- An owner has a vested interest in his property thereby being more cognitive of his return on investment and costs of operation.
- 100% of his time is focused on re-renting HIS property rather than being one of many properties being available for rent under the management company’s portfolio. Time between vacancies is minimized when the owner is not in competition with other properties being managed. The owner is able to devote more decisive attention to the new tenant selection process rather than relying on an agent that is handling many properties.
- You select maintenance vendors that are selected by bid comparisons, or referrals rather than vendors
that are selected by the management company that do not necessarily have the owner’s best interest in cost and workmanship quality, and may give compensation to the management company for work being contracted.
Traditionally, single family or small multi-unit rental properties are handled by property management companies. Unfortunately, most of these companies are not motivated to protect your interests—they do not have your “passion” regarding your investment, and are primarily motivated to sell property, offering a property management “division” as a secondary service.
Secondary services offered by primarily real estate sales companies often have conflicts of priority due to significant differences in management fees and sales commissions. Often their primary reason for having a management “division” is to hold the investor for future liquidation and the purchase of additional property. Because of these discrepancies between “selling commissions” and “property management” fees, there may be compromises in the selection of the most qualified tenant, putting the tenant placement fee of 50% of the first month’s rent in front of selecting the best qualified prospect. In addition, there is an ongoing monthly management fee that is usually 8 to10% of the monthly rent which becomes a reoccurring expense with little or no services offered other than collecting the monthly rent. Their inadequacies often cause you financial hardship. Examples of these shortcomings include:
- Long periods of vacancy from one tenant exit to new tenant residency—your property remains
another “number” in their list of available rentals.
Poor tenant selection often leads to slow or no rent payment, damage to the property, and ultimately
- Lack of response to tenant maintenance problems can cause tenant frustration with a resulting nonpayment of rent, reporting the conditions to regulatory agencies, or moving out.
- Managers that lack maintenance knowledge often fall prey to unscrupulous and unqualified vendors
who overcharge, and often do poor or shoddy work. As an incentive, they may use vendors that give “kick-back” commissions for doing work for the management company. They often do not inspect
work completed prior to the vendor payment.
- Excessive repair/maintenance expenditures without your authorization.
- Delay in enforcing timely rent payment or other monies owing – lack of follow-up in areas of partial rent payment, late fees owing, security deposits owing.
- Allowing tenant to take liberties that are in conflict with the rental agreement. (ie: automobile repair ,
interior painting, allowing room mates or other persons to reside)
- Not advising you properly of your liability exposure, and insurance needs.
It is no wonder that an increasing number of owners are managing their rental properties.
Taking control of your investment property is your responsibility… not someone else’s!