Choosing The Right Property Manager: You Get What You Pay For
The first real estate principle we at Nexus Property Management® try to teach to our clients is the importance and value of keeping an eye on the long term. In the same way it would be counterproductive for the typical mutual fund investor to be checking and reacting to the value of his or her portfolio daily, consistently trying to cut corners to save money on your investment property can be the kiss of death. This underappreciated reality is a big part of why we recommend hiring a property manager, whether it’s us or someone else. If you’re in “Do It Yourself” mode, you’re more likely to fixate on initial prices and upfront savings that could prove costly down the road. As The Property Management Authority® we wanted to share a gentle reminder... “you get what you pay for”.
WHY HIRE A PROPERTY MANAGER IN THE FIRST PLACE?
To return to the example above, what percentage of people opt to manage their financial investments and retirement accounts themselves? We live in a country where financial advisors and accountants are commonplace for those that are serious about their investments as well as for the general population. If you’re serious about investing in real estate it makes all the sense in the world to hire an expert to help guide and build your portfolio. Although many property management companies simply act as stand-ins who collect your rent and find a third party vendor when maintenance is needed, here at Nexus we are a top to bottom real estate investment company that specializes in buyer agency services (Nvest ®) and proudly offers 24/7 in house maintenance in addition to unrivaled leasing and management services.
WHAT IS IT YOU’RE PAYING FOR?
The first thing to look at when looking at a property management company is whether or not they post their prices. If they don’t, it’s very likely they’re not consistent...which means someone else is likely getting a better rate than you are. Red flag number 1.
At Nexus, we charge 7 or 8% of collected rent for our management services (clearly stated on our website). This covers all clerical duties including bookkeeping, rent collection, inspections, and the day-to-day responsibilities that property owners don’t want to be bogged down by. For that fee our clients (and tenants) can reach us any time of day by phone or online portal. Our maintenance team is also available any time of day and because we house our own maintenance specialists, our rates come in far lower than industry averages every time. In short, we take our pricing seriously. The goal is not to charge higher rates for the (short term) goal of maximizing return on each transaction but instead to think long term and create consistent value that leads to lasting relationships and a steady stream that allows us to create win-win opportunities for property owners, tenants, and for our team as well.
BUT WHAT IF YOU CAN FIND A BETTER DEAL?
Nexus recently lost a client we’d had a relationship with for a couple years. This property owner left because he found a competitor who was charging just a 5% management fee with no other costs. This company was offering management, leasing, and maintenance services all included in that monthly fee (somehow?). As a real estate investor your instinct should tell you this sounds too good to be true. Red flag number 2.
The big question is how in the world are they paying for any responses needed? If there is a broken pipe on one of those single digit winter days, how are they covering the plumbing and clean up costs when a basement is covered in a foot of water? When a heating system goes and needs to be replaced how are they covering the necessary labor, materials, and insurance? We all know that there are things that break down over the years when you own property. Saving on that maintenance fee each month might feel good up front...but this sounds like a huge long term risk. Owning and maintaining a property simply costs money.
One of the many ways Nexus separates itself from the competition is in our vacant unit turnover services. First and foremost, when a unit is vacant, you’re not collecting rent. The goal is to get it fixed up and rent ready ASAP so your income stream can return... which takes a maintenance team. But how do you keep one and have them ready to go when you don’t charge per diem for your maintenance services? How does a company like this hire professionals that are needed to add value to your property? A proper rent ready turnover can easily cost over $2000. Small companies simply don’t have the volume or capacity to cover all of that. Something isn’t right with this math.
BACK TO BASICS: IF YOU’RE GOING TO HIRE, HIRE A PROFESSIONAL
Let’s keep it simple: Regardless of what area it is you choose to invest in, you’re smart enough to always consider and calculate risk. Up front savings and pricing gimmicks exist to take your eye away from risk and toward making unnecessarily risky decisions. If you’re not going to manage your property yourself, go ahead and do your homework with a focus on your long term goals. At Nexus Property Management ® we manage property but we specialize in real estate investment. We advise clients and outline choices that are most likely to lead to profitable outcomes in the long term.
As an investor, you always have the choice to pay less for less or lower quality services, but as Nexus Vice President of Franchise Sales Greg Rice puts it, “you’ll be vulnerable, your property will be vulnerable, and your tenants will be vulnerable”.
Mick Lefort is the Vice President of Operations for Nexus Property Management® A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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