So, why should I pay these dudes?
March 9, 2009 11:10 PM

Please make it clear to me just how essential property managers are.

I'm moving out of town, and I've rented out my condo to tenants. Because I won't be able to manage the property in person, so I found a property management company that can do it for me for a monthly fee. Most people I talk to seem to think it's a good idea to hire such a service, just in case.

I agree with that at some level, but the more I look at what they do for me, the less compelling they seem.

Here's what they do (and my reactions to these service claims):

- Find you tenants and run credit, reference, and background checks on them.
(I already did this myself.)

- When there's a maintenance issue, they call the plumber, electrician, or what have you, and pass the bill on to you.
(I can do this myself. It doesn't seem that hard.)

- Handle lockouts.
(I'm fine with just paying a locksmith $100. It's what I had to do when I locked myself out of this place.)

- Collect rent. If there's trouble, they call a collection agency. Again, passing the costs on to me.
(I feel like it wouldn't be that hard to call a collection agency.)

Check on the condition of the apartment twice a year.
(I can just have my parents or a friend do this.)


I suspect I may just be a hard-headed control freak cheapskate. Give me a rational, solid reason for using a property management company. I know thousands of remote landlords use them, so they must be good for something, and I want to know what they know.
posted by ignignokt to Home & Garden (26 answers total) 5 users marked this as a favorite
When tenants move out, the property management company will check the place to make sure the tenants haven't destroyed it or otherwise badly damaged it.
posted by Chocolate Pickle at 11:17 PM on March 9, 2009


Also, they'll show the place to prospective tenants thereafter.
posted by Chocolate Pickle at 11:18 PM on March 9, 2009


If you're asking "could I get away with having a trusted friend do this for me?" I'd say yes. You probably want to pay your friend, though, or be really close with them.

Here's a tip: treat your tenants as a sublet and get a big deposit from them. Charge them a deposit + higher rent the first month, slightly overinflated the next few months, and then the rent should decline till the last month is free.
(For instance, if the place is $1000 and they wanted it for 10 months= $10 000 total-
I'd charge that amount something like this:

$500 refundable damage deposit when they move in (with a contract about where that'll go- ie, floor refinishing, locksmithing, etc)
$2000 first and last month's rent when they move in
$1200 for the next 5 months
That brings you to month 6, and $8000 of the rent collected.
for the next 3 months, I'd charge only 800, 700, and 500... and then the last month is free.

This means the person pays so much up-front that they're much less likely to vacate before the sublet is up, and if they do, you won't be short money for the month or so you'll need to find a new tenant. Plus, in my experience (I've managed about 20 tenants & subletters in my time), the people who can pay that much up-front are less likely to mess up your place.

And look carefully for tenants. Besides credit checks, trust your gut on them. Look at their reasons for finding a place. "I just moved here = good", "I didn't get along with my old roomates, they were jerks = bad". You want to avoid drama queens and party-hounds at all costs.
posted by pseudostrabismus at 11:54 PM on March 9, 2009


Oh, I'm already fairly certain I have good tenants and have collected a deposit.

I don't think most people would go along with that kind of rent scheme, though. The leasing contact keeps them from vacating without getting subletters themselves anyway.

So, I've gotten the tenant picking done. I just need to know whether or not it's worth it to use a management company for the rest of it. It's interesting to know a property manager thinks it can be done by a friend or family member. I probably would pay them some sort of compensation.
posted by ignignokt at 12:01 AM on March 10, 2009


- Will handle evictions which can be very valuable if you are living away from the rental property and want to avoid the headache that may come with tenants in default.
- Will prepare reports on the properties; valuable for tax preparation.

We have 3 rental properties and attempted to hire a mgmt company for 2 of them before we moved out of the country, but the particular firm didn't do what they said they would so they refunded fees paid and we released them from the contract. In the end, had the same thoughts as you and have now decided to manage all the properties on our own. Knock on wood, but we haven't had any issues managing the properties ourselves via long distance.
posted by MuckWeh at 12:08 AM on March 10, 2009


Hmm. These guys didn't mention a single thing about evictions or reports for taxes. I'll have to ask about that. Are these just reports on the property's condition?

Thanks for weighing in MuckWeh. I hope your self-managing continues to go smoothly.

Everyone else, I'd still like to hear you chime in!
posted by ignignokt at 12:27 AM on March 10, 2009


My guess is they know how to avoid liability better than your average landlord, and they provide a screen for otherwise dealing with trouble tenants.
posted by fleacircus at 12:38 AM on March 10, 2009


Yeah, honest property managers are worth it (make sure you get a good one with a positive reputation). Also from a tax pov their cost is deductible, and they reduce the hassle quite a bit. Unless you're on tight margins, this means you should use a property manager.
posted by singingfish at 12:39 AM on March 10, 2009


I've retained an agency for our rental property because I want this process to be as hands-off (well, for me) and as professional as possible. You could certainly use a friend instead, but for the 8% the agency charges I get access to cheap tradespeople who want the sort of customer base the agency has, I have my legals covered, they won't bug me about repairs unless they go over a preset (agreed) figure ($250, as it happens), and they'll take care of the rates/charges from incomings.

Basically, I'll let the agency do all the unpleasant stuff. I'd rather not have a personal relationship with my tenants and I expect they'd probably say the same. On the other hand, it does cost money.
posted by Wolof at 12:45 AM on March 10, 2009


Some other things property managers can do:
1. Hold the keys, and give them to local tradesmen who need to enter the building to do work.
2. Coordinate anything like fire safety inspections where government inspectors have to be allowed in and shown around.
3. Inspect the property during and/or at the end of the tenancy.
4. Knowing local tradesmen who can be trusted to perform work competently and, when working with new tradesmen, inspecting the work to make sure it's actually been done, and to a reasonable standard.
5. If you're renting to people new to renting, dealing with their newbie questions and mistakes (like misreading their electricity meter).
6. Be a contact for reporting faults who isn't you. This includes:
6a. When the landlord is on holiday, at weekends, etc.
6b. Keeping track of the status of repairs and making sure they are performed in a timely manner. In other words, preventing landlords or tradesmen "forgetting", which happens more than it should in the rental market.

Of course, you could be OK without most of these services.
posted by Mike1024 at 1:26 AM on March 10, 2009


Where a property manager has an advantage over a friend or relative is when something goes terribly awry. will your friend be able to confront the tenants should they harm the property? Will he or she be able to handle eviction proceedings if necessary? Your friend may be doing this because he or she likes you. That's nice, but you want someone who does this because it's his or her job and regards it as such.
posted by Verdant at 6:12 AM on March 10, 2009


Because all those things take your time, often at the least convenient times for you. Are you planning to ever take a vacation? What if something goes wrong then?

Basically, do you want a second job as a landlord, or do you just want to rent out your house?
posted by smackfu at 6:17 AM on March 10, 2009


Thoughts that come to mind (verging on repeating some good thoughts above) ~

1. You may have already found tenants, but what if they lose their jobs or just for whatever reason bail? I don't know how far away you're moving, but it sounds like a pain in the ass to try to find new tenants remotely - and then someone needs to show them the place however many times, answer their questions, etc

2. Do you have a locksmith, an electrician, a whatever that you trust and would know to call? it seems like the property management company would have established relationships, which might result in faster service and a level of quality maybe better than picking from the phone book. Who's going to let them in? I'd be pissed if my landlord was like "okay, the plumber will be there between 8a and 3p today, enjoy taking the day off to wait for him!".

3. Do you want to have to answer your phone very time your tenant calls with a stupid question, or when they get locked out at 3 am?

4. Totally agreeing that I have heard that being a landlord sometimes verges into second job territory.

5. You're going to start to feel weird about asking your friends and family to do this kind of stuff for you.
posted by KAS at 6:44 AM on March 10, 2009


Having a property agent can often help save on lawyer's fees. For example they should be able to draft up a tenancy agreement which does not have legal loopholes; they should be able to pre-emptively warn you if your property might not be meeting a regulation; they should be able to tell you the steps necessary to deal with problem tenants.

Property agents are good when it comes to setting or changing rent: they will have a good idea of the local market and will be able to tell you such things as the degree to which an improvement to the property might yield a rent increase.

Choosing the right agent can help determine the type of tenant that you get. More upmarket agents can get you more upmarket tenants. A good agent will normally be more experienced and thorough than you are at conducting reference checks.

The point when there is usually most work on a tenancy is normally whenever somebody moves in or leaves. So one option would be only employ an agent only for these moments. Friends or local contacts could be asked to help out for the rest of the time.

Aside from costs one disadvantage of using an agent is that it can prevent you from getting to know your tenant. Ideally I think you should be in a position where you are able to develop a mutual trust. Sometimes an agent can get in the way of that.
posted by rongorongo at 6:55 AM on March 10, 2009


I'd say pay a friend if you can. I've had some trouble with property managers, specifically in regard to repairs. The renter reports that something's broken. The property manager finds someone to fix it and sends you the bill. This sounds good. Unfortunately, however, the property manager is probably paying his cronies to do the repair. So you have no idea whether or not you're getting a good price or if the repair is much more extensive than necessary. The renter's happy; the manager's happy; his buddy the repairman is happy; you're screwed -- over and over and over again.
posted by originalname37 at 7:00 AM on March 10, 2009


If you have a good property manager, they are worth their weight in gold. A bad one, and it's hell.


(I used to work for one.)

But I have to say that if you are not in town where your property is, you pretty much need to have one because they are your eyes and ears, and if you have a tenant you need those eyes and ears. And btw, they need to at least drive by your property once a month.


But you wanted practical reasons...one, is if you wind up having to evict a tenant, some of this will involve sitting in court, which a property management company will do for you.
posted by St. Alia of the Bunnies at 7:20 AM on March 10, 2009


In regards to repeated mentions of locksmiths and getting locked out, seems to me something like this would be a proactive way to avoid that. They can be had online for ~$70. They are very easy to install (provided you already have a deadbolt).
posted by Dave. at 7:24 AM on March 10, 2009


You could easily abuse a friendship if you ask a friend to take on the responsibility of managing your property. Even asking family to do this could build resentment. If things go great, it's not that much trouble, but stupid, expensive, time-consuming, PITA stuff happens all the time in property management and if it does, you want someone who will be ready and willing to deal with it. Unless you are able to drop everything and travel there to take care of it yourself.
posted by rabbitrabbit at 9:18 AM on March 10, 2009


I am currently a remote landlord for a house that I plan to return to in a year or two. I do not use a property management service, but I have relied on friends and family for minor things. I developed good relationships with a handyman and plumber before I left, so I have been able to handle requests with a single phone call. Even when the garage door opener broke, I called a local service and had the tenants leave the garage open for him. You might not be able to shop around for services and pricing the same way as if you lived there, but Yelp.com and Angie's List can help you find a trusted service provider to do the job correctly and quick.

Since you have friends and family in the area, plan some trips back to visit and check on the house. I make excuses to stop by, just to keep an eye on things. Tell your tenants you need to change the furnace filter, water filter or do yardwork - whatever it takes to get in quickly and handle something they wouldn't want to do themselves. It has worked well for my tenants to know and see that I still have an active interest in the house.
posted by Andy's Gross Wart at 11:42 AM on March 10, 2009


It has worked well for my tenants to know and see that I still have an active interest in the house.

This usually isn't an issue with non-local landlords and with a condo, but I just want to point out that too much of this can run good tenants off. Mr. Rabbit and I -- who were quiet, paid rent early every month, and were in general perfect tenants -- moved out of a rental house once, as soon as the lease was up, because our landlord was there almost every weekend, cleaning the gutters or killing the moss on the driveway or whatever. And most times when he showed up, he'd stay almost the entire day.

We felt completely invaded. Even if it had been once a month it probably would have felt like too much. Do a monthly drive-by if you have to, even do a closer-up inspection if you know your tenants aren't around, but please don't be in there changing the furnace filter one month, then come back a few weeks later telling them you need to change the water filter. Respect your tenants privacy and their right to not have to deal with a landlord unless they are the ones who initiate it.
posted by rabbitrabbit at 12:39 PM on March 10, 2009


OK, there seem to be a few stories from people that have successfully managed remotely without a property management company.

smackfu, KAS, anyone else: this thing about renting out your apartment becoming a second job, do you have firsthand experience with this? I still see it as mostly calling repairmen on behalf of the tenants.

As for the tenant-obtaining stuff, I already have tenants with a solid employment history and very good credit.

Sitting in court for eviction proceedings is a fairly compelling reason, then again, I think defaulting is very unlikely.
posted by ignignokt at 1:57 PM on March 10, 2009


OK, I talked to a bigger and more reputable property management company than the one I talked to earlier. Here's what I found out:

- When they schedule repairs, they do not let the the repairers in. The reason they give is that the repairers usually want the tenants to be around for it.

- They will call a collection agency for overdue tenants, but they'll pass that cost on to you.

- They will recommend eviction proceedings, but do not actually conduct it. They refer it your lawyer.

- Generally, they say that neither you nor they, the property management, needs to appear in court for eviction proceedings.
posted by ignignokt at 2:09 PM on March 10, 2009


When I worked for property management, they always did. And there was reason for it.
posted by St. Alia of the Bunnies at 6:17 PM on March 10, 2009


Mr. Rabbit works for a property management company here in Oregon and he has to appear in court for eviction proceedings. But the local property management companies should know the local oddities best...
posted by rabbitrabbit at 6:33 PM on March 10, 2009


Ignignokt, regarding the reports I mentioned from prop. mgmt co. - it's more a P&L statement. As someone mentioned, there are tax deductions to be had with a rental and this will make your filings easier. We keep a separate bank account for each property (each tenant pays directly into & expenses paid from) and a set of "books" apart from our personal finances. We use Quickbooks, but with just one rental, you can don't need anything fancy. Just keep good records so you know where you stand at any given time (this will be helpful if you decide to sell; having a consise report of all repairs made and showing potential rental income is ideal).
Maybe the standards are different in my state, but the mgmt cos. we looked at all handled collections, evictions and court proceedings. Probably contracted the work out, but still, they handled the paperwork and procedures and landlord writes the checks for the process. After going through the eviction process just once while living in the same state, it was the main reason we wanted to hire a mgmt co. before we moved, however, finding a reliable mgmt co. proved to be most difficult though. Honestly, as the economy declines, eviction is my only real continued worry about our properties.
Never heard of mgmt co. letting repairer in the house; mainly for liability reasons, which is exactly why the contractors want the tenant there.
After your tenant leaves, consider finding a good real estate agent to help you find a new tenant. Ours writes the contracts, markets the property, does a key on the door for showings, conducts background checks ($30 at applicants expense), suggests rental rates, and keeps our relationship friendly but professional with tenants. We have found our r.e. agent to be well worth their commission rate. Also, our r.e. agent's standard lease states that the first $75 of repair calls will be the Tenant's expense if it is due to their negligence...we use our judgement and have waived it a few times, but it keeps tenants from calling about stupid things. Even as a tenant, I would never expect my LL to pay because I locked myself out, but the key pad is nifty as long as tenant understands low batteries = lockout. Personal experience talking; luckily my spouse was able to come home and let me in.
Keep in touch with your old neighbors; they'll know more about what's going on in your condo than a simple drive by will tell you, but that helps too.
Vacation - we give tenants our contact info. and an alternate emergency contact (family member) in case we are on vacation or cannot be reached quickly enough. We've only needed to use it once in 8 years of landlording.
Didn't mean to write you a book... reality is, imagine absolute worse case scenario after a bad day of work...decide if it's you or a mgmt. co. that takes the phone call from the tenant.
Feel to me-mail me if you have questions. Good luck!
posted by MuckWeh at 8:05 PM on March 10, 2009


Thanks for the detailed followup, MuchWeh. It's good stuff to know.

I will definitely use a real estate agent to fill the vacancy if I am still out-of-town when the current tenants leave. There's just no other feasible way. And I'd most certainly pay for a solid management company if I had risky tenants.
posted by ignignokt at 9:16 PM on March 11, 2009


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