Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We haven't decided whether we want to sell or rent out our house. A couple years ago, we were in the same situation and consulted a potential property manger recommended to us by our real estate agent. He said he only dealt with "higher end" renters and we would need to spend roughly $5,000 to fix up our house to his standards. He then proceeded to call different vendors to see if they could do the work he was looking for at the price he was quoting us. They could.
My husband says this was only because he'd get kick-backs from the vendors and a way of padding the monthly commission he would collect for managing the property. He said he would probably also get a kick-back on any repairs he recommended over the life of the lease, so we'd need to be careful about taking his recommendations.
Is my husband being jaded or is this guy taking us for a ride? The house could use a few cosmetic repairs, and, honestly, if we were going to sell it, it would probably cost us more than $5,000 to get it ready. He said that, when we were ready to sell, these costs would be a selling point. Is this standard operating procedure when using a property manager or is something wrong here?
Any other things we should be looking out for? Any insights appreciated.
We haven't decided whether we want to sell or rent out our house...
Any insights appreciated.
If you didn't buy the property with the intention to rent it out and at investment price...
Then you should probably SELL it and move on unencumbered.
(as most other accidental landlords are advised to)
If you're bound and determined to be a landlord...
do that with properties that lend themselves to renting
(factors reflected in layout, location, condition etc as well as the price)
We haven't decided whether we want to sell or rent out our house. A couple years ago, we were in the same situation and consulted a potential property manger recommended to us by our real estate agent. He said he only dealt with "higher end" renters and we would need to spend roughly $5,000 to fix up our house to his standards. He then proceeded to call different vendors to see if they could do the work he was looking for at the price he was quoting us. They could.
My husband says this was only because he'd get kick-backs from the vendors and a way of padding the monthly commission he would collect for managing the property. He said he would probably also get a kick-back on any repairs he recommended over the life of the lease, so we'd need to be careful about taking his recommendations.
Is my husband being jaded or is this guy taking us for a ride? The house could use a few cosmetic repairs, and, honestly, if we were going to sell it, it would probably cost us more than $5,000 to get it ready. He said that, when we were ready to sell, these costs would be a selling point. Is this standard operating procedure when using a property manager or is something wrong here?
Any other things we should be looking out for? Any insights appreciated.
Truthfully when I'm renting a property I go through it all. Paint, clean, repair or replace. This way there won't be any "it was like that when we moved in". And there is no such thing as enough pictures
I have dealt with property management companies and for the most part I found them lacking. They simply want to get someone in to get their commissions going. As long as they pass your requirements they could care less. You have no control over the quality of the repairs.
If this guy has standards on thecpkaces he rents to his customers that's great. Ask him to show you some fvthe vacant rentals he's currently marketing. What are his requirement standards for Applicants? Or better yet what are YOUR acceptance requirements?
Ask if he uses Joe Ballistic repair or actual licensed cibtractirs. How reliable are HIS contractors!
Better yet ask him what his marketing plan is and HOW is he going to make sure that the applicants he gets are quality applicants. How is he going to save you money on repairs? What's his tactic in that? Bid system or just call out the first guy that answers
No matter what he plans n doing he has to run any applicant through you. He can't make the decision for you.
As a property manager, we always go through a new rental an owner wants us to manage, and recommend the things we would like to see done before putting a tenant in. We also recommend subs who can do the work for a good price. We don't get any kickback or make any money off that work, we do it because having the house in good condition to start with gets us a better caliber of tenants and, on average, leads to fewer problems down the road. We build houses as well as manage rentals, so we already have a relationship with good plumbers, electricians, painters, roofers, etc who give us a good price. We also won't go out and get bids. We've told owners before that if they want to get a 2nd bid, they can do so, and we've only once had an owner find a cheaper bid, and when we compared bids, it wasn't apples to apples anyway.
We've refused to manage properties for owners who won't get their properties in good condition, because all we can find are low quality renters, and because it tells us that when things break in the future, we are probably going to have a fight with the owner to get them fixed. We don't make any extra for fixing things, so I don't want to manage a rental that has problems, nor do I want a bad tenant who is going to take lots of my time.
So if you had brought this property to us, we likely would have done the exact same as you are describing, and the conclusions you and your husband jumped to would be completely 100% wrong.
It's true that PMs tend to use the same contractors over and over again, once they find ones that are good and reliable. If they hire those contractors often enough, likely those contractors price their quotes favorably, so as to keep getting work from this PM. That's how the business world works. It's not a 'kick back'. The PM is the contractor's customer, and when you have a good customer, you want to treat them right, so they will continue to be a customer.
Keep in mind, that favorable quote gets passed on to you, the property owner. And the lower the quote, the lower the PM's markup, which further lowers your expenses.
Part of the cost when you pay for anything is time. Part of it is materials. And part of it is expertise. And that is what a PM does. They don't just shuffle rent checks and answer the phone for you. They are giving you their expertise in how to market your property and how to rent it fast and keep it rented.
If you don't want to make these repairs, then you can almost surely find another PM. While another PM may not market to the 'highest end' clientele, you would avoid the $5k cost. (of course, you probably won't be able to charge as much for rent). You are posing it as if you only have to choices--sell your house, or use this particular PM that your RE agent recommended. You aren't limited to those two options. Just remember, you get what you pay for.
But my husband owned a rental condo when I met him that was managed by a PM. They rarely responded to tenants' repair requests; I believe it was to achieve tenant turnover. The PM charged 50% of the first month's rent for enrolling a new tenant -- and they always had someone in the unit quickly. For the 3 years I was on the scene, tenants never renewed the first 12-month lease. When a tenant moved each year at the end of the lease, then we'd have expenses to make the condo suitable to re-rent and some of the expenses seemed needed during the prior tenants' leases. And there was rarely money taken from damage deposits, so that is the reason I believe the fixes were needed during prior tenants' residencies at the place. Examples: replacing faucets and light fixtures; repairing non-functioning electrical outlets; fixing gate locks; replacing old broken appliances. I think my husband was dramatically overcharged for repairs and new items.
I would have to have wonderful recommendations from people I trust before I would use a PM company.
How far are you moving, OP? Unless you will be living quite close to the old property, you have to have a property manager. Tenants can't be trusted to know what is wrong and what needs repair, so there has to be someone who knows what maintenance is needed, who to call for repairs, and someone to serve papers if rent isn't paid on time.
I am sure there must be some good property managers somewhere, but I would not turn any of my properties over to any of the property managers in my area. If I had to move far away, I would sell the property and if I wanted a rental, I would buy a new one close to my new residence. I wouldn't count on finding a property manager like Lacerta.
You can not get good responsible tenants in a tired and dirty house. Unless the rental market is so tight that there is nothing else to rent. In that case, a good tenant might take the place but have very little motivation to keep it in good shape. Much more likely, you will get a tenant who thinks a worn out place is normal and that tenant will tear your house up.
Last edited by oregonwoodsmoke; 09-05-2017 at 01:50 PM..
Adding, of course, it would matter what the property manager thought should be done. I won't remodel a kitchen or put in granite counter tops for a rental, but the house has to be sparkling clean and paint and flooring need to be in good shape if you want a decent renter. You want stuff that might break to be checked to try to head off service calls. Like, a water heater that is rusting should be replaced now because it is much easier to do on a vacant house than on a house that already has a tenant and all the tenant's possessions in it.
All plugs and light switches should be checked. New batteries in the smoke alarm and CO detectors. Broken sidewalks and any other trip hazard should be fixed to protect yourself from lawsuits. All doorknobs and latches should be checked and repaired.
You want every possible little thing that is going to need repair to be done before the tenant moves in. That saves you from middle of the night calls and from trying to schedule around a tenant who might want to be difficult.
The oven doesn't have to be new, but it should be very clean and rust and strain free. New drip pans are cheap.
Landscaping should be well manicured, and preferably very basic so it is relatively easy to care for.
Different property managers have different commission structure. Mine charges a fixed rate of $60 for "oversight and rent collection", about half of a monthly rate for finding a new tenant and advertising property, and a $30/hr for any repairs (or if he has to hire someone - then actual costs). I met several property managers before I found the one I was comfortable dealing with, who was respectful of my property and my wishes with how it has to be managed (i.e. I am OK with letting people with dogs/cats to live, and I am against policy to declaw them for instance - one of those PMs was trying to teach me that this is his standard policy and my response was "the house is mine, and so should be the policies").
Having said that, I am very happy with my mortgage paying off by my tenants (and my last tenant made a great job of painting walls for herself). It's already been 7 years into 30 yrs mortgage.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
