Long distance property management
 

We're considering buying investment property in Florida (yes, we've read up extensively on the potential pitfalls). What does a property management service cost? Is it a %age of rental income, or a flat fee? We'd need someone to take care of finding renters, and keeping the property maintained, including gardening/pool (if applicable) and repairs. Undecided yet if it would be a residential rental or a vacation rental - probably vacation, so we could use it in the off-season.

There are as many different formulas as there are managers... But most work out to be around 10 percent of gross. That is just for Mgt, maintain, repairs, etc are subbed out and extra...you usually pay cost without markup. On the bright side, you can write it off against income.

I'm a long distance landlord. A neighbor there asked to become my prop. mgr. and wanted 8% of the rent, paid upfront quarterly. My rental is a condo with minimal maint. requirements. So for around $120 per month, he was going to be availiable to knock on the door and collect rent if need be, go check on the place, do periodic inspections and arrange repairs. I'm getting most of that for free because I have good tenants, am buddies with my (different) neighbor there and have a list of contractors and repair folks who work in the neighborhood. I don't see much value in prop. mgt. unless you have several properties and someone whose job it is to do the repairs and be the tenants' point of contact. Anyone you hire is still going to bill you for repairs they do or farm out to others.

You can get property managers for as little as $400 up front and 6% of the monthly rent. The problem is that they often try to make extra money off you by getting kick-backs from maintenance.
You also have to watch that they really screen the potential tenants well, and not just let in the first people who apply. I've had a bad experience on both counts with RPM, so be careful.

Mine charged one months rent to advertise, show, screen, collect deposit and get the tennant moved in. If I wanted, they would arrange maintaince and collect collect rent for 10% per month......I live 90 miles away and opt to do that myself......I bought a used riding mower and trimmer, the tennant maintains the large lawn....

Ok, sounds like these kinds of companies may not be the best route to go. We can probably find tenants ourselves, especially if it's a vacation rental (we can advertise locally - half of FL's population are from Ontario already :) ). But what would you guys recommend in terms of repairs and maintenance? I don't want to just post a phone # on the fridge and give the handyman my credit card #.

Is it a condo or single family? I have an annual service contract with a local HVAC company. It's around $140 a year and includes fall and spring inspections and service and 15% off parts and labor. It has paid for itself. I order a case of a/c filters and tell the tenants to change them once a month and drain the hot water heater once a year. When my neighbors' fridge died, their landlord told them to go pick out a comparable fridge at Best Buy and then he ordered it online and had it shipped to them. I'd find a local handyman you can keep on speed dial. I had to have the garage door opener replaced. My lease says tenants pay the first $50 of any service call, so that keeps them a little responsible. When the garage door opener went, the tenants lied to me, said they paid for the repair and deducted from the rent. Of course, the garage door guy came looking for me, but by then the tenants had skipped. And as soon as I paid the garage door guy, he died and it took me months to get a receipt from his partners. Landlording is not for the faint of heart and I've been VERY lucky so far.

I have done it both ways...I have 6 single family homes. Each in a different state. I just passed the last one I managed to a manager. It is well worth the cost if you can find a good/honest one.

Don't know yet. Probably a condo, because the initial investment is lower. I also might be able to find local contacts through other in the condo building.

All of that sounds about right. I was going to say 8% to 10% to collect rent, do bookeeping, move in/out, arrange repairs.

Be careful on vacation rentals. I did extensive research on this several years ago. The costs are much higher for management and include turnover/cleaning, more frequent repairs, etc. We figured that the costs would be 50% to 60% of the gross rents for a cabin we owned at the time. Decided to just rent it out and forget about using it for a few years.