Real Estate Investing #13: hiccups and the routine things
October 17, 2016
Has it really been so long since my last update? Whoops.
Things have mostly been going well, but I’m definitely seeing the downside of hired property management. Not that I have a choice, the property is an unrealistic distance from us so I can’t drive over there and manage it myself. But when your property manager’s responsiveness goes down by 55% despite your specifically calling them out for it, then it’s time for a change.
I’m also in the market for a new home warranty company, and a new loan! If possible, I’m looking to refinance since my original interest rate was not favorable at all and I need to bring our monthly costs down.
But let’s start with one thing at a time since I get that “mountain sitting on my chest” feeling from all the things that feel like they must be done NOW.
- I contacted my broker, and investing friend, to get recommendations for a new property manager. (Turns out that same friend is also considering a change because we use the same person and it’s not just me, the service has been much less attentive than it should be.)
- The broker gave us a recommendation for a boutique property manager. The fees are pretty high, in addition to the monthly 10% off the top, so I’m thinking about what it is I want and how much I’m willing to pay. I want the kind of hands-on detailed service this manager provides but I have to consider whether my income will bear it. My monthly profit margins still aren’t high enough to cover more than a little over our expenses by the end of the year.
- I read through some Yelp reviews and sites, and sent an email asking about services and fees, to the one that seemed to be a possibly good fit.
- They replied the next morning saying politely they were not taking new clients because they have a full docket. That’s actually a good sign, I think, when a company knows how much they can handle well and sticks to it. Not great for me personally but good to know they’re not the sort to just take in as much business as they can get and damn the consequences.
- My friend is inquiring after a larger company. He and I both came up with their name independently, I’m guessing because it was because they advertise.
- My preliminary research turned up mixed results. They have all their information up front, which is great, and they state pretty baldly that if you’re asking about the kinds of restrictions you want to put on who gets to rent from you, you’re very likely trying to screen out people based on discriminatory reasons. This isn’t the first time I’ve been told that screening renters based on certain characteristics is really a racially motivated screener, I’m glad to see this company is speaking plainly about what that’s code for. I like that because of their size, they have easy ways for the renters to pay electronically. But I’m not sure that I want to work with a huge company that only gives you a price break after you own 40 units. For one thing, that’s a hell of a lot more than I intend to take on, so I wouldn’t benefit from adding one or three more properties with them the way I would with the boutique manager. For another, while they have the infrastructure to be more technologically up to date, that also means they may not be motivated or willing to consider updating where they’re lacking.
:: If you were renting, would you prefer to deal with a large somewhat faceless company, or a boutique property manager? If you were hiring a manager, which would appeal to you more?
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Not a landlord, but if I were I don’t think I’d mind big faceless property management companies as long as their rates, stated services, and reviews were in line with my expectations. Boutique companies don’t necessarily make better vendors and aren’t able to benefit from scale to update their services either.
The inability to scale on the boutique side is definitely my concern as well, but so is the inflexibility of a corporation.
If I were renting, convenience of payment and ability to get timely repairs are two high priority things. I don’t particularly care who delivers these two things, it’s just that I want a well organized and responsive property manager. If I were an owner, I’d probably have the same priorities.
We use a corporation. They are also a local (NW based) collection of realtors. They were referred to us by a trusted realtor that we’d used for a variety of purchases. So, we are now in the Bay area, and our house is in the Seattle area. The property manager is a critical part of stress management at our house. We had a tree come down in the last big storm, they dealt with it. They talk to the renters, deal with questions, concerns, deal with repair people scheduling, etc.
It’s a lot of $ to pay, but last year we broke even, by a few hundred dollars, I think. We’re raking it in here as landlords. 😉 We kept the house because we plan to either move back, or let it appreciate over time.
Howdy neighbor! “We’re raking it in here as landlords.” You too? 😀
Do you feel like they’re very responsive to your concerns when you raise them? Would they get back to you in a day or two days?
Sorry, missed your question. Absolutely – the person who manages our account is super responsive. He gets back to us same day, typically even on weekends. He’s almost “too” responsive. If the tenants find mail that may belong to us, he hikes it over to our house, photographs it, emails us, and asks if we want him to forward it. It’s almost always junk mail, but he’s great.
And yes, bay area living. Weather is gorgeous, but oh my, so expensive!!!! The worst part is that we are actually getting a “great deal” on our current rental here, and it’s a fortune!!! I can never consider $5200 a great deal. That’s just me, and my small town roots 😉
*laugh* Yes, $2500 will never feel like a deal, no matter how it’s compared to even higher rents. I attribute that to our being SANE more than anything, though I’m also a small town gal.
I’m not sure what the difference between a large company and a boutique is an owner, but as a renter I only cared about responsiveness when I needed stuff done.
This is a good point and one I’ll be sure to confirm that the big company does.
We haven’t used a property manager before for our rentals. We do live close by which helps. But also I have a DYI spirit. I think I might just have a good handyman on call who could handle a variety of things. But we have also never had a turnover. Which is amazing but perhaps rare. The same renters in both since the day I listed them.
That’s incredible – how long have you had your properties?
As a renter it doesn’t matter, as long as the response time is fast.
It obviously doesn’t matter in your case, but as a general rule I prefer to rent from people/landlords, not property managers. No letting fees that way, and I’d rather build a personal relationship with the owners–things get fixed quicker and they are less likely to hike up the rent indiscriminately if they know and trust you and want to keep you around! 🙂
Yeah, there are times I feel like I would rather be hands on but here I can’t do that. I still try to make decisions with regard to rent increases based on their history of paying on time and so on anyway, as if I were hands on.
Glad the bigger font helps!
And YAY! for the bigger font! Thanks. No more squinting 😉