When it comes to PMs, what is more important, price or service?

Question

Say you are looking at 2 different property managers. One will charge you 5% monthly and 50% for tenant placement. But then you have another one who will charge you 10% monthly and 75-100% placement.

1. Will you find out more to see what kind of services they offer, or will you automatically be drawn to the cheaper one?

2. You find out that the cheaper one gives average service, is completely reactive though. If its not broke, why fix it? The higher priced one however, focuses on preventative maintenance to keep your property in top condition and a lot of that maintenance is worked into the price. What is more important, only spending money when something breaks, or spending money upfront to keep everything in good working condition?

3. How important is an owner portal to you? Do you sign in and see what is going on with your property (assuming your PM is keeping it updated)? Or do you still call or email the PM directly to get an update? If there was a portal offered, how often would you check in? (BTW, the cheaper PM doesn't offer a portal).

4. Would you rather have a PM that does the regular maintenance stuff like change the furnace filter and clean out the gutters and be charged a little extra (included in your regular fees), or rely on the tenant to take care of those things?

Ok, I have a million more questions, but we'll start with those. TIA!!

Dave G. · Answer

Here's my overarching answer to your questions - you can't tell by price alone what the service will be like.

You have to meet with the PMs, interview them, gauge their intellect & communication skills and hear them describe how they will perform their services for you as the customer. Even after doing that, you can't be sure how they will really turn out. The "cheaper" PM may actually wind up costing you significantly more in the end due to poor tenant selection, excessive vacancies and maintenance costs, etc.

Last year I fired my PM of ~6 years and could not decide between 2 new PMs that were soliciting service to me. So I "dual-sourced" and hired them both. I divided up my properties and gave 1/2 to one PM and the rest to the other. I let them both know I was doing this and they were competing for all of my business. By the end of the year the choice was clear and I moved all my properties to the winner.

Account Closed · Answer

Yes

Rob Myers · Answer

From what I have seen, pricing of services in an urban market is a lot closer than the example you gave above. Regardless, there is a difference and one should investigate what they are truly getting for the services hired.

For me, it's all about communication. I started off with a large PM firm where I was one of over 250 owners. I didn't get a lot of personal attention, feedback on potential tenants, and repairs were handled with a "corporate" approach without a lot of personal judgment call from the PM. Now, I'm working with a smaller PM that still has many of the services of the large PM firm, but I get better communication on items important to me such as reviewing applications of potential tenants, approach to repairs, more feedback on property condition, etc. I'm willing to pay a little more for the personal attention if it helps me obtain better tenants and keeps my properties in better shape.

Ryan Murdock · Answer

@Robin Lewis I'd be skeptical of any maintenance item "worked into the price". Be clear on exactly what that gets you. Most always maintenance is billed in addition to monthly mgmnt fees.

Owner portal - yes. It'll allow you to keep tabs on your financials any place at any time. It also lessens the burden on the management company walking you through the numbers every time you have a simple question. Let them focus their efforts elsewhere.

Ask for and contact the references for each company you are considering. There are pro's and con's to all of the topics you pointed out and a ton of room for subjectivity when handling them. Talk to other property owners to get a sense for which company is best aligned with your goals.

When it comes to PMs, what is more important, price or service?

When it comes to PMs, what is more important, price or service?

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