With the rehab going on over at Arlene, and all of these interested parties coming to us while we are doing the rehab and asking when the units would be available, it became a little more urgent for us to find a new Property Manager. The old one sucks.
So I met with the “Speaker” from the REIC, and $1Mill Deal, who happens to run a little operation that does everything an outside investor could need. You know the type; we help you buy, manage, lease, and sell your property all under one house. Okay, I say to myself. I want to get more involved working with the Speaker and we need a new property manager. So let’s sit down and talk.
It quickly became evident that the Speaker is usually focused on SFH rentals and not MF rentals. Their contracts, pricing and service is geared towards SFH! Why would a SFH property management team be even meeting with someone who is only bringing MF to the table? Of course the answer to that is because the Speaker wants to work with me, or at least I hope it is.
A Couple of the Bullet Points:
- 8% Management Fee or $75 Minimum
- $250 Leasing Fee
- $250-$300 Rental Commission
- 11-14 Days Average For a Unit to be on the Market
I am glad I asked questions, “Is that $75 Minimum per unit or per property?” Speaker and his PM looked at each other, as if to say, ‘Errrhh?’ I continued on, “We are getting between $500-$600 a month on each unit. If its 8% on the Collected Rental Amounts, we are looking at $160/mo, but if it’s $75 x 4 units, we are talking 15%!”
And then it came down to something very interesting. It’s negotiable. Ok! We are on the right track. Then we started talking about the other points in the contract. Leasing Fees, Service Fees, Sellers Agreement, this that and the other thing. It boiled down to: It’s negotiable. The questions started pouring into my head:
- Is he testing me to see where I stand on negotiating?
- They’ve got SFH, and they don’t know where to start with MF?
- They didn’t discuss any of this before hand?
- Is he throwing this out here in hopes of the $1Mil Deal?
- Are they using us a Portfolio Booster to increase their exposure to the market?
- Should I have tried to go somewhere else so I didn’t mix business deals?
I also found it interesting that when Speaker asked about who was currently managing the property he immediately knew who it was. And almost seemed surprised that we were unhappy with them. I have my suspicions. I’ve seen my Property Manager posting deals on the REIC email list, so I think he is spending more time trying to rehab/flip/sell properties than he is actually interested in dealing with Property Management.
After the meeting the Partner and I talked about the bullet points and where we were at in signing up with the new Property Manager and came to an agreement. Partner actually thought that we were going to sign a contract! I mean we are fed up with the Old PM, but I want to be more careful this time selecting the right person. And while I thought that working with Speaker was going to be the right way to go I’m not so sure anymore. The thought needs to stew in my brain a little bit. Bubble, and boil.