Property Management Explained: A Common Misconception Debunked Pt. 1
If this is your first time reading our blog, I’d like to welcome you and I sincerely hope you enjoy yourself. I’ve made it a personal goal this year to blog more often. Embarrassingly, I studied Literature in University, so you’d think I’d be pumping out blogs like crazy. Turns out not so much…
So, I decided to do a series of blogs about what it’s like to work at a Property Management company. I think there’s a lot of misconception about what actually goes on behind closed doors in the Property Management industry, so I think a peak behind the curtain might answer some questions (If you have any specific questions, leave a comment down at the bottom and I’ll answer or find out for you.)
I want to address one of the most persistent misconceptions about Property Management:
“Property Managers will rent my property to anyone off the street.”
Instead of just telling you this isn’t true, I’ll explain why it would be suicide for us to operate that way.
The fact is this, we simply do not have the time to deal with poor quality tenants in the ~900 properties that we manage.
Just throwing whoever we find into a property, without doing our due diligence in looking into them, is almost guaranteed to cause a headache somewhere down the road. This kind of negligent management can result in missing rent, major repair costs, a hoarder, and all kinds of awful stuff. In the end costing us more time, effort, and money, and likely resulting in the owner terminating our management contract.
It is far more worth it for us to put in the time and effort up front to make sure we place the perfect tenant in the property in question. One who will pay their rent on time, take care of the property, stay long term, and report any maintenance issues to us. (Basically, the same kind of tenant any rental property owner would want!)
Here’s the truth; Property Management (done right) is a lot of effort for little to no initial gain. The only way this works is if the company has a large portfolio (of properties leased by quality, long term, tenants) under their belt.
There is a lot of manpower that goes into each department, which I will explain in Part 2 of this post, and at the end of the day we charge a small percentage of the rent each month per property. So placing quality tenants, as described above, is the only way Property Management companies make a living. This is why we are typically far more strict when it comes to our screening process.
Quality tenants are what make Property Management possible because, apart from when we go in for annual inspections and minor maintenance requests, we rarely hear from them. They allow us to perform the daily tasks that keep the machine running.
And to be honest, this is the case for the majority of our portfolio. (It’s the 5% that cause 90% of the difficulty)
However, that’s a subject for another day.
If you want to know more about a part of the Property Management industry, leave a comment below and I’ll find out for you and write an article!