By: Revanche

Real Estate Investing: Finding new tenants

April 6, 2015

Once again, while I’d rather have the money in my pocket, the ability to be completely hands-off with some of the day to day, other than answering emails, has been exactly what we needed.

My hands have been rather full so I’ve only answered emails, or redirected phone calls, but not long after LB’s arrival, the property manager dealt with:

1. the expiration of our old tenant’s lease,
2. checking the property to ensure that clean-up was complete,
3. collecting final rent,
4. getting the previous renters to pay up the utilities they claimed were paid (but weren’t),
5. returning the remaining security deposit once all the outstanding payments were deducted,
6. scheduling all the inspections and servicing of repairs,
7. marketing and showing the place,
8. reviewing applications and running background checks,
9. getting the final lease signed with my approval.

Bonus: we both make a little bit more now that the rent has changed to be more in line with the market rate for equivalent rentals. Not showing a profit yet, of course, but it gets us closer.

Not having to deal with that stuff and a screaming newborn? That’s absolutely worth the percentage off the top. Much like renting is not a waste of money because you’re getting a place to live without financial risk, hiring a property manager was the right choice for us. PiC has zero interest in this whole venture, beyond an academic one, so it’s entirely on me. Having someone deal with the hands-on work of owning a rental has made it possible.

Extra bonus: they organized all the income and expenses that they handled in a statement for me, reducing the amount of time and work I had to put into organizing our tax documents. Whew!

Read more of our experience with real estate investing!

15 Responses to “Real Estate Investing: Finding new tenants”

  1. Karen says:

    My rental property wasn’t intended as an investment property. I use a management service, too. Easier especially as it isn’t near where I live. I should do the math and see if it’s worth keeping. Heck, the rent for it hasn’t ever gone up but I think the area is stagnant.

    The management company should give you a 1099 every year.

    • Revanche says:

      I think I know more people in your situation than those who chose to get into this rental thing. Does it basically pay the bills, at least?

  2. Feeny says:

    Interesting. We tend to shy away from houses rented by property management companies, although my parents use a person to manage the income properties they have in another state.

    We live in a college town and so we have been burned by property management companies in the past who are slow to fix anything or respond to our questions because they know even if we get fed up and move out they can fill the house with college kids who don’t know any better.

    I do enjoy reading about your income property as it is definitely one of my goals in the future!!

    • Revanche says:

      Do you stay away from property mgmt companies or all not-for-rent-by-owner? I find that using the mgmt company, who must comply with my standards, means they get a much faster fix than they would if I were managing it directly but that’s just my own experience from this side of the fence. Then again, I also rent for my dad and the owners rent it out directly and getting an answer from the owners is often like pulling teeth.

      • Femme says:

        We tend to stay away from management companies, too. Mostly because in our area, the ones we know of have horrid reputations. But also because even as the rental market has significantly inflated in price, most of them want proof that you make 3x your rent monthly. We’re almost there, but not quite. And this has been after a lot of work to our income levels. We’ve never been late on rent or unable to pay. But 3x is a little ridiculous.

        On the owner’s side, it totally sounds worth it! So much less stress is completely worth that little off the top from what it sounds like!
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        • Feeny says:

          There are specific property management companies that I wouldn’t rent from even if they had the perfect house for rent. Mostly at this point we will feel out property management companies and see how we feel. A great house could outweigh a less than favorable property management company.

          I totally understand the income thing. When I was nanny-ing a few years ago it was all private and sometimes off the books and trying to scramble together proof of income was a pain.

          I totally understand the need of a property manager, and I’m sure there are good companies out there. I just feel like, if I’m having a problem in the house an owner responds faster because it’s also a personal problem for them. They are less likely to wave it off or just wait to see if it becomes a bigger problem.

        • Revanche says:

          You’ve made me curious about the reputation of my prop manager’s company. They came so highly recommended from LL friends that I didn’t think to do some research on the other side of the fence, and hadn’t ever looked at that in the past because we rented from owners.

          3x rent seems rather outrageous, considering how even totally responsible people may be paying anywhere up to 50% of their income for housing depending on the location. (using only myself as an example, thinking back to the earlier years)

      • Feeny says:

        I avoid property management companies I have used in the past but I don’t search elusively for RBO’s.

  3. Hedy says:

    FWIW, when I was apartment hunting, I looked for magagement companies after a friend had a screwball landlord.

  4. Linda says:

    I can’t say I have very extensive experience as a renter, but I have rented in places managed both by owners and by a property management company.

    My very first apartment was the second floor of a house and the landlady/owner lived on the first. She was a very nice retired woman who was open to the few improvements/changes I suggested and made myself. (Stuff like adding a suspended shower rod and hand-held shower diverter for the old-fashioned tub, and putting up a shelf in the kitchen to hold a microwave.)

    The next apartment I rented in the “big city” was in a 20-unit, vintage building. It had a “management company” that was really just the owner and his wife, so not really a corporation. There were a lot of new immigrants in this neighborhood and building, and the landlord/landlady seemed to be used to collecting the rent in cash door to door. The landlady came to my door a few times asking about the rent and I would get confused because I had mailed the check to the “management company” address already. (This was back in the 90’s when there was no online banking and mailing checks to pay bills was the norm.) She stopped doing that after a few months.

    That apartment had beautiful woodwork and a decorative fireplace that was painted in a hideous fashion. I asked if I could paint over it and was given permission to do so. I also added blinds to the windows myself (and left them behind), and also installed some baseboards in the bathroom for a more finished look (again, by myself, and only after getting the OK from the landlord/landlady). I used to negotiate with them every year a couple months before the lease was up. I’d ask if they were going to raise the rent and by how much, and then I’d usually negotiate some sort of improvement, too, like fixing up the kitchen or bathroom a bit.

    I’m currently renting a house managed by a property management company and everything is fine. My only “complaint” is that I would expect a company which is managing multiple properties to have more technically advanced methods for paying rent. I would think that I should be able to submit rent electronically via credit card, debit card, or an online bank transfer, but this company only accepts paper checks and cash. (Really! In 2015, they expect a paper check?!) Luckily my online bank will “write” and mail the check for me, so I just have to set them up as a payee in my online bank and schedule the payment a few days in advance to make sure it gets there by the first of the month. They do have a third party service that accepts payment via credit card, but when I went through the process of setting it up I saw the fee was crazy high (like $65 per month!)

    I think that if you’re generally a good tenant that can make a difference in your management company experience. In both my early apartments I was paying a rent that was at the low end of the market (and in neighborhoods that reflected that), so it’s not as if I was getting deluxe treatment. Yet the experience turned out to be positive for me overall because I was clear that I would follow the rules if they would, too.
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    • Feeny says:

      $65?!?!?! Yikes!! Our last prop management company also charged a fee to pay online but it was around $25 a month. Still too expensive in my opinion and worth it to just send a check.!!

    • Revanche says:

      I very much agree that being a good tenant would absolutely change the experience. We always tried to be good about repairs and communication and so forth as renters, and I really appreciate the same from people renting.

      I don’t understand why they wouldn’t allow you to set up an online auto-pay through your checking account, though, I understand that no one really wants to bear the credit card fees but why not at least do bank transfers? That doesn’t cost anything! $65 is pretty out there, though!

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