Finding a property manager is no different that finding a realtor...some realtors are going to be awesome and sell your property above asking in one day, others are going to take bad pictures, forget to list it everywhere, etc and it will sit. Property managers are the same way, you just have to find the right one. Most good PM's have staff that handle repairs and turns (and mowing), and can actually save you money due to scale.

OK, here's a question -
I've never asked a tenant to sign a new lease when their old one expired, it simply went month-to-month at that time. And it's been fine, one couple stayed another 5 years, and another stayed a couple more. Nobody has ever packed up and left the day their lease ended.

But this next time, I'd like to lock the current tenants in for at least another year - what do you guys do if they DON'T want to sign for another year?

Here's how my property manager breaks down:

She takes a one time 3% of whatever the yearly rent amounts to, and the referring agent (if there is one) takes 2%. Or in other words if the rent is $5000/mt, that makes one years rent worth $60000. My agent takes 3% of that which is $1800, and if there is a referring agent she takes 2% which is $1200. That makes the finders fee between $1800 to $3000, or between 24% to 60% of one months rent. This is only paid once, it is not paid yearly so if the renters stay 30 years it doesn't matter, that one time fee is never paid again.

The beauty of this setup is both my property manager and the referring agent are realtors so they had a pile of people looking to rent a location, hence my place was basically rented right away and at a higher rent than I expected. So in my situation I actually made money by having a property manager just from the savings in carrying costs and higher rent as a bonus, because if I tried to do it all my self it would have taken much longer meanwhile I'm still paying the mortgage and other carrying costs.

Her monthly cut of the rent is 6%, but she got us a rent that was > 6% of what we were expecting, or in this case she knew a fellow agent that had a more lucrative client and we went with them.

So the TL:DR is between the carrying cost savings and higher rent, our property manager is not only free but actually making us more money than if we did it alone so everyone is happy.

This is the beauty of having a property manager actually. You can still do everything yourself if you want, like you can refer a tenant even if you have a property manager, they don't care, so in your circumstance as to what happens if they trash the place, nothing changes compared to if you go it alone. Except for one key detail, now you have a second legal team on your side that can go to bat for you!

So yeah everyone's circumstance is different but in my case the property manager made me extra money by saving me carrying costs and getting me a higher than expected rent, and I get a legal team, a few decades of experience, a large client list and someone to do it all for me.

EDIT: Maybe one thing to recommend is to go with a realtor as a property manager as most of them not only sell property but also rent them, and they know other agents in the city doing the same. So with that army of data it becomes much easier to fill a place quickly and for higher than expected rent.

I sign 12 months minimum. Then when the lease is coming up for end of term, I schedule an annual maintenance inspection.
I walk through the property and assuming all looks in order I give them a renewal form.

The renewal for has 3 options and a deadline for return.
The options are a 1 year lease extension, 2 year lease extension, or notice to not renew and end lease at the current term.

If they are good tenants and I want to entice them to renew for 2 years, then I provide a rent reduction for the 2 year extension.

Good info and thanks for sharing. For now I am very happy with my own management. In the future/as I add more properties then things may change.

So, say for whatever reason they don't want to get locked into another year (job may be relocating, whatever), you kick out otherwise good tenants and have your property empty?

no, I end the lease at its normal conclusion and find new tenants during the best time of year to do so.

Given that we live in 4 season weather, I dont want to have a vacancy in Nov (I perceive that to be the worst month to start a vacancy as nobody wants to move with Holidays and then snow flys till March) . I dont allow month to month because of that.

I sign or renew for full leases.

That's extreme

not really.

It is not like I am kicking anyone out, lol.

I give any good tenant the option to renew/extend. If they dont want to, then the lease ends at the normal time and then move out.

This is really just simple business. The city I live in seems probably 80% of tenant turn over during the months of May-August. As a landlord, that is when you also want leases to end to ensure you have the greatest chance at filling a vacancy and finding the most qualified tenants.

The alternative is a month to month tenant leaving on Oct 31st with no new tenant for 6 months. Every landlord should be avoiding that.

During the final years of my landlord career, I had a lot of tenants who refused to pay their rent. I would write them letters, call them, and even hired attorneys to send them a bunch of "official" letters, but nothing seemed to work. Finally, I printed up some 8x10 neon orange pieces of paper that said, "EVICTION PROCESSING," in large letters with a paragraph of legal speak right below it. I taped three of the signs at one of my rental homes - front door, front window and garage door. Within hours I was getting calls from the delinquent tenants. Back rent was paid up within 24 hours. These little neon orange signs worked perfectly and I would use them with great success for all of my delinquent tenants... Always check state and local laws in regards to posting signs at a tenant's residence...

Fantastic.

Is the assumption it worked well because of the public shame? (because all the neighbors could see and the tenants wanted to pay up to remove the shame?)

I never figured out why those neon orange sheets of paper worked so well. If it was public shame, the tenants could have just taken down those notices. Or maybe they thought more notices would be posted... I guess the sight of a neon orange piece of paper on a front door brings fear and worry to a delinquent tenant... Ugh, just thinking about all of this makes me dizzy. I have many crazy tenant stories, which I want to forget. I'm so happy that I got out of the landlord game 5 years ago. It just wasn't worth it...

Well, looks like you’ve adjusted well to working at Captain Hook Fish & Chips quite nicely!

Believe me, working at Captain Hook Fish & Chips is way less stressful than being a landlord... "Awesome! Totally Awesome! All right, Hamilton!!!"

Long story, but my wife and I are buying up a 15 unit condo complex in New Mexico. First unit was purchased in 2009 and used as vacation rental for 10 years. Now we have 11 condos and are about purchase #12. Also had a SFH in Las Vegas from 2011 to this past year. Primary home is in DFW metroplex, so 500+ miles away. Currently out here renovating complex and have 4 LTR and 7 VR- mostly Airbnb nowadays.

Is it worth it? Depends. For us it is because:

1. We got in at a low price as these units are fixer uppers.
2. We're in a location that's based on year round tourism.
3. We've got 10 years experience and self manage. (PM takes 30% usually and that would destroy our margins)

And the craziest thing, since I'm a long time lover of pinball, (My dad bought me "Strikes and Spares" for Christmas when I was 10), I'm putting machines in most of the units that go along with their theme (I like themes too). So if anyone wants a free stay out here with skiing, casinos, horse racing, etc. in return for helping me with the learning curve on my current 3 machines that need some TLC... Let. Me. Now.

What's the minimum threshold for margins on the monthly rent amount ?
.
Is 30% any good, if not what's the least acceptable percentage?

Need some help: my father-in-law has a few rentals, but doesn’t like the dealing with renters aspect. He asked me to help him manage the properties. He wants me inspect all of his current houses and let him know what items might need addressed this year.

I used to run senior care properties, including independent living condos. So I familiar with keeping physical plants in good order. I am comfortable addressing difficult situations, should they arise.

Without recreating the wheel...does anyone have a great checklist to use when doing property inspections? Any advice on conducting them with renters?

Thank you in advance for any help.

I've never done this. I've had people on month to month leases for 5 years. And I've never had a problem renting a house no matter what time of year - someone always needs a roof over their head. You could almost argue that you could ask MORE in the winter since inventory is lower, and 80% of the population wants to move when it's summertime. As for a 6 month vacancy - the longest my place has been empty is 6 weeks, and that's my fault because I take forever to paint and stuff. I must get asked every time I'm there if it's for rent. I'd rather have 2 18-month tenants than 3 one-year ones.

I can't see ending a lease with a good tenant just because they're uncertain about committing for another year. But I do see the logic of your choice.

Like most things, it needs to be a case by case basis.

Agreed.

Any landlords contemplating relief to tenants during this time? Are you reaching out to them or waiting for them to contact you if there is an issue?

Denver seems like it could get rough soon. I think my tenants (I only have one rental) are in fields where it might not affect them. That being said if they come to me with issues I plan on waiving late fees at this time and if needed would entertain a discounted April. I imagine if I had numerous properties that type of discount would add up quick and might not be possible. It almost becomes a question of how can I help my tenant enough to get though this and keep them as tenants, without jeopardizing my own situation.

I contacted all of my tenants to see if they have any "employment interruption" and if they will have any issues taking care of rent. I asked that they let me know if there is an issue so i'm not surprised at rent time, and we can work something out if necessary. Three of the four got back and said all is good. One never replied. I told them i don't want hardships for themselves or me, but I want them to be able to live comfortably.

Good luck to you all and your tenants. I am actually quite relieved that I decided to back away from a deal I had been looking at. Would have been horrible timing for me for a first deal...

Rest assured I'm still looking though.

I already have a tenant informing me that although this months rent is coming on time "...we are fearful for finances of the next payment. We will send you what we can as we can"...

What would you have done if all four said they were laid off & were in a bad spot?

I just sold my rental property and I've never been so relieved. It seems like it would be a fun investment but I discovered I don't have the intestinal fortitude for the stress that comes with it. It was a pain to own when the economy was good...

I havent contacted my tenants, but if/when they contact me, I will be working with them. Most of them are young and will be struggling. If it was because they screwed up and lost a job, that would be one thing. But this is a whole different beast that many were not prepared for.

Now I do have one tenant at the end of his lease, and for some reason has decided to be late with rent for the final 6 months of his lease, now that is a different story, if he doesn't pay, ill be on him, no breaks for him.

My management company had a meeting with all of the property owners earlier this week. They told us that they do expect to have some tenants that will lose their jobs and not be able to pay. They said they will be working with all the tenants that need it during this time.

I didn’t feel that was an option as I do know what they do fora living and it’s not a big town.

One is a hairdresser and she is going on EI so that might be tough next month. She’s paid for April already so that’s cool.

Following is advice from a local landlord group. I’m not necessarily endorsing it, but I found it very helpful to consider the situation.

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Attention Fellow Landlords,

I would like to share the following thoughts and suggestions with you on how I believe this virus will impact tenants and landlords. I have developed a vast network of landlords throughout Massachusetts over my 10+ years in the real estate industry. I belong to several landlord organizations that provide great forums for communication and networking. I am also a landlord myself as well as co-owner of the real estate brokerage Northeast Realty + Co. Over the last week the landlord networks I'm tied in with have had one pressing question that is being vigorously discussed and debated: "What am I going to do as landlord when my tenants contact me and tell me they can not afford to pay their rent?"

This not an "if" question...this is a "when" question. Entire industries are being shut down. If you have a tenant that is employed within one of these industries there is a very good chance they will not be able to pay April's rent. Evictions will not be a possibility for landlords for the foreseeable future. Massachusetts Housing courts are no longer starting new summary process cases. This information will spread across the Massachusetts tenant population like wildfire. Tenants will realize that they can NOT be evicted, and if they can no longer afford to pay their market rent they will very quickly start withholding their rents. Below are some suggestions on how landlords can mitigate this already exponentially developing scenario:

1) This is a not a time for profit. If you are looking to continue to profit from your rent rolls during this time then your tenants will stop paying their rent very soon. This a time for a sustainable approach towards protecting our real estate investments.

2) Figure out what your bottom line is to cover all your property expenses. This should now be your net financial baseline focus and you should offer the tenants in your buildings that cannot afford to pay their market rent a new lowered rent payment lease option.

3) For any tenant that you have that is in need of a new lowered rent lease agreement due to a sudden loss of income, I highly suggest that you switch those tenants to a TAW (Tenancy At Will) lease agreement. There are several reasons for this suggestion:
a) If you end up with a tenant that is no longer able to pay their rent at all, which may very well be the case in the next few months, then once the courts figure out a way to continue the eviction process you will be that much better prepared with evicting a tenant on a TAW lease agreement versus a tenant that is in a fixed term lease agreement.
b) This situation is developing and changing daily (for the worse, probably more so than for better). That being said, a 30 day Tenancy At Will agreement will allow you to re-assess each lowered rent payment agreement on a monthly basis. If your tenant continues to suffer from a complete of loss of income, you may need to continue to renegotiate a lowered monthly rent until your tenant gets to a point where they might not be able to afford paying any rent amount at all. If that is the inevitable direction your tenant is headed in then its best to try to collect whatever money possible until they get to that point.
c) If the situation starts to turn for the better and your tenant is able to secure a stream of income then you can easily raise the rent proportionally to what the tenant can afford with just a 30 day notice.
I highly suggest that you reach out to your tenants now preemptively. I guarantee that an opportunity presented like this by a landlord to their tenant will be looked at favorably and could motivate them to come to an agreement with you on a lowered rent amount vs. no rent amount. Below is a copy of a notice that I have begun sending out to my tenants:

"Dear xxxx,

We understand that during these unsettling times you may be affected financially by a sudden loss of your monthly income, which therefore may directly impact your ability to pay the monthly rent. Should that be the case we would like to extend to you an option to pay a lower rent amount that adequately matches what you are able to pay. I'm sure you realize that any reduction in rents collected will directly impact the LLC's finances and that therefore we would need to see a reliable proof of your loss of income before agreeing to a new lowered rent lease. We will also expect to review the situation on a monthly basis with the expectation of returning to the original fixed lease and rent amount once you are able to regain the necessary income. Please let me know if this is your situation.

Please stay safe."

Also FYI. 4 for 4 rent paid up in full “almost” all on time. But no worries on that front.

My one tenant paid me without issue this month. I hope if they have troubles through this that they will reach out. Ideally it is business as usual, but if they need it I have figured out how much I can discount to stay afloat. Until then we will be donating part of our profits to Same Cafe on Colfax in Denver to help them feed some folks that need help more than we need profit.

All my tenants made it through nicely, no-one ever missed a minute of payments and I’m happy about that.

But, I’m 1/2 tired of being a landlord and owner of my revenue building. Only had it for 7 years, it’s a four-plex. I’m not a big deal.
I put it up for sale online on Friday to see if I can get any nibbles.

If I can get for what I think I may be able to for it, I will be pretty much debt free in life at 43. Hoping some big landlord wants to buy it and I can sail off into the distance.

I sold one.
With all the added burden and stress being put on landlords it felt like good timing to pull cash and reduce debt. Took that money and paid down loans on other rentals and now am more able to jump on the next deal I find to fix up.

I never thought I would sell, but current tenants wanted to buy and it was largely a no hassle sale. That made it an easier decision.

That’s an ideal situation if current tenants wanted to buy. Probably skipped all the realtor shit, skipped inspections and such and just had to do the deal?

Pretty much. They caMe asking. I told them they could take 3% off market value if it was no hassle.

I could have probably sold for 10k higher on open market but then you deal w all the BS and “fix this or I walk crap”.

This was also my least favorite investment property due to the larger yard that no tenants take care of

Well, I had interest, and showed it once, but someone else made an offfer, quick negotiation, and it’s sold pending conditions lifting!
Showed it to bank appraiser yesterday, and have final inspections Monday for condition lift.

Didn’t use a realtor, no fees there, got almost exactly what I was looking to get for it. (baby bit low...of course)

If all works out fine in next couple weeks, I’ll be mortgage free, and just have to figure out capital gains and a bit of pre buyout mortgage fees and such. I’m pleased, relieved a bit, but a bit sad I won’t have this for another decade of equity growing. All in all, im good!

I'm adding another property to my portfolio currently. With interest rates so low, and the stock market having been doing really well the management company I use is saying they are seeing a lot of people getting rental properties right now.

I’m right there with you. I’m closing on number 4 on Monday.

This is one of the best old school cartoons. It's called "moving day". I think subconsciously it helped me become a landlord. Very appropriate for the thread. Enjoy!

I only get things in the mail about selling the house I live in (probably helps that I am in a different state than my rentals). My dad and I get phone calls a lot about selling our house to some company.