What Do Property Management Companies Do

What is a property management company
and what is it that they actually do? If you’re going to play the game of real
estate, you need to really understand this very concretely. So in today’s video,
I’m going to break it all down for you. Alright my friends, Kris Krohn here and
today we’re talking about property management. If you’re in the game of real
estate, you’re going to have to decide are you going to be your own property manager?
Do you hire a different third party property manager? Do you skip property
management by going lease option? You’ve got a number of different considerations
here and what I want to do is I want to hit the really main big ones for you
that will help you really just understand what property management is.
Alright, so the first thing to understand is that
property management, their responsibility is to find tenants. So if you have a
house and it’s vacant, you need to get it rent it out, then property manager is
going to do that. My experience of most property managers, is they do not sell
lease options. They just do property management. And the reason why that’s
kind of a big deal is because you might say, “Kris I love your lease option
strategy.” But if you call up a property management company, 99 out of 100 are
going to say, “huh that’s not really our bread-and-butter. It’s not really what we
do. They will find your tenants. They will also replace tenants, okay? Now the other
thing that’s really important is they’re going to collect the money. If you are a big
hearted person, landlording might be really tough for you because people are
always looking for where they got the wiggle room. So a number of people are
going to see if they can mooch a little on you and if they can mooch a little,
they’re going to take the pinky. They’re going to have taken the whole body because
that’s kind of what goes down. Last thing you want to do is get in a
relationship with a tenant where you’re in the perpetual habit of being late. So
they’re going to go ahead and take care of collections. Will also take care of
fining. They’re going to enforce the contract right? If the people are late,
there could be some late fees and they’re going to enforce and make sure that
the contract is appropriate. That it’s legal and that the moment anything is
broken, we’re erring on the side of justice instead
of our mercy to make sure that the investment goes according to plan.
They’re also going to take care of evictions. You’re going to have some if you
buy enough homes. You can experience eviction. I know there’s a lot of people
worried about nightmare, tenants you know where most nightmare tenants come from?
It’s not property managers placing people,
it’s novices placing people. So we’ll actually put the wrong people in our
homes and then when we get what we deserve. We didn’t know. But we didn’t
know the standards. We didn’t know the mark and the reality is,
real basic common sense, “hey this person makes thirty thousand dollars a year, but
they want to rent this place at fifteen hundred a month.” Well do some basic math there. $1500 a month, that’s… What is that? $18,000. It’s half, more than half of the money that they make. No bank is ever
going to do a loan and take more than half of your income and apply it to your
ability to pay a mortgage. So you shouldn’t either.
These property management companies, they have standards for knowing what a good
tenant will be. What a bad one will be. They’re going to do background checks or
else we’re going to pick up the phone and they’re going to do some reference checks
if they’re a good thorough property management company. And then the last
thing is that your property’s going to have some repairs. And if you had a property
manager involved, they may be the repair company, they may be third party to the
repair company and generally, if it’s over a certain amount of money, they will
send an email say, “hey this is the bid, this is what’s broken, this is what we
need you to authorize.” And I do get a little skeptical here just between you
and I because it’s really hard to track a world where there’s kickbacks but it’s
not like the property manager is trying to save you money, so often they’ll go to
super-competent repair people but the super-competent might charge you double
or triple. So that’s where you might want to get a little bit involved when it
comes to approving the repairs of the property. But outside of that, it is nice,
it can be totally headache-free something breaks and they’re going to take
care of it. If it’s over a certain amount of money that you set up with them,
they’re going to make sure that they get your buy-in and approval. So there you
have it. Property management in a nutshell, a-to-z soup-to-nuts, is basically they’re
there to find people for your house, enforce the contract and get people out
if they’re the wrong people and otherwise, they’re going to do all of that
and charge you roughly 10%. Some might charge you 9, on some might 8, some
might charge 12. It depends but 10% is really an average amount that they’re
going to charge you for your gross rent. So if you’re renting a house for 1200 month,
10% is going to be $120 a month, That’s what it’s going to cost to have them.
I’m going to tell you right now, if you’ve got a awesome tenant in the house, then
you’ll be like, “why am I paying this property manager?” But the moment things
go sideways, you can be really grateful that you do have one. Again all the more
reasons why I love my lease option course. You may want to check out some of
those videos because the properties do manage themselves. I get super
cash flow and I don’t have to pay property management, but that’s not going to be
the perfect scenario. It’s not going to be the perfect situation in every
scenario. So friends, there’s property management. Hopefully this helped you out.
Make sure you subscribe. We’ll keep rocking our real estate
content for you. Whoop! there it is… Whoop! there it is. I just totally dated myself
but yes that’s that’s what you need to know about property management.
Now, if property management is not your game, you want to rise above it, you want
to go above it, you want to play in some different ways, you got to check out some
of the cool things we do in real estate. Check out my website. I’m going to talk
about lease options. It’s a beautiful alternative and you can even own real
estate honestly hands off, hands free but be making a hundred percent of the money.


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