property management company
Anyone here ever used a property mgmt to manage properties? How does it usually work if you have. I wanted to shift my focus from day to day mgmt to acquiring more properties. Also are the fees negotiable ever? or does it depend on the rental market for your area.
Thanks
Cole
Cole,
I've used property management companies in my city and what I've found is that they are not all the same. Most charge a monthly (rental collected fee) of 10% - 15%. In addition (most) charge 1/2 of the first month rent, when placing a new tenant into a property, for their time and effort in finding a tenant for you. Some are great and have the next tenant ready for you when the previous one moves out, and some companies are rather slow and cause a significant vacancy. Out of the large number of property management companies that are available in my area, I prefer to go with the larger companies that only work with tenants (meaning they aren't selling real estate on the side as well). You can in many cases become a lower priority to them.
depending on how many properties that you own, you may consider hiring an employee to handling all of your rental situations for you. In my state, if they work for you full time, they don't have to have a RE license to manage your property, as long as you are the owner of the property. Hope this helps!
My question is what is the amount of properties that most people feel that it is becoming to time consuming to manage your property yourself? So lets say at this number you turn it over to a management company, how many more properties do you feel you will have to aquire to get back to the same amount of cash flow? I realize that this is a very broad question and each situation just DEPENDS on things like what your man. company charges as well as vac. rates, cash flow, marketplace, ect. I'm just looking to see what others are doing.
Thanks
Joe
hartmanjr (Joe),
For me, one property is too many to manage by myself. I always include property management costs in my cash flow analysis when I purchase a rental property. I would rather not deal with tenants and toilets, so, I hire professional property managers to do that.
The property management company monitors the prevailing rental rate, advises me on appropriate increases, schedules health and maintenance inspections, supervises repairs, and maintains relationships with building trades contractors that often give my work priority because of the volume the management company gives the contractor.
I also do not have to be an expert on the local landlord-tenant law, I do not have to deal with evictions or process service, and, I do not have to go to court -- property manager does all that too.
I do not have to know a complicated accounting software package to keep my books, since the property management company has bookkeepers with that special expertise and reduces my income and expense tracking to a simple spreadsheet. At the end of the year, the management company files a 1099-MISC with the IRS for my gross rental income, and gives me a year end accounting of all the income and expenses for each property. Makes Schedule E preparation a little easier.
I would rather spend my free time in my leisure pursuits rather than managing my rental property.
I think hiring a Management Company for your properties boils down to two things: 1) Time and 2) Money (Big surprise here, huh folks???)
Time: If you have enough time to field the one or two phones calls needed for each property, then do it. You have to decide how many calls you can handle, before it cuts in to your other activities.
Money: Managment companies are EXPENSIVE. Reading the other replies, it seems that they charge between 8% and 10%. I paid 8%. That is from your revenue NOT your profit. It is a big chunk of change.
In my experience, the Managment Company ended up costing me more in repairs then I would have spent myself. In other words, they have a set of contractors that they use and they are not the cheapest (or the best).
Lastly, no one is ever going to care more about your investment than you. Period. Amen.
Once again you guys gave me some excellent direction! Here is the scenario I work for the govt and was fielding calls from employers and editing online orders yesterday and just so happens one was a prop mgr and we worked out the details Im paying 10% but everything is covered. I run a farm, have a day job and 7 houses to manage so I figured my time would be best spent increasing productivity of the farm and the expanding the rental houses. The hardest part was admitting to myself that I really didnt have the time to manage everything CORRECTLY!
Thanks
Cole