Only experience can teach you the dirty truth about property management

Estimated read time 10 min read

Property management is a concept that I love and hate. You are my favorite thing because I do not have to worry about managing my investments. You can also make me question my sanity!

You are likely familiar with property management if you have made investments outside your locality or if you live near your investment but would prefer that someone with greater expertise or passion take care of them. You probably also have some interesting stories to share!

Property management is an excellent concept for those of you who are new to the world. You can avoid being a landlord by hiring a property management company (PM) to manage your rental investment. The PM will place tenants into your rental property, collect rent and pay it to you each month, coordinate repairs and take care of them, take calls for repair and make sure they are done, take action against non-payment and other issues, and even handle evictions if needed. They do everything.

It sounds great, doesn’t it? Yes, it’s great. I have a private message for all my rental properties. This is mainly because they’re not local, but I also have no interest in being a landlord or dealing with tenants.

What’s the downside of this?

Property Management Reality

You knew that there would be a downside. The downside isn’t that you have to pay a monthly subscription fee. This fee is justified and well worth paying.

It can be difficult to find good property managers .

Why is it so difficult? Property management is one of the lowest-paid roles in the real estate industry. The low pay is problematic for two reasons. First, it doesn’t attract people of the highest caliber to take on the role. Second, it makes it easier for PMs who are desperate to earn more to charge you more. This can be discussed more in relation to dealing with bad PMs. Let’s instead focus on how you deal with the people who are chosen as PMs.

Investors, you can’t afford property management. Here’s Why.

Good or bad property management?

I would venture to say the majority of managers are not very good. Later, I’ll go into more detail about how this may or may NOT affect your investment property. But first, let me give you a few basic signs that you should be looking out for to determine the type of manager you have.

The Phenomenal PM (also known as My Dream PM).

  • Communicates effectively. Keeps me informed of any changes, is responsive, answers all my questions, and is pleasant.
  • Saves money. Saves me money. Hires handymen rather than contractors when possible. Has connections with companies that offer discounts on repairs items.
  • Proactive. Keeps track of tenants and properties, rather than waiting for something to happen before taking action. Deals with bad tenants. Maintains the property’s condition. Making sure that gutters are not clogged, planning for a tenant change.
  • Inspections. Keeps me, the owner out of the dark, and offers to send pictures to verify the condition of the property.
  • Statements. They are clear and easy-to-understand.
  • The verdict? Life’s amazing!

Just OK Property Manager

  • Communicates – kind of. He is not always easy to reach and may not be very clear about what’s going on. But he gets the job done.
  • Unsure about the deals/savings. He’s unsure if I am saving money or spending money by using him. Sometimes, I receive charges on my account that appear to be legitimate but could be nickel and diming me. Uncertain, but not so much that it would cause me to be concerned. I can’t tell if the repairs are good, but I don’t appear to be getting too stressed out either.
  • Not as proactive but still gets the job done. It is probably more accurate to call it “reactive,” however, the actions are taken so quickly that they appear as if there is minimal impact and the situation is handled well.
  • Inspections. They are not done proactively, but rather at the request of the owner. Reports may be returned, but they may be unclear and contain or not pictures. The pictures you receive are often blurry or irrelevant, or they may not have much information.
  • Statements. The formatting is almost impossible to read.
  • What is the verdict? The money is still coming in, but things could be better.

Horrible Property Management:

  • Non-existent communication. It’s like chasing a cat to try and get hold of the PM. The PM rarely responds to anything, even when it is important. You might as well hear him in another language if you ever do.
  • This PM wipes out your investment. Owning rental properties is supposed to be a way to make money, but this PM has the opposite effect. This PM will literally wipe out your investment by placing bad tenants, contacting contractors for each repair, and evicting them.
  • Reactive. This PM is at best reactive to situations. If he does react, it is not likely to be in a timely manner, nor will it be with clear communication. He may not know that there is a issue, or if he knows, he might not tell you. The timeliness of getting a resolution in place is also very poor.
  • Inspections. What’s that?
  • Statements. Huh? What is all this?
  • Verdict: You might be the next person to appear on the TV show snapped — and not the one who was killed.

Don’t keep an awful PM in your home. Have an okay one at worst. How can you find one that is truly amazing? Keep looking until you find the right one. You can start by asking around on BiggerPockets, or ask other investors in your area about the property managers and companies they like. Also, you can start calling all of them and begin to ask questions. It took me a year to find the perfect PM for my first search.

What do you do if your PM has you on the fence? How can you tell when to fire your PM?

There are two types of bad property managers

No one likes to work with a bad PM. It’s frustrating. Should you still consider firing a worker, regardless of the circumstances? Not necessarily.

There are two kinds of bad property managers, I always say.

  1. Ones who don’t communicate well
  2. You’ll lose money if you choose a company that doesn’t communicate effectively.

I’m the first to admit that a PM with poor communication skills is a frustrating thing (unless your property isn’t important). If the money is still flowing in and there are no excessive expenditures, then I would not recommend hiring a new PM right away. You can still start looking for someone else, but there is no need to rush.

A risk I’ve experienced in my properties is that if you change PMs during a lease, a tenant might be tempted to think they no longer have to pay rent. In the past, PM switches cost me tenants. Beware. Although it may happen more often with certain tenants, and not always, you should be on guard.

If you want to fire PMs that are terrible communicators, you can do so at any time. Consider tolerating communication issues as long as money is good. In my experience, I have lost money each and every time when a PM has poor communication. If they don’t even care about you, then why should they care about your home?

If a PM costs you a lot, then that’s another story.

How to fire a property manager

No questions asked! Fire your property manager immediately if he starts to cost you money or shows any signs that he is costing money.

Here’s where I’ve made a lot of mistakes on my properties. I’m a sucker and I believe the PM when he says that everything will be okay and that it’s being fixed. This promise has failed me about 10 times out of 10. When things looked bleak, a PM I had never cost me money or fixed anything.

Do not wait to fire an inept property manager that is costing your money. The longer you wait to fire him, the more he will cost you.

What you need to know about working with property managers

Here are some tips you should keep in mind when working with property management companies or thinking about it. Check out ” Surviving The Hell We Call Property Management for more information on the risks and intricacies of property management.

Here are some tips that will last a lifetime.

Remember that PMs are there to serve YOU.

You are their boss. You are the owner of their property. Do not forget! It doesn’t mean you have to be a jerk, or tell people how to do their jobs, but they are working for you and should make sure you are happy. If they aren’t performing, or if they push you around or damage your property, fire them.

Do not be obligated to sign agreements

I do not believe in agreements with PMs that state you have to keep them on your property as the PM for a certain amount of time. No way. They work (basically) for you, as I have said. They are not contracted to you for a certain period of time. That’s crazy! What happens if they fail to perform? Do you just keep them? No!

Keep an Eye on Your PM

Even the most successful PMs can fall from grace. Be on the lookout for signs. I experienced this. I had an excellent PM for several years, but suddenly, I began to see little red flags. He changed his communication style, and I had to fire him. I allowed him to go on for too long but I loved him so much that I could not believe he would turn on me. Always keep an eye out.

It’s Possible to Let Your PM Leave Remotely

I’ve hired and fired property management staff a few time, and I did it every single one via phone and email. I have never had to go to my properties in order to hire and fire PMs. It is possible.

Despite the many downsides to property management, I wouldn’t manage my rental properties in any other way. There have been times when PMs have cost me money and tested my sanity. I’ve also had moments where I wanted to strangle someone over the phone. Even with all that, I still find it less stressful than having to rent out the property. No, please!

You can read ” Why I prefer property managers over being a landlord” if you are interested in reading about a situation that I experienced and was reminded of why I like property management despite the drama.

You May Also Like

More From Author

+ There are no comments

Add yours