DON'T BLAME YOUR PROPERTY MANAGER!
I have heard multiple complaints from clients of Property Managers that are not happy with their cash-flow (or lack there-of). That is the same as complaining about their stockbroker making commissions even though their stock has no upside. It's not their fault that you chose the most expensive option for managing your assets. Sure, in the competitive space of property management their commissions have gone down, but when you choose a full-service option for managing your property, you pay full-service pricing.
What are the most difficult aspects of property management that keep most owners from managing themselves?
1. Marketing - Posting ads on the web, receiving applications, answering questions about the property, doing background and credit checks, drafting a lease, receiving application fees and reservation deposits. Yes, that alone seems like a lot of work and if not set up correctly could be a huge amount of work. Most property management companies charge the owner an average of one month's rent to perform this process plus they keep the application fees which can be an additional couple hundred dollars per property.
2. Managing Money - A reputable property management company is astute at managing the owner's funds in their trust/escrow accounts. They distribute remaining funds each month to the owner after paying expenses and holding a reserve amount. They provide financial reports as needed by the owner for their accountant and for their own edification. The owner has no access to these bank accounts.
3. Maintenance Requests - 25% to 50% of a portfolio may have maintenance and repair requests each month. Large, institutional property owners of rental properties assume an average of $300 - $400 per month as a budget for repairs and CapEx for each property. That budget alone could kill the cash flow of many property owners and if you have a property manager that is intending to profit from maintenance and repairs, cash flow has a 50/50 chance of happening each month.
Most property management companies have figured out how to automate the process of the 3 aspects above, why can't you? The property managers are not trying to steal from you, they are providing a full-service operation. That is their business model and you can often say, "you get what you pay for". BUT, as the property owner, it is your responsibility to make sure the property cash-flows. Make sure you can afford a property manager before choosing a full-service option. OR, self-manage with an automated process that we set up for you. Contact me to discuss this alternative option.