Property Managers what are your client's misconceptions?

Question

I'm interested in hearing from people who own property management companies. What are the common misconceptions and/or fears people have around hiring you? What do you re-educate them about?

Ross Denman · Answer

I will have to create a list. There's quite a few:

• Too many newbie investors think that once a home is rehabbed/refurbished, there will never be any expenses. There is always something unexpected that comes up. With enough time everything will fail.
• They don't figure their expenses correctly. They think cash flow = rent - property management - mortgage. In a perfect world yes, but it never stays perfect for long. Vacancies, reconditioning, maintenance, inspections, legal costs, etc.
• They don't understand the importance of doing things correctly and providing a quality property. This allows them to rent a home at the top of the market and have better tenants to select from. By doing the bare minimum, you are asking for headaches.
• The most expensive part of rental investing is vacancy and getting a home back to market ready condition. This means that proactively doing things to retain tenants is vital. The ROI increase from having new tenants every 2 years to every 3 years is huge. Many times it's as simple as ensuring that there are as few inconveniences as possible. I can't tell you how many times we have recommended our clients to allow us to install a power outlet in a kitchen or bathroom when there isn't one. When a tenant who doesn't have a place to plug a microwave, toaster, curling iron, or electric razor will move as soon as they find somewhere less inconvenient.
• The importance of inspections. Our standard practice is to do them every quarter, but our clients are allowed to have us do them less if they want. I have investors who opt for one or no inspections at all and then they are screwed when they find out that the tenant has a 100lbs pitbull that nobody knew about or that they are growing marijuana in the basement.

Robert Gilstrap · Answer

Not sure if there's enough space here to write them all but one off the top of my head:

Owners somehow thinking that the PM has generated the problem. Like we're calling tenants trying to get them to request maintenance! Think about it; more calls = more work for me; why in hell would I try and make more work for myself? Or an owner thinking I can somehow force someone to pay or act in a certain way or do a certain thing.