Posted by phil fernandez on January 08, 2001 at 17:53:29:
I think you need a team behind you such as a dependable plumber, an electrician, a painter/ handyman, a guy that takes care of the lawn and a reliable snowplower.
Through the years I’ve been loyal to them and them to me. My lawn man has been taking care of the lawns for 15 plus years. I had a plumber from the start until he retired about two years ago. Now I have a new plumber who I’ve dealt with since. As mentioned in my last post I’ve had the same painter/ carpenter for almost 15 years.
These professionals are at ground zero whether I’m around or not. You definitely need dependable people like that.
When a plumbing problem occurs, I get the call from my tenant. I assess the problem over the phone and then call my plumber. He goes to the property, fixes the problem, sends me a bill and out goes his check. Somewhat of an autopilot system I guess.
I’ve got an opportunity to purchase an 8 family in my home town approximately 300 miles from my current residence. The building is 25 years old and is all electric heat. These are all 1 Br / 1 Ba apartments in good shape. The overall building is in good shape but does need repair to the decking leading to the top 4 units and possible a new roof. Rents average $290 and 5 of the 8 apartments are currently rented. The location of the builing is in a questionable neighborhood, but not a warzone. The seller appears motivated.
My dilemma is that this is my first acquisition (no experience). Compound that with being 300 miles away and I’m wondering if I should set my sights lower. I know of a few property managements companies in the local area that could handle the management. Also an option, is a property manager that does this on her own (not affiliated with any company that I’m aware of).
I’m asking some of the more seasoned investors / landlords here what their first impression is? Would you be comfortable turning the reins over to a 3rd party to manage?
Posted by Mark (SDCA) on January 09, 2001 at 12:48:30:
I do agree with everything that Phil said. What I wanted to add is that apartments- and especially 1bd/1ba are more management intensive than single family houses.
For my first acquisition, I’ve decided that I would forgo this opportunity for something I can personally manage. I appreciate everyone’s insight here!
I have rental properties 3000 miles from where I live and I DO NOT use property managers.
I have dealt with some of the biggest property management companies and I was absolutely blown away by the way they operate. I was not getting my rents collected and I was not getting my units rented out in a timely fashion. In return I got to pay some joker $35 to change a light bulb - it was unreal. Then you read the fine print on the monthly bills and I was paying $25 for faxes and $35 for photocopying and $40 for office supplies !!! It was a joke - the only problem was I was paying for the laughs.
I always hire a local caretaker couple (over 50 - they have experience) and I pay them well and give them a unit to live in and at Christmas time I send them some nice presents and a Christmas bonus. And they save me lots and lots of money.
It amazes me that there is such a market for these companies - I guess a lot of people who own rental properties are not all that concerned with the bottom line.
I learned my lesson and I will never hire another property management firm. I am closing on a beautiful 36 unit townhouse complex (2000 miles from my home) in a month and the VERY FIRST thing I do is fire this “overpriced professional property management firm”. I know they are professional cause they sent me a big favcy expensive brochure telling me how professional they were !!!
Re: Professional Property Managers: - Posted by phil fernandez
Posted by phil fernandez on January 08, 2001 at 16:35:10:
I agree with both Jim and Rick. The only guy that will make money will be your property manager. He’ll manage you out of any possible positive cashflow.
The managers that I have seen are both lazy and " the I’ll throw the first person into your rental unit with a pulse" attitude. Hey it’s not my property.
I still manage all of my rentals. They are all within 5 miles of my home. I do have a contractor that has worked on my rentals for over 10 years that I do trust and this summer he will be handling most of the management of my rental business. But I know and trust him.
Posted by Jim Locker on January 08, 2001 at 13:55:22:
The property manager will wind up with ALL your profits, and you could easily find yourself writing him a check every month.
Typically, he’ll charge you a percentage of gross, plus maintenance. He can hit you very hard on maintenance, and you can’t tell the difference.
OTOH, if he sends you a check each month, he might be doing that by neglecting maintenance. This will result in you having P*ssed tenants who won’t stay, and a building that deteriorates so that when you decide to sell out and take your “profit” you won’t have any due to building condition.
Or, he might keep the building full by renting to the first yahoo who shows up with money in hand. You would be happy since you are getting paid each month, but the yahoos are tearing up your building.
You probably won’t find a property manager who is both honest and motivated. And one who is not BOTH honest and motivated can hurt you badly.
Don’t do it. Never hire a property manager if you can help it. Certainly don’t buy a property with the intent of hiring a property manager. Also, do not buy something so far from home, especially when you are a beginner.
Posted by Jeff in Mke on January 08, 2001 at 16:52:38:
Hi Phil,
I was just wondering how you are able to get away for vacations,weekends,etc. when you manage your properties yourself.
How did you do it especially in the earlier days of your investing career.
thanks in advance,
Jeff
Re: A question for Phil - Posted by phil fernandez
Posted by phil fernandez on January 08, 2001 at 17:43:36:
Hi Jeff,
I had always bought rentals in excellent neighborhoods and kept them in excellent shape so I attracted the right type of residents who didn’t need much supervision. I always run credit checks and thoroughly check out the rental application to make sure I had a tenant that would be responsible and take care of the property.
With great tenants, it’s fun managing my own properties. Twenty plus years ago I had to manage them because I didn’t have the kind of cashflow that I have today.
About 12 years ago I hooked up with a painter/contractor who took an interest in my properties as if they were his own. He probably liked me because I’d pay him quickly after he did a job for me. So I was lucky there with him.
Throughout the years I’ve learned alot from the Mr. Landlord newsletter which helped alot.
Today with computers, voice mail and FAX machines its much easier to manage my properties from afar as will happen this summer. I’ll be about 100 miles from the property at my vacation place. I will have John show the rentals. He’ll FAX me their apps. I can check their application from there and order credit checks from the lake.
Because the rentals are in good locations and are in excellent condition, I don’t have a big turnover so less work and less management hassles in general.