We have recently moved away from the house that we own and we have rented it out to a very nice family. We debated a very long time about whether or not we should get a property manager for the house. We do have a property manager for another house that we own (and he is wonderful, and in the Hampton Roads area if you need a referral), but the details of this house make it seem like a property manager is not the best use of our money.
There are three main ways in which a property manager can be useful. First, property managers often participate in the securing of tenants, including advertising, showing, tenant screening and lease negotiation. Second, property managers handle the monthly financial transactions for the landlord, including receiving rent, paying bills, and following up with non-paying tenants. Third, property managers oversee the maintenance and repairs to the house, often using a collection of service people that they have worked with in the past.
Property managers are compensated by a percentage-based management fee, various other fees for particular situations, and the collection of late fees from tenants. I've seen fees from 10% to 5%, plus a wide variety of other variations. There is a great article at ManageMyProperty.com that includes a pretty comprehensive list of fees that you might discover.
This house is in an expensive area and so the percentage-based management fee would be large. In addition, we have secure tenants for two years. Because they are military, and have been reliable tenants at their previous home, it seems that the chances of financial problems are fairly low. This means that we do not need a property manager for the first two parts of their job and only really need someone to be responsible for the physical condition of the house. It seems like a lot of money to spend each month just to have someone available to organize repairs. In addition, I thought that the customary additional fees in our area were really high. The final decision point for us came in the part of the contract that gave the rental company's brokerage the first right to sell the house if we were to decide to sell. I was not comfortable with that at all.
For these reasons, we decided not to go with a property manager. After a bit of a search, we have found a good contractor who lives nearby and is willing to organize the general maintenance of the house and only asks to be paid when he works for us. I am feeling pretty good about our set-up and I hopeful that it will all work out well.
I say that I "am" hopeful, in the present tense, despite the challenges of the last few days. Our tenants moved in on Wednesday and already they've discovered a few things that need repairs, two of which will require specific repair specialists. I spent all day yesterday trying to figure out how to call back to the States (should have done that sooner), how to call toll-free numbers with an NEX calling card (can't be done), running downstairs to the library's working internet to look up numbers, and organizing those two repairs. I was very frustrated and at many times I began to doubt our decision. Sure, I'm saving a few thousand dollars a year, but I also want our tenants to be happy. As someone who is often a tenant, it makes me happy when things get fixed quickly and it seems like the landlord (or housing) cares when things aren't working well. I'm not sure that me organizing stuff from overseas is giving that impression of speediness.
For now, I've got the repairs organized and hopefully it will be smooth sailing from here on out. If all goes well, I won't be doubting our decision again in the future. If it turns out that I am wrong, I guess that we will have to reconsider. A good property manager who handles all the things necessary and charges appropriate fees is a wonderful thing and I don't disapprove of property managers in general, just for our situation.
The entire series of articles at ManageMyProperty.com is really, really good and I encourage you to look there for more information if you are considering hiring a property manager.
Happy 4th, Everyone!