Property Management
I'm considering hiring a property manager for 19 units. She will handle re-renting and hiring people to do repairs. I would handle everything else. What would be fair conpensation? Percentage of gross? I have done everything in the past, so I'm in the dark on this one. Thanks.
Well here in Miami Beach I manage about 271 seperate units ( all condo's in different buildings ).
I charge 15% of the income stream. I'm also always between 92% to 98% full. also I have premium renters ( 10% to 20% above the market )
what the 15 % covers is the full management and no outlay of my own. ( I also get all the rentals .... ) The owner never get's a call unless it's for lease approval, something needs to get fixed or I am going to the market for bids on one of the repairs they need.
a good manager is someone you never hear from on the phone but you get pleanty of update.
what you pay your manager should be based on how much she pulls in for you, so percentage of the monthly income ( not on contracted value ( lease value ) ) .
also, if she's really good, she should be able to save money for you on the expense side ( for example having better and cheaper light bulbs, knowing how to make a unit drop dead wonderful so that it rents out without hesitation....
start out at 5% of the gross per month then increase it based on performance of the building. better performance means more profits on the long term.
heck when I have a vacant unit I always send in the maid, drop the temp's in the fridge so it does not work as hard and keep the AC on the cheapest setting, I also have stocked up on the best cleaning solutions so that I can pass the savings on to my owners.
Mike
Mike,
Thanks for the tip. Your percentages make sense, and the incentives are in place to maximize cash flow. A good manager will surprise you with attention to detail and ability to solve problems. I think I'm getting that. You have quite a bit more on your plate, and your advice is appreciated.
steve
I need some help so I am better at screening property managers. I have one now who I thought was good and I am now wondering. One problem is that she charges 35 hours for the most basic things. For example i do not get copy of my reciepts of repairs/ maintenance. If i want them I have to pay her staff 35 hours to get copy it. HOw am i to know if the time is accurant. I believe I shouldnt be charged for this and it should be part of the standard management fees. Also her statements is the most confusing I've have ever encountered.
Another manager decided to lease the property for two years rather than three and then informed me afterwards. I wasnt happy because I wanted to sell the house in a year.
Also I always wonder when they get an "estimate" for a repair, how am I to know if it's fair? cant I ask for three estimates. I always get this song and dance that they have certain handymen they work with and have the best prices. And I know this how? I have to take their word for a lot of things IMO.
So that I dont pic a bad manager again what should I ask them? I know I will ask for a copy what one of their statement's looks like ahead of time just to make sure I can understand it.
I[ Edited by reklats on Date 07/16/2004 ]
I[ Edited by reklats on Date 07/16/2004 ]
Reklats,
From your experiences you can assemble a list of requirements of what you want and don't want in a manager. I've changed my rental agreements through the years to reflect some of the bad experiences I have had with tenants.
Spell it out for them, when you get a new manager. It's more than enough to be at odds with your tenants, you don't have to butt heads with your manager.
steve
That's what i am thinking to write up a template to ask questions. I know the usual ones:
1)is managment fees percent of rent? or monthly? What do they charge during the unit is vacant?
3) do they charge for copying or letter writing?
4)for late fees does the manager get all of it or part of it? (I found if they get all of it they dont work that hard to get the tenant to pay on time at all.
5)Who do they use for handymen. (this is one bone of contention for me: I always get teh song and dance about how they got a good deal/relationshp with vairous handymen, contractors but the prices for some of the services seems very high. Are they getting a kickback or what?)
1) How often do they inspect the site during teh year (that is actually "drive" there?) The property manger a few posts above is beyond the norm.Heck if i could find guys like him in all the areas i own property I hire him as my property manager in an instant!
So far I found many to be lazy and no thorough. They just figure they do everything from their office --the bare minimum there is. (that is deposit rent check, send me my portion). I have some really good property managers on the one hand and then some incompentent ones or ones who are nickel and diming me to death on all sorts of crap. I find it ridiculous one of them is going to charge me 35 bucks an hour to copy the reciepts of repairs I paid for! What then they tell me it took two hours to do? Like i can prove it didnt take that long. That to me is obnoxius.
Any other questions i need to ask? perhaps if they are licensed? Not that means anything to me but that they passed a written test. big whoop.
i just went thru a change over with my managment company, the lady ive used for 4 years branched out on her own, and not wanting to pay severence fee's i stayed with the current company. BIG mistake they sent my checks 2 weeks late and never sent reciepts and always had a song and dance, 3 months of that i fired them.
anyway i went back to my other lady, she charges 10 % of monthly rent, no fee's for yearly contracts or percent of repairs, and if theres no rent coming in she dont get paid. late fee's she keeps half, even pays the water bill out of my rent and direct deposits the rest. plus she sends me copies of all reciepts plus check studs.
they wont do any repairs over 100.00 without approval and if i dont like the qoute she gets more.
remember they do work for us and if they dont do their job alot of others would like the chance.
good luck hunting! :-D