Validating Property Management Actions - Posted by Rick

Posted by Richard on July 19, 2007 at 24:45:03:

It seems you have a basic issue of trust to resolve. This is something you should do prior to signing a management contract…not after. Assuming the Property Manager is duly licensed by the local Real Estate commission, It should be a simple matter to determine if he has prior complaints. If not, it is not likely a Professional will risk his license, and more, by committing fraud.

Again, assuming this PM is actually experienced, and ideally his primary focus is PM, you are likely to shoot yourself in the foot by demanding estimates for every routine job, and confirmations from tenants. These types of reactions only serve to drive UP the true cost of doing business, which ultimately WILL be paid by you. It’s called “overhead”. Additionally, these items slow down the entire repair process, which means the tenant will be even more unhappy.

I am again assuming your PM manages numerous properties, and as a result deals with these routine service calls on a daily basis. He has likely established a relationship with several vendors based on consistent and reasonable pricing; quality of workmanship; responsiveness; and a proven track record of standing behind their work. This is not something you can ascertain simply by picking a vendor based on the cheapest bid, and in fact these intangibles create REAL value.

OTOH, if you just picked any old sales agent to “manage” your property, and they don’t have thousands of unit/months property management experience, then you have every reason to be concerned. Similarly, if you are talking about a $5000 job, then of course you should expect at least two proposals from known vendors, for the same SCOPE OF WORK.

You should expect to get the actual receipts for all work done, along with your monthly financial reports. These should be reviewed by you in a timely fashion, and promptly discuss any questions with your PM. It is easy enough to check material prices to see what is “reasonable”, and you can pick up an estimating manual to calculate reasonable labor costs, if you know enough about the actual work involved to figure it out.

Validating Property Management Actions - Posted by Rick

Posted by Rick on July 15, 2007 at 21:49:40:

I recently bought a property out of state and hired a property management company to manage the property. This month, I was informed that the property management company responded to a couple of maintenance calls. The calls led to general repairs and the replacement of a stove. I haven’t received the report for the tenant’s request at this time, but I expect them shortly.

Recently, I discovered (from an article) that property management companies (not all) have the ability to bill you for false repairs are maintenance calls to pad their monthly fee. In order to avoid this situation, I would like to verify such request with the tenant, but for some reason I’m reluctant to communicate with the tenant because they will know that I reside in another state by mail or telephone contact. I would like to know the following:

1.) Is it okay for the tenant to know that I reside in another state?

2.) Should I contact the tenant for verification–does this ruin the owner/management company relationship?

3.) Will my disclosure that I live in another state make me more vulnerable to non-paying tenants or other problems?

4.) Are there any other methods for communicating with tenants to validate the request and completion without dislcosing my location (possibly email)?

Re: Validating Property Management Actions - Posted by Natalie-VA

Posted by Natalie-VA on July 19, 2007 at 08:49:04:

This wasn’t one of your questions, but the biggest issue I see in my area with out of state owners is that their property managers are charging below market rent and putting poor credit tenants in their houses.


Re: Validating Property Management Actions - Posted by James

Posted by James on July 17, 2007 at 09:58:35:


I manage several properties for fellow investors right along side of my own rentals. In the event something is to be repaired, it’s fixed up to $X.xx dollars. Anything over that, and it must be approved.

Generally speaking if its something major that needs immediate attention, it’s handled by maintenance workers. I’m large enough to have those guys on staff and available 24/7, but smaller management companies don’t. I also charge roughly 10% extra on the bill for repairing/replacing whatever.

As an example, I replaced a HWH in a 2unit without telling the owner immediatly. Wasn’t the tenants fault, so it just got replaced. Charged the owner about $150 dollars (+$325 HWH/parts) - just take a wild guess as to an estimate by someone else - sitting somewhere around $600 bucks.

I take care of my investors and they take care of me.
The point is, just do what you feel comfortable doing w/ the current management co. Authorize them to repair stuff up to $X and call you about everything else. If you want them to verify everything first, then make them do that.

You should have no concerns dealing with tenants because you are out of state.

Re: Validating Property Management Actions - Posted by steve

Posted by steve on July 16, 2007 at 09:59:58:

I don’t think being out of state is an issue. The tenant is in contract with the management company. you are in contract with the management co. I’m assuming. I think I would request receipts for all work, and before that, I would request an estimate before any work is started. You can review the repair estimate and contact the repair company before giving the Ok to the management company.