- About a year and a half ago I started an exciting new chapter in my life, becoming a mom! As luck would have it, my downstairs tenant gave me notice that they were going to move out pretty much exactly on my due date, which was not going to be terribly convenient, to say the least. My husband could have fielded all of the calls and done the showings, but his day job is a lot less flexible than mine, so we were kind of in a bind.
- My husband owns another rental property, and is far less into the active management portion than I am (he has his rental property by “luck”, as he was unable to sell it during the end of the real estate bubble). He had already been working with a property management company for some time, and was reasonably happy with the results.
- I had been getting tired of dealing with the inter-tenant issues that had been popping up since I’d moved out of the duplex anyway. My hope was that if my tenants were dealing with someone that they viewed as a “professional” property manager, they would be less likely to bug them about nit-picky he said/she said things and figure it out for themselves.
- I own an unrelated business (that’s my “real job”), and things had been getting a lot busier, so I was looking for ways to simplify, streamline, and delegate.
So, with things being kind of hectic in our own personal lives, we signed up for the property management firm to start managing the duplex. The firm we work with charges per unit, ($79/month), and takes a one month finder’s fee for placing a new tenant. We had them work with the immediate turnover unit first, continuing to manage the upstairs unit until that tenant also moved out. The monthly management fee is really pretty reasonable for what they do. The one month’s finder’s fee is pretty steep and tough to swallow — especially if you have a lot of turnover! But, we were kind of stuck, and busy at our “real jobs” (and parenthood). And, realistically, it is a lot of work to find a tenant, so they’re justified in charging it.
Advantages of working with a property management firm
One thing that was nice about working with the management firm is that since they have a large pool of properties, they were able to more objectively price the unit at the highest rent rate that they could easily find a tenant for — with me it was always a guessing game. Also, since their finder’s fee is based on the amount of rent charged, they do have an incentive to keep the rent as high as possible. And, for the most part, the property is kind of out of sight, out of mind for me. The management firm finds the tenant, deals with the move-in/move-out, negotiates any specific terms (like can they paint, how many cats, moving out early, etc.) and gets our approval via email. They do all of the screening and background-checking, and send their recommendations to us. They also hound the tenants for late rent starting on the first day that it’s late! (I was never very good at this part — thankfully I never had habitual late payers).
Disadvantages of working with a property management firm
Well, obviously the cost is a disadvantage — if you’re barely cashflowing the property as it is, and aren’t otherwise strapped for time, this is a tough decision to make. But, if your time can be better spent elsewhere (making your other job or business more profitable, or maybe spending time with a new baby), it may be worth it anyway. Then, of course the management firm is never going to give your property and its management the “personal touch” that you would — you’ll be lucky if they’re 70% as diligent as you would be. They may not scramble quite as much as you would to get the place rented by the first of the month, they may not be quite as much of a salesperson for your specific property (after all, they represent a dozen other available properties too); when they’re on-site, they’re probably not scanning the unit for little fixes that need to be made to keep it in tip-tip shape. And, you do still need to be on call for some things — if something breaks, the management firm can hire someone to fix it for you (which gets expensive), or you still have to go over and do it yourself.
So how’s it been going? Well, speaking of fixing it yourself, we’ve had to get a new refrigerator and stove since the management firm took over. In both instances, the tenant let the management firm know that the appliance wasn’t working, my husband took an initial look at it, decided it was made more sense to replace than repair, and then we ordered a new appliance from Sears with delivery/installation and haul-away of the old one. We didn’t have to be there for the delivery or installation (although our property manager was there). They’ve gotten us through two turnovers now, and aside from those finders’ fees, it was sooooo much less stressful than doing it myself. I’ve actually forgotten that we were looking for a new tenant — previously it was something that was always top of mind when I was looking. Overall, given where I’m at with my life right now, I think that it was the best decision that we could have made.
Oh, and I haven’t gotten any more complaints from tenants about their neighbor leaving them passive-aggressive post-it notes about leaving the front porch light on 😉