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Ride The Gravitron
May 2, 2008

by FactsAreUseless


My mom is ready to retire. She wants to rent out the house she owns, move back to her family in Mexico and live off the rent. I live out of state. And she has no one else to tend the property.

How would one go about hiring a property manager?

How do they charge you? Is it commission or a flat fee? How would house insurance work out? If the renters stops paying is there a plan to keep some sort of cash flow to the owner?

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faarcyde
Dec 5, 2005
what the hell did you trade Jay Buhner for!?

Where are you located? If you are in an urban center or decent sized Midwestern type of town there will be a lot to choose from. A standard fee is usually one month's rent per year. This includes tenant screening and coordinating maintenance.

As the owner she would keep paying insurance and taxes herself, unless there was some kind of agreement with the tenant which would be unusual. In the United States it is standard for tenant to pay utilities.

As to your question if there is recourse if the tenant stops paying..lol, no. That is the whole game, getting people to pay on time and take care of the propertyy. If you screen tenants properly you shouldn't have an issue. I've been buying rentals for a long time now and never had an issue apart from my first tenant because I had no idea what I was doing.

photomikey
Dec 30, 2012


What's the house worth? What would that money earn doing something else? (Stocks, bonds, etc).

Property management companies charge 10% of the rent. That's the fee you pay for them to answer the phone when the tenant calls. They then call you and ask what to do. It's a very expensive messenger service.

If the tenant calls and says a faucet is dripping, the management company calls a plumber, who rolls out at $125/hr, then puts $50 worth of parts in the faucet, you're in for a couple hundred bucks. Please disregard that this is for a $25 faucet that you could throw away entirely and replace in 5 minutes - you weren't there to make that decision. So $300 it is.

For an additional full month's rent (not counting the 10% they already get) they will find you a new tenant. It costs $25 to run a background check - this is not included in either the 10% or the full month's rent you're paying - that's an expense and you get to pay that too - they will find and (eventually) install a new tenant. If that tenant skips rent the 2nd month and then bashes holes in the walls and holds over for three months until you finally get them into eviction court (all the while, you pay your 10%), the property management company will pay for all damages and lost rent because it's entirely their fault HAHAHAHA Just kidding you pay for all of that plus the lawyer plus court costs plus repairing the place plus finding another new tenant.

I'm not a big fan of property management companies.

If you live local, you can (after some study) become a small-time landlord. If you live far away, sell.

Slayerjerman
Nov 27, 2005

...and spelling lessons.


I had a property manager with my townhouse when we had to move out of country for work and it was annoying.

The tenant eventually flooded my master bath on the 2nd floor and did 10k in water damage.... between dealing with insurance, them, tenant and the restoration crew, I do not recommend using a management company. They literally will just sit there and watch the place fall apart as long as the can keep collecting their fee.

Sell the house. It's easier to bank the cash and not have the stress and surprises that will await you as a landlord.

RussianBear
Sep 14, 2003

I am become death, the destroyer of worlds

photomikey posted:

I'm not a big fan of property management companies.

If you live local, you can (after some study) become a small-time landlord.

I'll offer an alternative perspective as a renter. I'm a big fan of property management companies. I always pay my rent on time, take care of the property, and report any issues as soon as notice I them. It's great knowing that if anything goes wrong there's a property management company that has relationships with reputable vendors. I don't want to rely on someone playing landlord to fix the problem eventually. For example, two years ago the house we were renting had the AC die. The property management company made sure it was replaced in less than a week.

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20 Blunts
Jan 21, 2017


photomikey posted:


If the tenant calls and says a faucet is dripping, the management company calls a plumber, who rolls out at $125/hr, then puts $50 worth of parts in the faucet, you're in for a couple hundred bucks. Please disregard that this is for a $25 faucet that you could throw away entirely and replace in 5 minutes - you weren't there to make that decision. So $300 it is.


As a contractor this is why I come a-runnin' when we have a message from property management looking to get an estimate :getin:

I would crank the rent up a little bit if you are going to go with a management company. Honestly being responsible for a property any more than a couple hours drive away, using a company or not, would just drive me crazy. The other thing that seems true, in my experience, is the long term maintenance of the house could actually suffer a little if you are depending on the manager. Your house is just another on the list for whoever is personally assigned to the property. Sure, they will make sure there isn't standing water on the floorboards, broken windows, gas leaks and other big problems. But...from there they are just going down a checklist, and I use scare quotes here intentionally - is it "clean?", does it look "presentable?", is maintenance at an "acceptable" level?

Basically they are in the business of getting bodies in and out of homes, and staving off the ire of tenants, owners and municipal inspectors. But your family owns this house and you should be in the business of maximizing its value. Renting is hard on a house no matter but you will be putting certain upkeep decisions in the hands of someone with a different bottom line than yours.

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