What to look for in a property manager (tenant, eviction, renters)
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Hi everyone! This is a completely unknown area for me, so I appreciate any guidance.
I have a home for sale in suburban Chicago and am thinking about renting it out due to sluggish market activity. Similar homes in the same neighborhood are renting/rented for $1800-$2100/month. Given that my mortgage is only $1300, I think this makes much more sense than to leave it vacant. I have moved to Michigan, and don't know the first thing about being a landlord, so I'm looking at property management options.
What questions should I be asking in my interviews? I know the obvious ones such as how are tenants found, how are they screened, how is maintainence handled, what are my fees, and when do I get paid. But so far they all have answered these questions in their canned speech/presentation when I've reached out for information. What other information should I be looking for beyond just lowest cost?
Second, when I call references for feedback, what should I be asking them?
Even though I'm a property manager (resident manager), I don't recommend using property management companies. My daughter hired one to take care of her rental, and they took her to the cleaners. They have control over maintenance and use their own people. In my daughter's contract,they didn't have to get her permission if the situation was an "emergency." Guess what? Everything was an emergency. They didn't notify my daughter of what had been happening until her reserve fund was exhausted. She fired them, but it was a really expensive lesson.
I suggest you do it yourself, if you want to rent it out. Are you local to the rental?
What you can do, is use a tenant screening company. Some will do all the screening and then tell you if they think you should rent to them or not. This is the company my boss pays for. All I use them for is checking credit reports and eviction reports, but they offer a full service for tenant screening:
Then, I'd just hire maintenance people when you need them.
You can have the tenants pay you with PayPal. If they choose the "send money to friends and family" it costs you nothing. This is legal to do for rent payments as well. I called and asked. And it does say so on the site, as well.
If the tenant pays you using their bank account, doesn't cost the tenant anything either. If they pay with a credit card, they pay a fee. If I remember correctly, they have to choose that they pay the fee.
I set this up for my daughter's rental after she fired the management company. The tenants love it, my daughter loves it. No lost checks, no making trips to deposit the checks. You link your bank account to the Paypal account, and just transfer the funds online to your bank.
I wrote up an addendum that spells out that all fees must be paid by tenant if they use Paypal, and there are any fees.
The tenant screening service would probably have an application you could use. They may even have a contract you can use.
This site looked helpful, and has a contract you can use:
If you are determined to hire a management company, I think you should get an attorney to look over the contract. Make sure they have to contact you for permission EVERY time there is something that needs to be done. Also, I'd put in there that you get to choose who does the work.
With my daughter's contract, not only could they do the work and pay themselves each time they said it was an emergency - which it always was - including a limb that fell off the tree onto the ground in the backyard - requiring an "emergency" trim of the tree to the tune of $600, in which they butchered a beautiful old tree - but they also charged my daughter a 10% "supervisory" fee for every maintenance job. So, obviously, the more expensive the job, the more they made. This is where they make the real money.
Never never do business with those that think they r doing u a favor by taking your money
Check the standard charges of repairs vs what he charges also amount of deposit held in reserve
Class of renters he accepts and most important how many law suits against his owners
Do comparisons on rentals in your zip code
DIY baby DIY
I used a PMC. Never again. I just manage it myself. NOBODY will watch out for your money and property as you would. There is nothing a PMC can do that I cannot do.
Most PMC do not care about your property. They will get the first person that passes their cookie cutter check list. They will not be responsible for the tenant trashing your property, they will take 10% and the finder fee 1/2to 1 full month rent. Basically 20% of your TOTAL revenue will go to PMC. then you will still need to pay for the repairs which will be done by their subcontractors. And you have no idea of the quality of the repair.
Now PMC are a necessary evil for some LL. Sorry but ill KEEP that 20% in my pocket. If I were to ever move I would rather pay a friend who has his own properties a monthly fee to take care of the properties. I also have my own contractors who I trust.
Last edited by Electrician4you; 10-27-2013 at 01:13 PM..
I used a property manager once to rent a house after I had moved out of the state. They were also my realtor (who couldn't sell the house after 7 months on the market, but that's another story). She ended up being a better PM than realtor. For most clients she would charge 10%, but she only charged me 4%. I had renters in there for about 5 years and finally sold it for a slight profit. They did little damage and she handled things promptly.
Right now, my husband and are renting a house through a property manager and she leaves a lot to be desired. We've been very disappointed with her timeliness at responding to issues/complaints. I don't know how much the owner is getting shafted by her monthly fee, but I would be livid if the person I asked to represent my home let serious mechanical and structural issues linger for weeks at a time like she has.
At the end of the day, I see PMs first priority as getting the rental check each month. After that, it's a toss up if they actually care to protect their client's investment (i.e., the house).
Thanks. I will be out of state, and working a job that requires international travel once a month. As such, doing it myself just does not seem to be a viable option. My CPA, realtor, and family lawyer are all guiding me on this. Their opinions are mixed on if I need a PM or not. But being out of state and not knowing what I'm doing, I think I really need to go for it. There is enough of a buffer between my monthly mortgage and going rent that the monthly fee doesn't seem prohibitive.
I'm going to check the heck out of references for these companies, but I'm attracted to one that has a fairly basic fee structure compared to the others, who seem to nickle and dime for a lot of things. They charge me $400 for a "one time setup fee", and then 10% a month while filled. They handle all marketing costs. I will need to put $250 into a maintainence account and they will get authorization on any repairs that isn't covered by that amount.
I will be out of state, and working a job that requires international travel once a month.
Their opinions are mixed on if I need a PM or not.
If you insist on renting out your property under these circumstances...
then you need a responsible party available 24/7/365 for the tenant to be able to call if/when
something happens. Someone you can trust to ease heir mind, solve the issue whatever it might be,
take out a VISA card to pay for whatever goods or services might be needed and to achieve all these
in a way that doesn't unduly add to your costs and if appropriate to assess damages to the tenant.
It's a very tall order.
Quote:
But being out of state and not knowing what I'm doing, I think I really need to go for it.
Being out of state and not knowing what you're doing... you really need to find a buyer.
Sell, take the hit if need be, and then move on with your life unencumbered.
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