Property Mgmt Company?
Hello all. As some of you might know from some of my earlier posts, I've been struggling to find financing to purchase my first property - a duplex in NY. I have an answer coming to me today by 4 pm...PLEASE KEEP YOUR FINGERS CROSSED FOR ME...AND PRAY TOO!!!
Here's my question: I live in NYC, and the property is about 4 hours away. The broker suggested a hire a management company, to which I would pay a monthly fee ($150.00). Just what can I expect for my $150.00 per month!?!?
Thanks much,
Tony
I'm not sure about your area but I called around to some places around me that did property management and they said they would list the house for rent, screen the potential renters (credit, criminal), handle the maintenance when issues come up, collect the rent and a few other things. I wasn't real impressed with the companies I called since I got the feeling that I could do all of that myself. They charged anywyere from 6-10% (of the rent) for the management of the property and would charge 1/2 of the rent during the times that the house was vacant. They were real good at telling me what the charges would be for having them manage my property but couldn't really "sell" the benefits that I would gain from having them involved. This will be my first property that I will manage but I'll try it myself since I didn't see a real benefit to them doing it. Plus, I found it strange that they would charge 1/2 of the rent for months that the house was vacant. It seemed, to me, that it would be in their best (financial) interest to have the house vacant. The reason they charged more is to cover the costs of advertising in the local paper, putting up signs, and taking phone calls - again, things I could do.
Thanks for taking the time to reply! I guess I'm concerned with something like a pipe bursting at 3 am, while I am snug in my bed 4 hours away. Do they dispatch somebody to investigate the problem, who then calls a plumber that I pay for? Or do they fix the plumbing, and that's included in the fee I pay?
Also, and this is important: the area gets pounded in the winter...who does snow removal!?!? If not them and it's not included in the fee, then at what cost?
Thanks again,
Tony
Again, from my experience, they will handle the 3am calls for the burst pipe but it's not included in the managment fee. They will make the calls to get someone out to fix the problem but you will still pay for the repair. They told me that they get a discount on the repair, which might be true, but I'd guess they will also make money on the repair. I think one of them would contact you for any repair over a certain dollar amount. As for snow, I plan to have the renters responsible for removing snow and mowing the grass. Best thing is to call around to see what each offers. Of the ones I called, they were pretty much the same as to what they would handle but the fees differed.
Look for a company who takes a percentage of the NOI rather than the GSI
The company that I was told to contact (told by the broker! HA! I wonder what his cut is!) wantd $150 per month. Property generates $1050 per month in gross rent. 14%...I think that's STEEP.
With the 4 hour distance, the 14% might not be bad - depending on what they provide for you.
The best thing is to call as many management companies as possible to get a bigger picture of what to expect. In fact, I got a number of a management company from a person at my dentist's office who has several houses managed by them. It was nice to get a contact that came from a person who used the company instead of a realtor who may be recommending a "friend".