Why Most Single Family Property Managers Suck
Common Complaints
Whether they're a real estate agent/broker providing property management services part-time or have grown large enough to focus exclusively on providing single family property management services, the common problems usually include the following:
Insufficient value provided. Most single family property managers charge 50% to 100% of the first month’s rent for leasing services (to locate a qualified tenant) and 8% of all gross rents for ongoing property management services. Property management services usually include managing tenant move-ins, turnover, contractors, and any/all tenant interaction. They also may charge extra for project management or evictions. Based on my experience, the most critical item is locating a qualified tenant. However, because property managers get paid regardless of the type of tenant that leases the rental home, they generally make more when problems occur. So it’s not necessarily in the property manager’s best interest to locate the best quality tenant, but an okay tenant that might be close, but doesn't quite meet the qualifications. Accepting a less than qualified tenant to rent your property will open you up to all sorts of potential problems like late or missed rents, significant property damage, and possibly eviction proceedings.
Padding contractor charges. Though I’d rather not generalize, I am qualified to say that many property managers pad contractor estimates in order to make extra income when managing investor properties. They may do this because either (1) they are just plain greedy and they can, (2) they don’t feel they’re generating sufficient fees to justify their property management business, or for a variety of other reasons. If you're not getting a bill from their 3rd party vendor you're getting screwed! Remember, these types of property managers make more money off of a BAD tenant than a GOOD tenant. Someone needs to pay for their maintenance managers salary and that person is YOU.
Poor service quality. Slow or completely non-responsive to tenant repair requests. If property management is their main business, property managers will likely be managing over 100 rentals in order to generate sufficient income to make it a viable business. Being responsive to requests and providing a high quality of customer service is quite difficult when you’re managing over 100 different properties and tenants and the income generally isn't great enough to enable the property manager to hire additional personnel.
Poor training. Most of a property managers staff is hired based on some basic skills but mainly because they fit their budget. $10 - $12 per hour is a 'You get what you pay for' scenario. They're not trained well and are regarded as 'minions'. So if you're losing money off of your investment property, this would be the reason.
Getting your rental disbursements late? Ahh, the property managers 'cash flow' dream. Tenant pays rent by the 4th, owner sees a check after the 20th. Unless they deposited this check via a pigeon, there is NO reason for this delay other than cash flow problems or basic laziness.
Why is property management of single family rentals such a difficult business? There are several reasons for the poor service quality. It’s usually not their main business. Most are real estate agents or brokers managing single family rentals do so part-time. It’s not their main business because they (1) tend to generating more fees from transactions (representing buyers and/or sellers) or (2) they do not manage enough properties to generate sufficient income to live on. For these reasons, the majority of individuals, usually real estate agents/brokers, who decide to start a property management business usually give up or go bankrupt.
Many of the problems may be alleviated by requiring property managers to be certified and have other credentials before they are allowed to provide property management services. The lack of required education and certifications enables anyone to hang a shingle and begin providing services even though they are not qualified to do so. Requiring additional certifications and educational requirements would help add credibility to the property management field. A real estate license isn't enough nor is a brokers license. Both just qualify you to do business, it doesn't give any type of merit as to knowing what the hell they're doing.
If your manager is not producing, kick them to the curb and find someone that will. And find a manager that doesn't charge a termination fee. If you're already tied to a property manager that sucks and you have a hefty termination fee it may just be the best money you ever spent to get rid of them before you really get taken to the cleaners.
Okay so that's the ranting part. Now, ALL PROPERTY MANAGERS DON'T FALL INTO THIS CATEGORY. There are some out there that are well qualified and are good at what they do. The trick is to weed out the bad apples. Ask questions before committing. How many years of experience is always a good start. Credentials should be your second question. And always ask to have direct access with the Broker. An absentee Broker makes for an absentee staff.
Good luck.
(Jon Strishak -2014)
HomeQwest Realty Group has over 40 years successful experience managing various types of properties. Along the way we have worked closely with many professionals building relationships and exchanging knowledge.
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