Property Managers

Hiring Your Property Manager

Property managers should respond promptly within 24 hours. To ensure consistent service, it is advisable to have a backup property manager in each market.

This is a relatively low-skill role, but the level of commitment and experience makes a huge difference

Interview questions

What is level of work they’re allowed to conduct
What is the extra charge for maintenance calls
Average vacancy/expense/cash flow numbers
Hold any licenses? There's usually one for PM and their broker needs to allow it
Time in the business? Longer isn't always better, but there's a minimum
Who manages the property? PMs will often hire out labor for this
Number of properties managed
Fees
How are they listings
How are they screening tenants
How are they handling repairs and maintenance
Will you be using standard property management agreement
Will you be using standard lease
How will you send financials? More of a software question
Insurance carriers. Need business insurance*
Fidelity bond
References

What to include in the PM Contract

Identify parties and property
Don’t haggle fees too hard
Manager responsibilities, don’t forget to include yard work/snow
My responsibilities (timely response to capital expenditures for example)
Contract duration
How much can be spent without authorization (100$ normally)
Signature

Negotiable items

These are my preferred contractual items

Property managers only receive fees when tenants pay rent.

There should be no minimum monthly fees for unoccupied properties, so you need to incentivize them for success.

Who receives the late fees

<aside> 💡 Running your own PM Company? They are really profitable after 6000 units, according to Glenn Gonzales (used to manage 2,000)

As you scale, regionals are an expensive margin biter

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Managing Your Property Manager

It is important to trust your property manager, but it is also important to verify their work. To do this, you should:

Visit the property unannounced every few months.
Check the actual cash in the bank, not just the invoices.
Be aware of any potential kickbacks with contractors. Even if they give you three quotes, get another one occasionally to compare.

<aside> 💸 Tax credit of 10k means that you remove 10k from your taxes owed. Taxable income write-off of 10k means that you remove 10k from your taxable income, which is usually less than a tax credit.

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Open a separate bank account for each of your real estate properties (personal checking or business account if you have an LLC) for rental income to come in
Keep a separate debit/credit card specifically for that real estate property expenses to be paid by the new real estate bank account
Keep receipts and write the reason you have a receipt (for example, “business dinner with Nelson L”). Check out Stessa.com on Software
Start your tax time early. Hire a CPA, or use TurboTax.
Maintain records for as long as you keep the property (and 3-5 years after)

Commercial Property Manager Questions

Commercial PM & Engineer Interview