Property management

[amarowsky]

I am researching property management companies, as I will need one in the next year or so. They have a company called "Enter Castle "in metro Detroit area.

Looks like a newer company, but their highly rated and have (apparently) a very simple app to monitor status of your rentals. Their fees seem good.
-400 finders fee for a renter
-$100 flat a month for first until (2-20 units are discounted to $79 flat)
- no nickel and dime fees. Flat 100. They say "if the tenant breaks the lease they refund finder fee "

Seems good and the reviews are good. Anyone else use or know about property management know how this process/plan stacks up?

[kork13]

Depends on what rent you're charging, but offhand, it seems reasonable.

For generic rules of thumb, common fee schedules for property managers include:
- 0%-100% first month's rent as a leasing (finders) fee, 50% most common
- 8%-10% monthly rent as the ongoing management fee

Beyond that, as you mentioned, there are often little nickel & dime fees for stuff like maintenance/repairs, setup fees, and who knows what else. That your found one who keeps the fees simple is great! If those fees fall in line with those norms based on your rent, you may have a good option. Just be sure that you fully understand how they operate, what services they provide or don't, and how they communicate with you. Sometimes a cheap PM is cheap for a reason.... You want to be sure they won't neglect your property.

Biggest downside of using a PM is that you cede control over to someone else, and they're fees will eat into your cash flow/profits. However, if you aren't skilled, willing, or available to handle the management of the rental, they can be a necessity. For example, I live 3000 miles away from my rental property. I can't just hop on over to fix a leaky faucet, so a PM was needful for us.

[97guns]

I don't like the $400 finders fee, I've used 4 or 5 different property managers and my brother has used the same, we have never used one that charged a finders fee

You should consider a monthly fee of 7% on the cheap/low end and 10% or more the high end, I'm paying $75 a month on a unit which works out to 6-7%

[~bs]

you need to see what services they'll provide as a property manager.

not all property managers are the same or are competent, for that matter.

what is the % rate of rent they're taking monthly?

[NatalieRosenthal]

I think real estate agents are best choice to deal with property management. They deal with all aspects of sales, renting, management, investment in retail property, farmland, industries and many different sorts of property. To know more you can visit *****************

[97guns]

I think real estate agents are best choice to deal with property management. They deal with all aspects of sales, renting, management, investment in retail property, farmland, industries and many different sorts of property. To know more you can visit **********************

I won't go into full details but my mom had a 21st century RE agent take her for a ride, mom is in California and property for sale was in Hawaii, agent had the listing and was managing the property short term. just imagine the possibilities to corrupt and she did it, from lawn mowing and trash service to keeping rents and claiming non occupancy

[TexasHusker]

I think real estate agents are best choice to deal with property management. They deal with all aspects of sales, renting, management, investment in retail property, farmland, industries and many different sorts of property. To know more you can visit *****************

Couldn't disagree more. That scenario provides an endless variety of "the fox guarding the hen house" situations. Conflict-of-interest situations come up every day.

Here are a few real life examples in the vacation property world that we have encountered:

Example 1:

XYZ Real Estate Co. has a listing for sale that really needs some lawn rehab and repairs to sell. XYZ really wants it to sell because a 6% commission awaits, but the homeower is broke and can't afford to spend further money on the house. So XYZ hires out the lawn rehab and repairs, and simply assesses the property management clients evenly under the guise of "misc repairs and maint" and no one ever knows.


Example 2:

XYZ Real Estate Co. has a buyer coming in from out of town to look at a few properties. As a gesture of goodwill, XYZ offers "free" lodging at one of its property management client's properties. So the property management client is underwriting the cost of this in lost rents and never knows it.


Example 3:

The owner of XYZ Real Estate Co. is having problems with his/her air conditioner at home. Rather than pay for a repair as one would normally do, they barter with a local HVAC company, offering them a free week at one of their client's rentals. The client is paying for the XYZ owner's AC repair.

We have seen under-the-table bartering for pest control, firewood, tree removal, floor installation, roof repairs, septic repair, and all sorts of other stuff.


Example 4:

XYZ Real Estate Co. manages one particular rental that brings them about $30,000 a year profit. The property is for sale, but XYZ doesn't market it and discourages viewings from competing re companies because they don't want the property to sell - it would mean a long-term loss of income to them.

[bjl584]

Example 3:

The owner of XYZ Real Estate Co. is having problems with his/her air conditioner at home. Rather than pay for a repair as one would normally do, they barter with a local HVAC company, offering them a free week at one of their client's rentals. The client is paying for the XYZ owner's AC repair.

We have seen under-the-table bartering for pest control, firewood, tree removal, floor installation, roof repairs, septic repair, and all sorts of other stuff.

How is XYZ pulling off sneaking an individual into a rental for a week without the owner knowing about it? I'm assuming that they are claiming that the unit is vacant for that particular week but actually have their friends staying there. Seems like once you review the utility bills for the month a red flag would be raised. Or if you happen to have a few cameras set up connected to your smart phone you could monitor the properties from afar.

[TexasHusker]

How is XYZ pulling off sneaking an individual into a rental for a week without the owner knowing about it? I'm assuming that they are claiming that the unit is vacant for that particular week but actually have their friends staying there. Seems like once you review the utility bills for the month a red flag would be raised. Or if you happen to have a few cameras set up connected to your smart phone you could monitor the properties from afar.

Quite easily. In many property management contracts, there is a provision whereby the property manager can utilize your home from 5 to 10 days per year for "administrative and marketing" purposes. Ours DO NOT because we feel it is unethical, but it IS an industry standard.

So if you manage 50 properties, you have anywhere from 250 to 500 nights a year to barter for any good or service that one can imagine: Car leases, spa treatments, free steak dinners at the local diner, you name it. It goes on ALL the time.

There is one competitor property manager of ours who basically lives for almost free by bartering his clients' homes - 10 days per home per year.

[disneysteve]

In many property management contracts, there is a provision whereby the property manager can utilize your home from 5 to 10 days per year for "administrative and marketing" purposes. Ours DO NOT because we feel it is unethical, but it IS an industry standard.

Wow. In all the times I looked into buying a rental property, I never heard of this. I wonder if it is true everywhere or if it's more of a regional thing. I would certainly never sign a management contract that gave the manager the right to "rent" out my home for free. I'm surprised any owner would sign such a contract.

[bjl584]

Wow. In all the times I looked into buying a rental property, I never heard of this. I wonder if it is true everywhere or if it's more of a regional thing. I would certainly never sign a management contract that gave the manager the right to "rent" out my home for free. I'm surprised any owner would sign such a contract.

I'm not sure if this same standard applies to rental homes. This may be a vacation rental thing.

[disneysteve]

I'm not sure if this same standard applies to rental homes. This may be a vacation rental thing.

That's what I was referring to. I had looked into buying a vacation rental in Florida. I spoke to numerous owners and a couple of management companies. Though I never got to the point of actually seeing a management contract so I'm not sure if that would have been in there or not. None of the owners ever mentioned it and obviously the management companies didn't.

[TexasHusker]

That's what I was referring to. I had looked into buying a vacation rental in Florida. I spoke to numerous owners and a couple of management companies. Though I never got to the point of actually seeing a management contract so I'm not sure if that would have been in there or not. None of the owners ever mentioned it and obviously the management companies didn't.

They probably don't know.

Traditional rental property management cos can be just as sly. They over pay various service contractors to take care of your rental, and get all those services for free at their own home. Yes, it's a form of kickback.

Happens all the time.

[~bs]

Wow. In all the times I looked into buying a rental property, I never heard of this. I wonder if it is true everywhere or if it's more of a regional thing. I would certainly never sign a management contract that gave the manager the right to "rent" out my home for free. I'm surprised any owner would sign such a contract.

never heard of it. must be a regional thing.

the only thing I can think of that comes close is utilizing the dead time between tenants. Say tenant moves out 7/31/17, it'll take a while to get the property cleaned up, advertised, etc. and normally contracts run monthly. So the property gets rented out 9/1/17. property manager has that window to do whatever they want, hopefully not breaking bad style, and hopefully not vrbo style either.

Actually, if youre taking the position that the prop manager is crooked, they can get away with a ridiculous amount of crap, and the homeowner wouldn't even know it. Going back to the vrbo thing, prop manager "finds" tenant, actually his friend. He makes the monthly payments, so the owner is happy. But in actuality, the friend doesn't live there. Instead, they're running a VRBO operation and making a killing on the higher daily rates, using your property to pull it off. And as your property is seeing higher usage and things break, the property manager charges you for all the repairs as well.

[TexasHusker]

Anything in the investment world is fraught with willful deceit and misconduct. The things that go on inside mutual fund cos, hedgefunds, and brokerage firms would make even the Clintons blush.