Q&A: Why Do Property Managers Suck?

QUESTION:

“Not meant to offend the property managers out there – I know the good ones exist. However, a common theme I’ve seen is how hard it is to find a good, reliable property manager that makes the money you spend on them worth it. So please share your stories of what has made you frustrated with your property manager (or what you’re looking for in a good one!)”

 

ANSWER:

Good morning Jen  – It’s disappointing to see your troubles and I get exactly where you are coming from.  Property Management has a low barrier of entry and in some states, zero licensing.  It makes good property managers stand out even more.

I would also ask – from a previous post of mine – Are you a “C” Class Landlord?

 

In the property management industry managing single family and multi-family homes, we have classifications for Landlords that are never put on paper and probably never talked about.

This has probably never been published before, so here goes something new… If you are a Landlord, you may want to read this and see what classification YOU would fall into. If the description fits you – wear it.

If you are subjective about your dealings with your Property Manager, it could help foster a better relationship between you and your property manager getting you better service.

Class “A” Landlord:

1. Hires a Property Manager and is glad to pay their fees understanding that they provide a valuable service assisting them in growing an asset.
2. Appreciates their systems, procedures, tools, and level of separation they provide from their tenants. They understand their job is often difficult being the punching bag for both sides of a management transaction that can last for years.
3. Allows them the flexibility to make tough decisions in a pinch on their behalf. (Spending $505 dollars for an AC repair in July when their spending limit is $500)
4. Understands that the Property Manager is not responsible for everything that goes on with the home – to include the weather and the marketplace.
5. Is easy to get in touch with and responds well to phone calls, emails, and even texts.
6. Realizes that by having a property manager and paying $20/hour (example) – it allows them to find bigger deals and more investments making $2,000/hour for their time.
7. These folks are full time, possibly part-time investors that have enough capital to back up their investments and truly understand that what they put out in management fees is far outweighed by appreciation and tax breaks. Simple depreciation is a monster and is often overlooked by a lesser class landlord.

Class “B” Landlord:

1. Reluctantly hires a Property Manager after some minor effort to shop for the cheapest property manager they can find.
2. Second guesses all repair items and laments about not having any money to cover large repairs.
3. Often classified as “Reluctant Landlords” for never planning on having a rental home, but being thrust into the realm of owning one by an unexpected relocation.
4. Wants two bids for every job in the effort to save $20.00 – not caring if the tenant goes without AC or hot water for several days.
5. Does not understand basic accounting and needs a constant explanation for what the income/expense statement means.
6. Is difficult to reach often not responding the same day for urgent matters.
7. These folks are often reluctant landlords, first-time landlords, and intermediate landlords away for a year or two then moving back into their home.

Class “C” Landlord:

1. Grudgingly hires a Property Manager because their CPA told them to do so.
2. Shops high and low for the cheapest property manager in town – then asks them for a discount because they are an “investor”….. with their two homes.
3. Is abusive to the property management staff requiring constant communication and taking the attitude “Don’t you know who I am?”.
4. Introduces themselves to the tenant behind the Property Managers back – telling the tenant they can call them anytime if the Property Manager does not immediately answer their every need. (This creates a Mommy / Daddy issue. The PM says “NO – You can’t pay your rent late this month”….then the tenant runs to the Landlord telling them the PM said “We are evicting you AND taking away your birthday”)
5. Wants three bids for EVERY repair – no matter the inconvenience to the tenant – no matter the headache to the property manager…all with the effort to save $5.00. (Sounds dramatic – but this is true!!! – seen it many times before!)
6. Blames the Property Manager for wind, hail, storms, tornadoes, winter storms, freezing pipes, foundation movement, dead grass, etc… Essentially, nothing is ever beyond anyone’s control – it’s always the PM’s fault. This is a deeper reflection of that type of person never taking accountability for anything.
7. Wants to sue everybody for….everything. Tenant did not water the grass last week, can we hire an attorney and sue them? You did not answer the phone on a Saturday if you don’t call me back and I will seek vengeance on you with my attorney!
8. Leaves negative reviews online about a property manager. Hides behind Google and Yelp to feel better about their cyberbullying. If the landlord truly had a real issue – almost all property management companies are governed by several entities to include the state. Threatening to leave a negative review if you don’t get your way is blackmail and extortion. The same tactic the mafia has used for years….no different. If the Landlord has a real issue with the property manager – point 7 above may be needed. Leaving negative reviews on public forums is not productive for anyone.
9. Is impossible to reach via phone/email. Then they respond at 10:00PM on a Saturday and is upset no one is available to speak with them at the time they finally call back.
10. Will not reduce asking price in rent. If a home is vacant – with good marketing photos (and video) – and is being advertised fully…..here is a hint: IT’S THE ASKING PRICE! There are two things that rent homes – Price and Condition….and Price can make up for everything. The Landlord not willing to reduce their asking price at any cost is a flat out moron. If you want to do the math – assume your property rents for $1,000 a month. But, you aren’t getting it. What do you lose every month that the home is not rented? That’s right – $1,000. What do you lose every month if the home rents for $950? Well done – $50 / month or $600 a year. Which would you choose?
11. Wants to do their own repairs. We have seen time and time again owners taking 6 months to do their own make-ready repairs spending several thousand dollars MORE to do it and losing 4-5 months in possible rent. I have seen the total swing to be $10,000 with several investors….all one can do is shake their heads at them.
12. These folks are often first-time investors, overly dramatic reluctant landlords, emotionally attached to their homes and in often cases have an “I’m smarter and better than anyone else in the entire universe and I can do it all” attitude.

Ask yourself – which type of Landlord are you?

 

Source: Bigger Pockets.com

Study: Raleigh rental rate growth among highest in U.S.

Rents in Raleigh are up 3.6 percent over the past year, the 6th-fastest growth rate among the nation’s large cities, a new study from Apartment List says. For comparison, the national rent index grew by just 1.5 percent over the past year.

For even more historical perspective, rents in Raleigh have risen by 17.4 percent since 2014, outpacing the national average of 12.7 percent, the study says.

But Raleigh’s median rental rate is still a relative bargain. The median rent for a two-bedroom apartment in the City of Oaks is currently $1,159, compared to the national average of $1,855.

This is the seventh straight month that the city has seen rent increases, after a decline in October of last year. Raleigh’s year-over-year rent growth is also above North Carolina’s average of 2.8 percent.

Throughout the past year, rent increases have been occurring not just in Raleigh, but across the entire state. Of the largest 10 cities that Apartment List has data for in North Carolina, all of them have seen prices rise.

Cary is the most expensive of all North Carolina’s major cities, with a median two-bedroom rent of $1,280. Of the 10 largest North Carolina cities that the report has data for, all have seen rents rise year-over-year, with Wilmington experiencing the fastest growth (up 4.7 percent).

The Apartment List report revealed Henderson, Nevada, had the highest year-over-year rent growth in the U.S., with an increase of 4.5 percent – nearly three times the national rate. Another North Carolina metro, Greensboro, ranked just behind Raleigh on the national list, with a rental rate growth of just under 3 percent. National rankings are based on cities with a population of at least 250,000.

Apartment List uses median rent statistics from the U.S. Census Bureau, then extrapolates them forward to the current month using a growth rate calculated from its listing data. The report uses a same-unit analysis similar to Case-Shiller’s approach, comparing only units that are available across both time periods to provide a picture of rent growth in cities across the country.

By Cameron Snipes  – Associate Editor, Triangle Business Journal

https://www.bizjournals.com/triangle/news/2019/06/05/study-raleigh-rental-rate-growth-among-highest-in.html?ana=e_me_set1&mkt_tok=eyJpIjoiTWpZNE0ySTFaR1kzWkRRMSIsInQiOiJBSmRVNkpxS0N1eEorMHVmUHhZOVVERkpkMTZVekw4SDNtaExvN0l2TmhrTnBtMkwxaWJ1NlppOUxTNHlMQlZ3aExyOVBXRnRiYTJPckdBWW84U1wvMko2N1NKVk1BbW5SRWlDXC9uTmZnZlZFOVdhT3JNeG9JTjltdlwvT3NrNFlmNyJ9

5 Ingredients of a Good Tenant

What 5 Ingredients Make Up a Good Tenant?

By John Nuzzolese

Most landlords try their best to select good tenants to occupy their rental properties. Some are very successful at it while others always seem to end up with bad tenants regardless of how much they try.

In order to find a good tenant, we need to first understand the qualities or ingredients that a good tenant is made up from. Once we understand what ingredients we are looking for, we can carefully screen applicants with the right ingredients in mind. The LPA has a few tools I’ve listed below that can help you determine if your applicant has the desired qualities you are looking for in your screening process.

So What Are the 5 Ingredients that Make Up a Good Tenant?

1. Honesty / Integrity Trust… reliability… decency are qualities that come to mind when I think of a top quality tenant. I want a tenant who will do what he agrees to do. Someone who morally chooses to do the right thing. A person whose signature on a contract signifies a binding promise they will keep.
2. Creditworthiness If I am going to give legal possession of a valuable piece of real property to a tenant, I’m going to first want to know I’m dealing with someone with a good track record concerning credit. We have the technology available now that can give me a credit report on the computer instantly on any rental prospect, so I definitely want to assure myself that my prospect deals with financial matters in a reputable way.
3. Ability to Pay Does the tenant have sufficient income or other resources to easily pay the rent and other living expenses every month? Is the tenant employed or just independently wealthy? Does the tenant depend on any other parties to survive? The answers to these questions will tell you how secure this tenancy will be.
4. Cleanliness A clean tenant has higher standards than a dirty tenant. It is a fact that clean tenant will care for your rental property better than a dirty tenant.
5. Respect This is an important one. I have had the worst experiences with people who do not respect others. They may not even respect themselves, which usually means they won’t treat your property very well since they don’t respect it either. If they do not respect you as the landlord, you have a recipe for trouble.

Source: The Landlord Protection Agency, Inc.