Hiring a property manager that also does renovations/repairs.

[Greg Gangle]

Curious if the property manager takes advantage of clients for up selling in repairs/renos. Obviously it’s handy to have the experience of the property manager but wondering if it’s a good idea overall or repairs/renos should be with a third party. Thanks !!

[Jim K.]

@Greg Gangle

Here's my take on it, Greg, from the perspective of a small handyman investor who manages his own high-maintenance C-class properties and does most of his own repairs.

First, when it comes to contractors:

Let's say you manage a portfolio of 25 rentals and own six on the side yourself. You call the same HVAC company each time a furnace goes out in your managed rentals.

When it's time for one of your six rentals to get a furnace replacement, after throwing so much business this guy's way, you can expect to get a discount.

Second, when it comes to the in-house handymen of your own property management business:

Assume, again, you manage 25 and own six. Every time you send your in-house handyman out for a job on the managed properties, he buys just a few more common building materials than he need for a repair job: an extra bag of ready-mix concrete, an extra box of drywall screws, an extra sheet of drywall, four or five extra pieces of dimensional lumber, extra gallon of paint. When it comes time for the handyman to work on YOUR six properties, you can expect that many of the materials to the complete whatever repair needs to be done will already be in your work shed.

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I simply could not imagine running a property management business and not doing this. But I am, by most accounts, a slumlord. Nobody in a very long time has accused me of being as pure as the virgin snow. Consequently, I don't imagine there are many property managers out there who don't have a shed or a garage full of building materials for use on their own properties that someone else paid for, and a contractor or two in their back pocket willing to do them a kickback favor or two.

Is this slimy? Sure. But on the other hand, the concentrated volume and experience of the property manager gives you a much larger probability of getting a good contractor or handyman repair on your managed property than trying to get it done alone, with just one property. I'm sure many property managers justify their garages and sheds and kickbacks to themselves that way.