A property manager told me his owners are worse than his tenants. Is he wrong?

Question

I've been talking to property managers for a few weeks, mostly smaller shops. I assumed tenants would be the worst part of the job. Every one of them said tenants are manageable - it's the owners that wear them down.

One gets the same question three weeks after the fact about a repair he already handled. Another said monthly reporting eats more of his week than anyone realizes. A third was blunt: the experienced investors are easy, and the hardest ones are the people with one or two doors who want to argue about every $300 invoice.

So, owners - they're basically saying you're the problem. Fair?

Shiloh Lundahl · Answer

@Shai Zisman it is not the owners that is the problem. It is the lack of alignment of goals. The owner wants to minimize costs (including property management fees) and maximize profits. The property manager wants to maximize their profit and minimize their costs too. But maximizing the property manager's profits often means lessening the owner's profits.

What I find that works better than a property manager is finding a great project manager/personal assistant. But it only becomes worth it at scale meaning it only becomes cost effective when you have portfolio of 10 or more properties and that would only be part time. One thing that is great about this is that you have aligned goals. Your priority becomes the priority of your assistant. You both have the goal to maximize your profits.

Chris Seveney · Answer

I can believe this, as many owners think it is the property manager's problem if a tenant destroys the unit or heavy winds knock a tree down, which causes a roof fix or the 20-year-old HVAC system to clunk out. Now I have worked with some property managers who are the worst of the worst and do not respond to tickets or fix things and overcharge for everything. There are also a lot of owners who will go on the cheap and not want to fix things right so when it consistently breaks they blame the property manager

Drew Sygit · Answer

What about owners that expect their PMC to "play bank" and loan them money for repairs and take it out of future rents?

Pretty much illegal in most states.

Jay Hinrichs · Answer

U bet  I have seen this many times..  beginner investors are lazer focus on their one or two deals and want to micro manage.  WE see it in the forums were an investor will make a post about a 200 or 400 dollar item like its the end of the world.

Also keep in mind those that can afford to buy rentals generally if they are buying starter rentals  have a completely different life experience than a life long renter or section 8 renter.  They have no clue on how that part of society lives and gets through a typical month financially speaking.

I mean they live in their homes and the vast majority I doubt have to change out their carpets in one year of living in their home or have pest and rodent problems within 3 months of living there or clog the plumbing up by flushing stuff we know not to flush etc etc.

In addition on the PM side if they are of any size 500 or more doors there is not time in the day to physically view each of these homes they just have to react to tenants repair e mails or calls etc. Some PM's do charge for quarterly visits I would be interested to know of PM's on this site if they do that and how many folks actually will pay for it.. you know dont want to mess up your spreadsheet return by spending money that was not allocated when you made the investment.

Depending on Neighborhood owners have no clue how much risk they take on for having a turn over and a vacant house.. get stubborn with tenant and PM tenant leaves and now you are vacant  a target and have a turnover.  we see people on this site have a fit because the tenant did not pay their 50 dollar co pay and others go to right to evict the bad tenant..  Then proceed to have a turn over a few months of vacancy and your condenser unit gets stolen.

Drew Sygit · Answer

Jay, recent PMC industry survey of property owners states many owners would pay for additional property inspections.

We poll our clients quarterly and VERY few take us up on it:(

You are mostly correct about owners.

• Newbies take up a LOT of time because we have to explain ALL the basics to them - and then, even though we also put it in writing, they don't remember in 4 months and expect us to spoon-feed them again because they're too lazy to go read what we put in writing previously.
• DIY investors handing off their "babies" don't trust anyone to handle them like they did. This is despite the fact their tenants are usually problematic and are actually wagging the dog.
• Experienced investors switching PMCs are the easiest, if they truly appreciate what great management looks like and correspondingly costs.

Newbies take up a LOT of time because we have to explain ALL the basics to them - and then, even though we also put it in writing, they don't remember in 4 months and expect us to spoon-feed them again because they're too lazy to go read what we put in writing previously.

DIY investors handing off their "babies" don't trust anyone to handle them like they did. This is despite the fact their tenants are usually problematic and are actually wagging the dog.

Experienced investors switching PMCs are the easiest, if they truly appreciate what great management looks like and correspondingly costs.

•

Adam S. · Answer

We have a landlord who owns a 2 million dollar home in an Upper Crest area of New Jersey.  He's a "venture capitalist".  He's got to be the cheapest person I ever met.  We are nursing a AC system from the early 80s because he doesn't want to replace it.  It's caused to ceiling leaks, which he's spend around 3.5k to repair.  Sometimes, one cannot argue with cheapness.

Marcus Auerbach · Answer

100%.

Replace a light bulb for $200 and you will get an angry phone call. Nobody cares that you had to send out a qualified repair person with benefits and PTO  fully loaded with FICA at $65/hr across town with a 65k company vehicle just to find out its not a standard E26 base but a E17 and he had to drive to a store to find one, then the tenant was in the shower, so he had to wait and the whole thing took almost an entire afternoon.

The owner only knows a light bulb is $2 and he could have done it after work.

James Wise · Answer

Definitely. The reality of the real eatate business is thar large percentage of people who come on this site, and or invest in a rental property, are not built for this business, or any business really.

Eduardo Cavasotti · Answer

Not wrong, but it's not really an attitude problem either. The owners fighting every $300 invoice usually don't have a way to independently check it, so pushing back is the only tool they've got. The ones who've built a habit of tying every charge back to an actual invoice or bank line rarely argue, they either see the number holds up or catch the one that doesn't and move on.

Richard F. · Answer

The biggest reason SOME owners can be a PITA, is quite simply they did not take the time to read their management agreement, or inquire about routine, yet critical processes. They did not previously look at, and get an understanding of, typical monthly financial reports that legit PM's provide. Even worse, they don't bother to study their monthly reports once they are under management. They act so shocked, and so indignant, when they find out about an expenditure months after the fact, that was quite necessary, and competitively priced when compared to other licensed and insured vendors rates.

They fail to consider the fact that they, or their prior PM, placed the low-life tenants that trashed the place and left in the middle of the night once they figured out the new PM wasn't falling for their excuses or playing games with them.

They fail to consider that they bought a marginal property, slapped some paint on it over the weekend, and called it "Ready to Rent" without checking actual functionality, safety, or spending much time cleaning. After all, tenants should be thrilled...no, make that grateful, to rent such a nice home!

Sorry, but I laugh at posts by obviously confident "investors" or "managers" that don't even have a dozen units under their belt, but clearly believe they are "experienced".  I hate to burst your bubble, but you are still in kindergarten, and have many years of learning ahead. Some years will be costly, some will be painful, and much will be "a total surprise", but you will learn something new about this business continually, even after you finally hang up the keys. But, only if you open your eyes and ears.

A property manager told me his owners are worse than his tenants. Is he wrong?

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