fee. Is that normal?


Thanks Guys!!
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Old 03-03-2013, 07:37 AM
 
Location: az
13,426 posts, read 7,794,735 times
Reputation: 9311
Quote:
Originally Posted by PNWGuy View Post
What you need is a good friend.
Yes, but only if this friend is willing to do the dirty work like going after tenants who are late every month or will file an eviction.

Unfortunately, you really need some who understands the pitfall of rental property. Granted a PM company might not have your best interest in mind but you've got to have someone who understands how an eviction works, how to run a proper credit check and is familiar with vendors.
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Old 03-03-2013, 08:32 AM
 
Location: Hyrule
8,390 posts, read 11,561,309 times
Reputation: 7544
I know some large PM's, they might be better. Desert Wide is one. If you look for places to rent in Phoenix you will find a lot of larger PM's. They will not only care for it but rent it out for you as well. I'm not familiar with the fee but I think it's worked into the rental price.

If you decide to go it alone, let me know in my private messages. I know a few guys in plumbing and air conditioning that are really reliable and won't jack you on the price. I'm sure others do as well.
Those are the things you need to keep in mind when going it alone.

As for finding a good tenant, well, someone with great credit in Phoenix will most likely buy at our prices. Mortgage is cheaper than rent. So, you'll have to take someone who is in need of renting, they've had a foreclosure or been off work for a while, they are just moving here and looking for a short term. Make sure your condos are in renting condition, tile floor, simple easy to repair fixtures. Get familiar with your rights as a landlord. Keep a savings for in between or no pay tenants. A repair fund, etc. Make sure you have a contract that's tight a bout what you will allow. Dog's, cat's, etc.

I've rented and it's an experience, good and bad. You have to be in a good place to do it, you have to have enough money for all the emergencies that will arrive to avoid stress. So many people here try and rent out properties when they can't afford to. You will have to have the money for repairs as well as easy recovery when the tenant isn't working out. Look at the big picture, over the long run you are getting some help on your investment. You won't make money short term. Don't expect to or you might be disappointed.

Keep in mind with condos you aren't going for a long term situation. You might luck out but most who rent condos are looking for a place to save for a home, recover from a bad situation or are a student. Some are just renting as transplants and will move on once they explore the valley for a perm situation. You might want to think about vacation renting if you can't find a long term tenant. Remember, over the long run is your goal, not short term. Good luck to you.
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Old 03-03-2013, 09:05 AM
 
Location: az
13,426 posts, read 7,794,735 times
Reputation: 9311
Quote:
Originally Posted by PoppySead View Post
...Look at the big picture, over the long run you are getting some help on your investment. You won't make money short term. Don't expect to or you might be disappointed.
This is what I have learned. You need to allot 50% of gross income towards total operating costs.

Do the math. (Unfortunately this is something I didn't do very well.)

Owning rental property esp. as an out of state owner is difficult to say the least and one major repair can wipe out all income for that year.

And even though you're paying good money to a PM if you think you can pass along all the duties/responsibilities to them is r just asking for trouble.

Unless you're willing to double check almost everything I wouldn't recommend buying rental property.
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Old 03-03-2013, 09:37 AM
 
26 posts, read 33,063 times
Reputation: 46
I can give you the name of an excellent realtor. He found me tenants that are excellent. They have been just a little late a few times but always let me know when they would be late and offered to pay the late fee.
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Old 03-03-2013, 11:30 AM
 
Location: In the Deem Hills of NW Phoenix
800 posts, read 1,904,018 times
Reputation: 889
As a Broker that does Property Management, I'd like to chime in on what one should look for in a PM.

I agree that there are many poor Property Managers out there. That is the reason we got into it - years ago we had hired out the management on our own rental properties, but it resulted, sadly, in needlessly costing us thousands of dollars from neglected repairs and vacancies. That said, there are good PM's out there, but you should screen them carefully and ask for references from both tenants and owners.

PM Fees vary from company to company. Sometimes you get what you pay for. Don't hire a PM because they are really low budget or sometimes "free". Some of these companies pass ridiculous fees on to the tenant, don't offer a fair co-broke commission to showing agents when vacant, or "save" the owner money by not attending to necessary repairs and upkeep. These end up in dissatisfied tenants, higher turnover, and longer vacancies. Some companies may say they don't charge fees when the property is vacant. Be aware that a PM spends twice the time and effort on vacant properties, so ones who still charge a monthly fee when vacant aren't being unfair.

Big companies aren't necessarily the best. Some of the largest, valleywide PM's in town never seems to answer phone calls or return voice mails or emails, even from prospective renters calling on yard signs. They may have a different department for everything, making it difficult for owners and tenants to know what number to call for a specific question. I dealt with one company once that had at least 8 different people to go through to transfer a lease when I sold a client's property. It was very frustrating. Also, some very large companies will manage properties from Wittman to San Tan Valley. This can result in not knowing the area demographics, and also less time spent physically visiting the properties. The PM should intimately know your property.

The smallest companies aren't always the best, either. There are a LOT of agents who get into PM because they think it will be an easy way to make an extra buck. The truth is a lot of these don't really know what they are doing - there are a lot of laws that apply to property management, and it can be difficult to know them inside and out without a lot of continuing education. If you use a PM that doesn't know and apply the law thoroughly and consistently it can end up being very costly for the owner when a tenant sues. Many PMs don't stay in the business very long. It is complex, time consuming, and not lucrative.

You can't just get a neighbor or friend to manage a rental. Yes, they can look after your vacation home and water your plants while you are away, but dealing with tenants, collecting rent, showing property, writing contracts, and advertising for rent requires a real estate license in the State of Arizona. RUN AWAY from any agent or company that claims to be a Property Manager who does not have a current real estate license!!! There are many fly-by-night companies out there and the AZ Department of Real Estate is investigating many. If you do not reside in Arizona you must by law also designate a statutory agent who does live in Arizona to accept legal service on your behalf.

A good Property Manager is worth every penny and more. They need to have a solid grasp of accounting, Fair Housing and real estate law, be able to have a good rapport with tenants and owners, and be able to creatively and effectively market properties. They must be available to triage tenant problems to assign the most effective priorities. They must be able to handle difficult tenants and solve problems. In most cases, they don't simply collect a check once a month and pass the money to the owner.

The purpose of the Property Manager is to simplify things for the owner. A good PM will have a solid screening process that checks credit, criminal background, and rental or ownership history. They will be able to assess repairs and have the best handyman or licensed company for the job, and will have vendors that they regularly use and trust. The PM should act immediately when rent is unpaid and follow the Lease to a "T" and consistently. The PM should have an easily read, but thorough lease contract and addendae that protects them and the owner from liability and outlines every aspect of the lease. The PM should have a consistent process in place for late payments and evictions. They should have a thorough accounting of all money coming in and going out. The owner should not really have to do anything besides approve the most costly (say, over $500) repairs. Owners should choose a Property Manager they not only can trust, but have a good rapport with.

A good Property Manager should be trusted to keep your home in good condition, and fix it up in the most economical ways possible between tenants. They should be willing to sever an owner who refuses to make repairs that are necessary to attract good tenants, keep the home up to code, or for tenant safety. A good Property Manager relieves the owner of having to screen tenants and can make a proper judgement call on repairs. The owner should not have to be involved in these things unless the tenants are borderline for acceptance or repairs are very costly. The Property Manager will keep the owner in the loop if a tenant is late in payments and does not have to be bugged for an accounting.

If this is your first rental property, be prepared for the net income to possibly be much less than you expected. Sometimes condos are the most costly and time consuming properties to deal with. There are some condo associations that frown on rentals and will smack you with unreasonable fines and constant requests to fix things that aren't really a problem. Hopefully yours is not this case. Many condo associations will want a copy of the lease and charge you an unreasonable amount to "process the tenants". Some even ask for the ages of family members and race of the people living there, which is contrary to Fair Housing laws and must not be complied with, or you risk fines of thousands of dollars. Another downfall of condos for rental properties is neighbor issues. Once a neighbor has the PM's or owner's phone number, some feel free to call at all hours to tell the PM the tenant is being too noisy or too messy for their liking. (Nothing a PM can do about that really).

I sincerely hope you find a good PM to manage your property. They are out there. Best of luck!
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Old 03-03-2013, 12:15 PM
 
Location: az
13,426 posts, read 7,794,735 times
Reputation: 9311
Quote:
Originally Posted by S. Chris Webb View Post
As a Broker that does Property Management, I'd like to chime in on what one should look for in a PM.

I agree that there are many poor Property Managers out there. That is the reason we got into it - years ago we had hired out the management on our own rental properties, but it resulted, sadly, in needlessly costing us thousands of dollars from neglected repairs and vacancies. That said, there are good PM's out there, but you should screen them carefully and ask for references from both tenants and owners.

PM Fees vary from company to company. Sometimes you get what you pay for. Don't hire a PM because they are really low budget or sometimes "free". Some of these companies pass ridiculous fees on to the tenant, don't offer a fair co-broke commission to showing agents when vacant, or "save" the owner money by not attending to necessary repairs and upkeep. These end up in dissatisfied tenants, higher turnover, and longer vacancies. Some companies may say they don't charge fees when the property is vacant. Be aware that a PM spends twice the time and effort on vacant properties, so ones who still charge a monthly fee when vacant aren't being unfair.

Big companies aren't necessarily the best. Some of the largest, valleywide PM's in town never seems to answer phone calls or return voice mails or emails, even from prospective renters calling on yard signs. They may have a different department for everything, making it difficult for owners and tenants to know what number to call for a specific question. I dealt with one company once that had at least 8 different people to go through to transfer a lease when I sold a client's property. It was very frustrating. Also, some very large companies will manage properties from Wittman to San Tan Valley. This can result in not knowing the area demographics, and also less time spent physically visiting the properties. The PM should intimately know your property.

The smallest companies aren't always the best, either. There are a LOT of agents who get into PM because they think it will be an easy way to make an extra buck. The truth is a lot of these don't really know what they are doing - there are a lot of laws that apply to property management, and it can be difficult to know them inside and out without a lot of continuing education. If you use a PM that doesn't know and apply the law thoroughly and consistently it can end up being very costly for the owner when a tenant sues. Many PMs don't stay in the business very long. It is complex, time consuming, and not lucrative.

You can't just get a neighbor or friend to manage a rental. Yes, they can look after your vacation home and water your plants while you are away, but dealing with tenants, collecting rent, showing property, writing contracts, and advertising for rent requires a real estate license in the State of Arizona. RUN AWAY from any agent or company that claims to be a Property Manager who does not have a current real estate license!!! There are many fly-by-night companies out there and the AZ Department of Real Estate is investigating many. If you do not reside in Arizona you must by law also designate a statutory agent who does live in Arizona to accept legal service on your behalf.

A good Property Manager is worth every penny and more. They need to have a solid grasp of accounting, Fair Housing and real estate law, be able to have a good rapport with tenants and owners, and be able to creatively and effectively market properties. They must be available to triage tenant problems to assign the most effective priorities. They must be able to handle difficult tenants and solve problems. In most cases, they don't simply collect a check once a month and pass the money to the owner.

The purpose of the Property Manager is to simplify things for the owner. A good PM will have a solid screening process that checks credit, criminal background, and rental or ownership history. They will be able to assess repairs and have the best handyman or licensed company for the job, and will have vendors that they regularly use and trust. The PM should act immediately when rent is unpaid and follow the Lease to a "T" and consistently. The PM should have an easily read, but thorough lease contract and addendae that protects them and the owner from liability and outlines every aspect of the lease. The PM should have a consistent process in place for late payments and evictions. They should have a thorough accounting of all money coming in and going out. The owner should not really have to do anything besides approve the most costly (say, over $500) repairs. Owners should choose a Property Manager they not only can trust, but have a good rapport with.

A good Property Manager should be trusted to keep your home in good condition, and fix it up in the most economical ways possible between tenants. They should be willing to sever an owner who refuses to make repairs that are necessary to attract good tenants, keep the home up to code, or for tenant safety. A good Property Manager relieves the owner of having to screen tenants and can make a proper judgement call on repairs. The owner should not have to be involved in these things unless the tenants are borderline for acceptance or repairs are very costly. The Property Manager will keep the owner in the loop if a tenant is late in payments and does not have to be bugged for an accounting.

If this is your first rental property, be prepared for the net income to possibly be much less than you expected. Sometimes condos are the most costly and time consuming properties to deal with. There are some condo associations that frown on rentals and will smack you with unreasonable fines and constant requests to fix things that aren't really a problem. Hopefully yours is not this case. Many condo associations will want a copy of the lease and charge you an unreasonable amount to "process the tenants". Some even ask for the ages of family members and race of the people living there, which is contrary to Fair Housing laws and must not be complied with, or you risk fines of thousands of dollars. Another downfall of condos for rental properties is neighbor issues. Once a neighbor has the PM's or owner's phone number, some feel free to call at all hours to tell the PM the tenant is being too noisy or too messy for their liking. (Nothing a PM can do about that really).

I sincerely hope you find a good PM to manage your property. They are out there. Best of luck!
I agree with you wrote but here are my realities after 15 years of using PM in AZ and Cal.

A PM often looks after 30 or more homes making it almost impossible to visit each property whenever a tenant calls in a repair. If the owner is luckily the PM will have a list of vendors who are reliable and reasonably priced. Vendors can easily take advantage of an owner because they know the PM usually isn't going to visit the property and inspect the problem. Also the PM isn't necessarily concerned with finding the most cost efficient way to solve the problem as they are seeing the work gets done as quickly as possible.

In my experience PM usually do a good job screening tenants because they have to deal with them.

I have a number of rentals which means more in commissions so a PM will often agree to some of my terms. For example I want to be contacted anytime a repair is estimated at over $100. I also require a copy of the invoice immediate after the work is done. I often contact the vendor directly to ensure the problem has been corrected.

I expect the PM to collect the rent on time and not accept excuses. If a late fee is charged and the PM wants to keep that. Fine. I just want to make sure tenants understand they have to pay on time or there will be a late fee and possible eviction.

I tried being the understanding owner and give both PM and tenants a lot of slack over the years but believe me this can backfire fast.

Again if you're an absentee owner you've still got to be willing to be involved in almost every aspect of PM.
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Old 03-03-2013, 01:17 PM
 
Location: In the Deem Hills of NW Phoenix
800 posts, read 1,904,018 times
Reputation: 889
"I agree with you wrote but here are my realities after 15 years of using PM in AZ and Cal."

A PM often looks after 30 or more homes making it almost impossible to visit each property whenever a tenant calls in a repair. If the owner is luckily the PM will have a list of vendors who are reliable and reasonably priced. Vendors can easily take advantage of an owner because they know the PM usually isn't going to visit the property and inspect the problem. Also the PM isn't necessarily concerned with finding the most cost efficient way to solve the problem as they are seeing the work gets done as quickly as possible.
"

A good PM will not use vendors who take advantage and inflate prices. If a vendor tried that, we'd get a new vendor quickly. Vendors do come and go, as is the nature of contractors and handymen. A PM should be able to trust the vendor to fix or clean in the most economical way, and shouldn't have to go out to inspect a leaky toilet before hiring a handyman (although a good PM will sometimes do this at their own discretion if it's something the PM might be able to correct without hiring someone). Getting separate estimates also will result in tenants being dissatisfied by the inconvenience of extra visits. The owner should be able to trust the PM to make vendor decisions, and not to have inside agreements with vendors. A good PM is VERY concerned about cost effectiveness and also making sure it is done right so it doesn't happen again.

"In my experience PM usually do a good job screening tenants because they have to deal with them.
"

Your experience is good, but I know there are some that don't screen tenants well - they just want bodies in the house quickly. I don't get it, though. We've taken over management from some companies that have tenants we never would have approved (and some repairs done that make our heads shake in wonder).

"I have a number of rentals which means more in commissions so a PM will often agree to some of my terms. For example I want to be contacted anytime a repair is estimated at over $100. I also require a copy of the invoice immediate after the work is done. I often contact the vendor directly to ensure the problem has been corrected. "

If you have a number of rentals a PM may be more agreeable to this, but if you just have one property, a PM will not want to be micro managed, as it can result in a lot more work for the minimal fee being charged, as well as more expense for the owner. Sometimes there is no way of knowing when a minor repair can turn out to be more costly than $100 until the repair has been started. Some vendors will charge $50 to go out to just do an estimate. Again, this results in more visits to the property. If something needs to be repaired, it needs to be repaired. It should be up to the PM to make sure it is done properly and cost-effectively. Then again, there are some local owners that prefer to be contacted to do the repairs and hire their own vendors - that is fine too, but I've seen them come up with much higher expenses in the long run.

"I expect the PM to collect the rent on time and not accept excuses. If a late fee is charged and the PM wants to keep that. Fine. I just want to make sure tenants understand they have to pay on time or there will be a late fee and possible eviction."

Late fees, late rent policies, and evictions should all be covered in the Lease Contract. Again, the PM should apply these policies consistently with the lease provisions.

"I tried being the understanding owner and give both PM and tenants a lot of slack over the years but believe me this can backfire fast.

Again if you're an absentee owner you've still got to be willing to be involved in almost every aspect of PM.
"

My opinion differs with this. If the PM is doing their job properly, the owner should be able to sit back and relax, and let the PM handle the majority of the day-to-day issues, and only need extra contact (above the monthly accounting) when larger issues come up. That is what you are paying them for. If they need to be micro-managed, they aren't doing their job and you should find someone else.

By the way, California has a very different set of laws pertaining to PM and tenants that may make an owner want or need to be more involved due to stringent liability and legal reasons.
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Old 03-03-2013, 02:47 PM
 
Location: az
13,426 posts, read 7,794,735 times
Reputation: 9311
What is written above is all well and nice.

All I can suggest to the OP is they make it clear they like to closely monitor what's going on.

Start with the $100 and over repairs.

If the PM will not agree to contact you for repairs $100 and up keep looking.


Quote:
Originally Posted by S. Chris Webb View Post
...Sometimes there is no way of knowing when a minor repair can turn out to be more costly than $100 until the repair has been started. Some vendors will charge $50 to go out to just do an estimate.
Unless it's an emergency there is no reason an e-mail or call can't be placed to the owner shortly after the PM receives a repair request from the tenant.

A clogged toilet or sink and the bill ends up $125 or so fine. No problem

The point is to make sure you (the owner) are in the loop regarding repairs.

If an owner is diligent and responds quickly I don't see why this should be a problem.

As time goes by and you begin to feel more comfortable with the venders and work being done then yes I would say let the PM handle all but major issues.

However, until then an owner should insist on being contacted.

Last edited by john3232; 03-03-2013 at 03:19 PM..
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Old 06-10-2014, 05:57 PM
 
40 posts, read 245,828 times
Reputation: 45
Default prop mgmt recommendations

I am having a hard time finding a good prop mgnment company for my rental in AZ. I am out of state and have no choice so can anyone give me some company names and also let me know which ones to avoid? Thanks!!!
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