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I am paying 20% of rent on 2 of my rent houses; but no extra for tenant turnover and basic maintenance and semi-annual inspection included.
I only pay 20% of rent on the rent I collect. If a property is vacant or a tenant stops paying (in theory, hasn’t happened) then my PM doesn’t collect from me. I don’t believe its in the property owner’s best interest to pay a premium (such as 50%) first month’s rent for new tenants in a hot market such as mine. People line up to rent affordable houses and giving a premium to a property manager for tenant turnover simply gives an incentive to underserve the existing tenant so they will want to move.
Basic maintenance includes (some examples): checking hvac condenser monthly during summer and cleaning off; small fixes such as ceiling fan balancing, replacing doorbell, fixing broken mailbox, repairing window screen, driving by and verifying lawn is being mowed (sending me a photo), replacing toilet flapper; replacing failing hinges, cracked outlet covers, replacing bathroom hardware like towel holders, changing locks or repairing sitcky locks, etc.
In addition, if I need to hire for other repairs, I am the one who arranges for the repair and my PM must be there to let the contractor in if the tenant can’t do this.
I just started this arrangement in January; I have always managed my own properties and continue with 5 others. I am experimenting to see how this works out. Its hard managing properties in Dallas now that I spend most of my time in Las Vegas.
Last edited by WorldKlas; 04-04-2018 at 11:34 AM..
I am paying 20% of rent on 2 of my rent houses; but no extra for tenant turnover and basic maintenance and semi-annual inspection included.
I only pay 20% of rent on the rent I collect. If a property is vacant or a tenant stops paying (in theory, hasn’t happened) then my PM doesn’t collect from me. I don’t believe its in the property owner’s best interest to pay a premium (such as 50%) first month’s rent for new tenants in a hot market such as mine. People line up to rent affordable houses and giving a premium to a property manager for tenant turnover simply gives an incentive to underserve the existing tenant so they will want to move.
Basic maintenance includes (some examples): checking hvac condenser monthly during summer and cleaning off; small fixes such as ceiling fan balancing, replacing doorbell, fixing broken mailbox, repairing window screen, driving by and verifying lawn is being mowed (sending me a photo), replacing toilet flapper; replacing failing hinges, cracked outlet covers, replacing bathroom hardware like towel holders, changing locks or repairing sitcky locks, etc.
In addition, if I need to hire for other repairs, I am the one who arranges for the repair and my PM must be there to let the contractor in if the tenant can’t do this.
I just started this arrangement in January; I have always managed my own properties and continue with 5 others. I am experimenting to see how this works out. Its hard managing properties in Dallas now that I spend most of my time in Las Vegas.
Inspections should be included as well as minor repairs like an outlet cover or minor toilet repair. I think the 20% is high. If your rent is $2,000 and you pay 20% over the course of a year, you are paying $4,800. At 10%, you would pay $2,400 plus 50% of the first months rent for placing the tenant of $1,000. Total outlay would be $3,400 for the year. That's a decent savings in my eyes.
In addition, for that 10%, my manager will find a capable repair person and oversea if necessary, any repair needed. If I want to put a new kitchen in, I would likely shop around myself, but also hear who he has and compare quotes. The 50% rental placement fee helps ensure you get a better tenant. Where I have property managed in Florida, that fee is the primary income, while monthly % is more like residual income that is split by the management company. If the tenant is not served well, I find another rental agent. He knows that no vacancy means no pay and even though the market is hot in Florida too, there are many people with multiple large dogs or lower credit, that finding the right tenant can take a month or too. That means no pay for the agent. They want the tenant to stay (at least in Brevard County it seems that way).
This is probably a better post for the Rental forum.
There are some very seasoned folks over there who don't usually visit this forum, which is more oriented toward sales.
Regardless, OP, you are getting a lot of apples and oranges in terms of input here.
You need to look at overall fees, and the advantages of various models.
And, are you talking about 1 rental, or moving a portfolio of properties into management? I would expect a better, blanket deal, on multiple properties.
The percentage of rent charged, whether repairs or new tenants are covered in that percentage, whether you pay during vacancies, etc, are all variables that contribute to your bottom line expenses and your ROI on the property.
You need to be able to compare all those variables in one package, rather than the bits and pieces being tossed around in this thread.
Some things we do that our clients like that you may benefit from when interviewing candidates:
1-quarterly property checks
2-we have an online owner portal so owners can check their ledger and access copies of documents (invoices, lease, etc)
3-receive online payments
4-pay owners by direct deposit after funds clear
5-optional home warranty
6-tenant portal for online payments and repair requests
7-don't upcharge for contract labor
8-advertise on mls
9-document condition at move in and move out
10-use MLS lockboxes and vault boxes for showing
11-require decent credit, income, and background checks for tenant screening (big one, if they haven't paid other people they probably won't take care of your property or pay you at some point. I'd rather take a bit longer to rent the house and get a good tenant.)
Why not just manage it yourself and cut out the middle man?
There is something to be said about not having to deal with the emergency calls for a backed up toilet or sink at 2am. Keeping yourself distant from the tenant removes an awful lot of accessibility to your personal life. I guess the biggest plus is having them deal with collecting the rent and enforcing the concequences when it does not happen on occasion. I have done it both ways, been through several evictions and after that process, a property manager is for me. It is definetly cheaper, moniterily, without one, but for me, it's worth it for less aggregation.
There is something to be said about not having to deal with the emergency calls for a backed up toilet or sink at 2am. Keeping yourself distant from the tenant removes an awful lot of accessibility to your personal life. I guess the biggest plus is having them deal with collecting the rent and enforcing the concequences when it does not happen on occasion. I have done it both ways, been through several evictions and after that process, a property manager is for me. It is definetly cheaper, moniterily, without one, but for me, it's worth it for less aggregation.
Right.
A good service provide can hardly be dismissed as "a middle man."
I don't do property management, want nothing to do with it, and I know many who work very hard to support their clientele.
Just getting a good tenant in place is a skill.
Not for nothing but if you can't manage the property yourself then you probably shouldn't be buying said property.
In my case, I no longer live full time in the area where my rental properties are located. I sold a few of them and the taxes I paid, and the adjustment in my medicare premiums were incredibly high. In addition the income stream from the rentals (paid cash for all of them) exceeded other investments I am comfortable with. I keep a hands on approach and am actively involved in screening new tenants. I’m comfortable paying 20% knowing my PM will climb in the roof and perform a small patch; will replace a toilet; will fix a fence; with change out a faucet and most other non-major repairs all included in the monthly fee. And my tenants are happy and long term.
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