Author Topic: 3rd Party Management  (Read 4571 times)

msmo

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3rd Party Management
« on: February 14, 2012, 06:06:55 PM »
I may be moving out of state or country soon, for work. I'm not sure if it's temporary or permanent yet so I would like to hold onto my condo and rent it out. I thought about hiring a real estate company to do the property management, but they'll take a big cut. I'm considering asking a good friend, who manages several of her own rental houses, if I could hire her for a smaller cut. Is this a good idea? Or am I about to strain a relationship? And are there other things that I should be considering? What I need is to hire someone to find, screen, and manage tenants and take of the unit for me.

arebelspy

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Re: 3rd Party Management
« Reply #1 on: February 14, 2012, 07:59:24 PM »
I'm considering asking a good friend, who manages several of her own rental houses, if I could hire her for a smaller cut. Is this a good idea?

Mixing money with friends or family can often lead to problems.  It really depends on the people involved (their temperaments, relationship, etc.) and the situation.  Only you can figure out if it's a good idea or not.  Generally, I'd say "no."  Better to preserve the friendship and get another company to do it, one where you may pay a bit more, but (potentially) save a friendship.

And are there other things that I should be considering?

Laws.  In my state (Nevada), one has to have a real estate license or be working for a broker to manage property that is not your own.  Your friend might not even legally be allowed to manage your property.  Look into that first, for sure.
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LAHK

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Re: 3rd Party Management
« Reply #2 on: February 15, 2012, 05:54:14 AM »
What is a typical cut for managing "doors" in downtown Toronto?  I have a few houses in Toronto that my parents are managing right now.  However, they are nearing retirement age (society's default 65) and they are looking for an eventual exit.  Despite the hot market I would like to hang on to these properties since the rent is very nice.  For outside help, should I expect to drop 10% of gross? 20%? 30%? 

arebelspy

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Re: 3rd Party Management
« Reply #3 on: February 15, 2012, 07:00:41 AM »
Not sure if our neighbor to the North is different, but typical in the States is 6-10% to manage it, and often extra fees to get it rented.  Mostly works out in the range of 10-15% total (usually toward the lower end of that).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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AJ

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Re: 3rd Party Management
« Reply #4 on: February 15, 2012, 04:05:50 PM »
You know what they say about getting what you pay for :) I wouldn't want to scrimp on a property manager, and I definitely wouldn't ask a friend to do it for under market value. Actually, I wouldn't want a friend to do it at all. In the worst case scenario, you need your PM to be able to be a hard-ass with deadbeat tenets. They may need to evict these people, and that is a huge burden to place on a friend.

I need my property manager to care as much about my place as I do. Or, at least, be the best approximation money can buy :) Totally worth 10% of the rent.

msmo

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Re: 3rd Party Management
« Reply #5 on: February 15, 2012, 05:28:01 PM »
In my neck of the woods, it's more like 15%, but I agree that it's worth it. Thanks all.

sirspiffy

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Re: 3rd Party Management
« Reply #6 on: March 06, 2012, 06:54:00 PM »
Depends, for one property I would just ask the friend and give her a good cut.  But make sure she's cut out for dealing with the problems first and has systems in place for rapid action in the face of a catastrophic problem or eviction.

Mr Mark

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Re: 3rd Party Management
« Reply #7 on: March 13, 2012, 08:07:39 AM »

I'd pay the extra a get a (good) professional manager, for the reasons above.

elysianfields

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Re: 3rd Party Management
« Reply #8 on: May 15, 2012, 07:14:06 AM »
I pay 8% of gross rent for my handyman, who only manages the house & grounds.  He doesn't vet or find tenants, run background checks, or collect rent.  This is fairly standard in the Metro Washington, DC area.

James

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Re: 3rd Party Management
« Reply #9 on: May 15, 2012, 07:24:14 AM »
I wouldn't put your friend in that position unless they really wanted it.  And even then I would still talk to the management company and make sure you could switch to them if things get to be too much.