Posted by Jim Rayner on January 24, 2001 at 12:55:31:
Leon,
I have been managing my holdings through my llc for the time being. Currently managing 46 units that way. i will however with the completion of the next round of deals add the additional layer of a corp structure for managing the properties as it will provides additional benefits as far as taxes go. The llc will remain and continue to serve its other remaining functions beyond those of managing the properties.
Repost…Property mgmt corp? - Posted by LeonNC
Posted by LeonNC on January 24, 2001 at 10:06:57:
I’m looking for input on whether ANYONE uses a property management corporation to manage thier properties. There wasn’t a response to the last post so I’m thinking maybe it’s not such a good idea. It sounds good in the text book but I’m wondering if it’s practical. Just a yes or no answer is fine. Thanks!
LeonNC
Re: Repost…Property mgmt corp? - Posted by Dave T
Posted by Dave T on January 24, 2001 at 22:18:02:
Leon,
There are good property managers out there. I was fortunate to find one to manage some of my MD properties (I live in SC). It is only because I have such a good property manager that I continue to invest in MD in the service area covered by my property manager.
A good property manager will relieve you of the tenant and toilet “emergencies”. A good property manager will know the state and local landlord/tenant laws and keep you out of legal pitfalls. A good property manager knows how to work the eviction process and will be ready move quickly when the process has to be exercised. A good property manager screens tenants. pulls credit reports, and checks employment and previous landlord references. A good property manager conducts routine property inspections and schedules repairs as needed.
A good property manager costs me approximately 10% of my gross rents. A good property manager earns every penny of their management fee. A good property manager is indispensible to me.
Dave
Re: Repost…Property mgmt corp? - Posted by Frank Chin
Posted by Frank Chin on January 24, 2001 at 12:27:51:
There was a thread a few weeks ago where this was discussed in detail. One fellow suggested finding a good property management company first, then locating the properties.
I managed all of my properties myself as I heard many stories:
1- One friend took a no money down course, and I asked him if he found some deals. “Yes, plenty” - was the answer. “Where?” - I asked. He tells me of numerous properties run into the ground by management companies. In fact, one landlord’s been pestering him to take over the property - just assuming the mortgage. “Do you want this guy’s number?” he asks. Tells me some management companies had a knack for finding deadbeats.
2- I took a Saturday Real Estate investment course in New York City. This investor owns property in the Mid-West and Texas. He hires retired people part-time to manage his. Takes a trip out there to place want ads on church bulletin boards senior citizen centers. Had great experience with god-fearing seniors willing to make a few extra dollars. “Beats Property Management companies by miles” he says.
3- A good friend bought an apartment building from a doctor at a giveaway price. He fired the management company, property manager, building super, and evicted deadbeat tenants. Moved into the building. Sold it several years later at a great profit. “Who bought it” I asked. “Oh - the same doctor who sold it to me” he says. “He’s learned his lesson and is not using a property management this time.”
In fact, I recently made a career change. I own too many properties to manage part time after work. I can try - but won’t see much of my family. I can:
A- Hire management companies and have them run my properties to the ground.
B- Trade up to larger properties and manage it full time myself. In fact - if things work out right, I plan to hire some seniors to help with the mundane handy-man and cleaning work. I’ll be the property manager - real estate investor.
I make it a point to visit the properties and collect the rent checks in person. Work with tenants to plant front yard gardens. Get to know the neighbors. Patronize neighborhood shopkeepers to get the local buzz.
Paid an elderly next door neighbor, named Dominic, who sits on the front porch every day (all day long)$40.00 a month a keep the sidewalk clean and keep an eye on one of my rental prioperties. Got a citation one day for some debris on the sidewalk. He tells me that at 8:45 that morning, a City crew emptying garbage cans knocked a can over and didn’t pick up the debris. I’ll go to court with you to fight the citation he says. “No thanks” - I said, don’t have time to fight City Hall.
I always wonder where I can find a mangement company who can beat Dominic’s attention and price. In fact, Dominic promised me next time, he’ll pick up the debris immediately rather than waiting till he finished his coffee. “That citation’s all my fault” he says. Would that be a management company’s attitude?
Dominic got a nice color TV that Christmas.
Re: Repost…Property mgmt corp? - Posted by phil fernandez
Posted by phil fernandez on January 24, 2001 at 10:49:43:
Hi Leon,
We had a discussion about property management companies about a week or two ago. Basically it was agreed upon that property management companies are really “property MISmanagement companies.”
Nobody can manage your property better than you can. Its your financial stake out there, not the management companies. I’ve heard of management companies throwing anybody with a pulse into apartments, mismanaging money and on and on.
For every good one, there are ten bad ones. I would not consider property management companies.
Lucky! - Where do you Find Them - Posted by Frank Chin
Posted by Frank Chin on January 25, 2001 at 07:21:41:
How did you run across the guy you use. Word of mouth? Is it a realtor also doing property management or a full fledge property management company.
Many local realtors by me also do property management and their quoted 10% for the smaller properties I own. Apartment buildings run about 6%.
Is there a checklist of questions such as:
1- How do you screen tenants?
2- What steps do you take with delinquent tenants.
3- How often do you visit the properties.
4- How do you handle minor repairs, graffiti etc.
5- How promptly do you respond to complaints? - Do you have them call you on a cell phone, or is it a voicebox you get back to once or twice a day.
One guy tells me he checks his voice mail once or twice a day? Is that good enough for a toilet emergency?
6- References - can I see one you manage and speak to the landlord?
I have looked into them, but have doubts and the ones I spoke to did not impress me.
you’re on to something with #2 - Posted by Anne-ND
Posted by Anne-ND on January 24, 2001 at 13:59:36:
Here in ND there are plenty of farmers who move into the city when they retire. One 6-plex I looked at had been managed by a tenant who was just such an individual. He would collect the rents for a $50/mo reduction in his rent. But for free he did all the fix-up work in the place because he was bored. He’d updated the kitchen and bath in his own unit, replaced the hot water heaters in all the units, and was in the process of putting up plug-ins in the parking lot (for those of you who don’t know, that’s so we can plug in our cars at night when it gets below zero, so the oil doesn’t freeze- having a plug-in adds value to an apt.). He’d put up a new fence around the property, and did all the maintenance for the other tenants so they didn’t have to hassle the absentee landlord. I don’t even think he asked the landlord to reimburse him for the cost, he was just keeping busy.
Then the landlord’s college-aged daughter moved in and took over management responsibilities and the place went to heck. When I met him, this guy was so frustrated that he was moving back to the farm to work with his kids. If I’d had a multi-plex to put him in, I’d have given him free rent for the quality and quantity of work that he did.
“Retired Farmers Management Company”- there you go.
Anne
Re: Repost…Property mgmt corp? - Posted by LeonNC
Posted by LeonNC on January 24, 2001 at 12:26:44:
Hi Phil,
I guess I was totally unclear about what I was asking. I meant should I form my own property management company/corporation to manage my own properties. Sorry about that.
LeonNC
Re: Lucky! - Where do you Find Them - Posted by Dave T
Posted by Dave T on January 25, 2001 at 18:18:20:
I found the property managers I now use by trial and error, and, referral. Notice I avoided use of the word “guy” because the property management business is not gender specific. I have two managers in MD (one male and one female) and one manager in OH (also a male). I found the first MD manager by trial and error, after experiencing two other property managers first. The second MD property manager was recommended to me by the first. In MD I use property management companies – not realtors with a sideline property management business. In Ohio, I also found the manager I use today by the referral method when I wanted to change management. This manager is a realtor with a sideline business.
In all cases, I have a maintenance escrow on deposit with the property manager to draw against for repairs. In all cases, I have given permission to make emergency repairs without my approval up to $300.
Whether the manager is a real estate office or a property management company, I avoid the “one-man” operations. I want to know that a live person answers the phone during normal business hours and that an emergency answering service is in place after hours. After all, if your tenant has an emergency, you want it addressed right away – not when someone gets around to answering the voice mails.
Your questions are a good starting point, but for me it’s more a matter of their property management style and practices fitting my needs. Other questions that address your needs might include: What day of the month rent disbursements are made? If your mortgage payment is due not later than the 15th, you might not want to wait until the 15th to get your rent check. Will the manager deposit the rent proceeds to your account – EFT or mail deposit – or do you have to get a check in the mail?
How is the accounting system set up, and can you see a sample statement? Does the statement itemize all expenses charged to your account each month? Does the manager attach a copy of the original bill or invoice for all charges to your account? What happens at the end of the year? What does your year-end statement look like? When will 1099-MISC be issued? What happens with late rent payments? Is the rent held until the next monthly statement is issued, or will the manager make an interim disbursement?
Will you participate in the tenant approval process, with the right to deny an application? If you eventually sell the property, what commission will you owe the manager if you sell to your tenant? If you want to be actively involved in the management, how much owner participation will the manager invite?
Ultimately, the selection of a property manager boils down to your level of satisfaction and comfort with the services performed. Sometimes, you need to employ a manager to discover what you like and don’t like about their management practice. When you find something you would like to change, a good manager will be receptive to any change that improves their business practices.