Real Estate Investing #16: Under new management
May 14, 2018
Last summer, I was fed up with my property manager. She’d worked out ok the first two years, with a few hiccups and annoyances, but she’d slid way past “ok.”
The timing was terrible, of course. Our agreement had automatically renewed for a fourth year and it would have cost $150 to terminate our contract part way through an agreement year, but my old property manager, heretofore to be known as Crappy Old PM (COPM), had fallen back into her old ways. ARGH!
Sometime in the second year of working with her, COPM started taking weeks to answer emails. That’s our primary mode of contact! She’d been told quite firmly that I expected a response time within 2 business days. She kept making excuses about her health, apparently incapable of putting up an out of office message or having someone on staff answer her emails at least to tell her clients that her replies would be delayed ever. You know, basic communication.
She improved for a while but about two months after renewal last year, she slid right back to the bottom of the customer service canyon. Every email required 3 follow-ups over 3 weeks. That’s unacceptable. You don’t get to be paid 10% of my rent and fail to answer my MAYBE 1 email a month in a timely manner. To cap any possible guilt, the November payment was 3 weeks late. They didn’t even notice that they hadn’t paid me! They blamed the holiday weekend blocking the payment but honestly I didn’t believe them.
My tolerance for poor service is far lower than other people’s to begin with but messing with my money? Oh no. I later heard that I wasn’t the only one. My investing buddy, Robin, had problems with rent payments going missing too and he didn’t even get any explanation! But he’s the nice one. And that just confirmed to me that they’re getting really sloppy.
Thankfully, last spring, I had vetted and interviewed a boutique property management company that one of my real estate brokers referred. I gave my notes to Robin to run with first.
Transferring our records costs $150. My profit margin is slim enough that doubling that for an early termination wasn’t worth so. I sucked it up and rode it out the rest of the year. Luckily, we hold a $250 reserve with COPM so we can absorb that expense.
Robin has already hired New Boutique PM for his properties and has reported that it’s a much higher level of service than we’d been getting which is well worth it. They charge more for filling vacancies but they’re hands on, responsive to emails even while we were only potential clients, and they’re not charging us more than the standard monthly 10% property management fee.
With all that in place and just a few months left on our agreement, I’ve sent my termination notice to COPM!
Honestly I think they were ready to be done with me too because they could have done better, but it wasn’t important enough to them, so I don’t feel bad about parting ways. It’s time for fresh blood that actually cares about my business and will take good care of both my property and my tenants.
Aside: You know what’s not going to be fun? My New Boutique PM has 2 first names for their first and last name. I will always accidentally pick the wrong name to call them. ARGH.
As a renter:
Responsive is key!! It sucks to have to wait for someone else to sort out a plumber/repair-person. My LL recently forgot my repair request and waited over a week to sort out our garbage disposal repair and it was awful. There was a holiday coming up and the repairpeople couldn’t come before it so we ended up waiting yet another week for it to be fixed. Meanwhile, I don’t think my flatmates totally got the message that NO FOOD could be put down the sink til it was fixed. Cue constantly cleaning it out…a job I hate at the best of times.
I luckily (and purposefully) have only had to deal with home-owners for the places I’ve lived. They generally care a lot more about keeping their property in tip top shape, so we get along really well. Aside from the example above, my LLs are on the ball! It sounds like you guys are, too. 🙂 (If the prior management company was so bad at responding to your requests as a homeowner, I can’t imagine how bad they were at responding to the tenants!!)
Aside from responsive, kind and understanding of human error is also good. For example, in NZ, banks sometimes take a few days to transfer money electronically. As an American, I’d only ever paid rent via mailing checks. I scheduled my first rent payment in NZ on the day before it was due. However, while it showing as paid on my end, it took a few extra days to hit my LL’s account. She was nice enough to explain that I needed to schedule my payment another 3-4 days before it was due in order to ensure that it was received on time.
Oh yes, that’s so true – I am much happier with the new person’s responsiveness to me over all the details so I’m expecting that will translate to the property.
Yikes. At that point you may as well manage yourself. I know we are so lucky to just invest in real estate as very minor partners of larger projects, because then we don’t have to deal with the day to day nonsense. Not sure I’d want to.
I don’t love the day to day stuff but I deliberately bought elsewhere so that I wouldn’t be tempted to do it. It costs us money, yes, but my energy is far more precious!
Sorry to hear that. I don’t trust property management companies anymore. They just don’t do a very good job. They all take on too many clients and are always too busy. It’s pretty crazy. Good luck with the new company. They sounds good for now. Hopefully, they don’t grow too much…
This one seems to be set up to deliberately cater to my kind of people – we expect high quality hands on service, and will pay a bit of a premium to do so, so they share the workload across the whole team and individually only handle small portfolios.
As a renter, the main thing was responsiveness to “there’s a problem” phone calls. Bonus points if they anticipated a problem and fixed it in advance– one place that I lived in for a few years, they sent a handyman out to replace smoke detector batteries, and as part of the scheduling, they would sometimes have him do general maintenance stuff at the same time.
That wouldn’t bother you? I had been thinking that I’d like an annual General Maintenance day, but wasn’t sure how they would feel about it.
Our PM isn’t as communicative as we’d like, but the key for us is that they get stuff taken care of. I’m content with the trade-off. Plus, we don’t pay anything like 10% of rent (though our charge for new-tenant work might be higher). Is that the standard in the Bay area? Right now we pay about 5%, but the actual charge is a flat fee, unrelated to rent.
This is unfortunately standard to the area, though not the Bay Area. I wasn’t willing or able to buy locally for a rental 🙂