The Hidden Price of Property Management.
When I first started in property management I researched the standard practices, marketing, reviews and anything I could find about my soon to be competitors. Being a landlord myself for a decade already, I knew what was needed to efficiently manage and I had first hand knowledge of what my future customers needed and would be looking for. I remember hearing how much people thought a property manager would cost, “10%”, “12%” “$100 a month a unit”, “too much”. I also remember being told that property managers keep the 1st months rent after placing a tenant. It seemed like the range of numbers was oddly wide. I was considering starting a business. This would require risking every dollar I had on top of every dollar I could borrow. All the while my expenses would be rising with the hopes I could generate enough business to beat the clock before the bank balance hit $0.
Race Against Zero.
So, I added up all my expenses. Then I needed to figure out how many units I would need to sign up for management to not go bankrupt and how long I had before I would be, ha-ha. (it’s only funny now). The first number I would need is how much I would charge to manage a unit but I didn’t even have real numbers on what my competition was charging. I started visiting dozens of sites in my area. Have you ever found something you wanted to purchase online but you click on the item and the listing says, “call for price”? I have left every website I have every been on that did that and I have never once called for a price, because of that fact I was amazed to discover the reason that no one seemed to know what a property manager would cost. None of them tell you on their websites!
Priceless Property Management.
This was 2012 and to this day I still have no idea why most of my competition is “Priceless”. It would seem to me that they are looking to convert each website visitor to a phone call, during which they would have to connect with the potential client enough where they instantly became insensitive to pricing, magically convince them to agree to pay more than they wanted, or just happen to quote a price for management that was below what they expected. There are many problems with this approach that should cause alarm for property owners. Some of the bigger problems are efficiency, performance, transparency and equality,
Dialing For Dollars or Working?
I read an interesting article that said many congressmen spend more time fundraising than doing legislative work! With that thought in mind, if your property manager has no price listed on their website who answers the calls asking for the price? If they are answering calls about price, who is managing your property? It may seem like a trivial issue, trust me it is a warning sign. Property management is a very complicated business with a wide variety of tasks, variables and crucial items to address all the time. Very small inefficiencies add up and will bring a manager to capacity fast. Simple things like, additional phone calls, redundant filing techniques, communication gaps, all chip away at a manager’s ability to perform. These types of items result in less value to the client simply because the manager is not available to respond/perform as readily as one who is more efficient. This means that if a manager would rather talk to new clients than manage your property, you should look for another manager. No price should equal no purchase.
Is That The Price For Everyone?
Whenever a price is not listed I automatically feel that there is something wrong. If the price is not posted then there is an issue with transparency. Even if you call the property manager and they give you a price how can you be sure that the next caller or the previous caller didn’t get a better price than you? What is the price based on? Do you know I once called a manager and they said they had to look at the property to see “how much time it would take them to manage” before they could give the price! Wait what?! I would love to see that calculation….
When looking for a property manager I would suggest you go by the rule No Price = No Purchase. You don’t want your manager “dialing for dollars” when they could be earning their fee. You don’t want a property manager who doesn’t treat all clients fairly with standard pricing or who doesn’t know how much to charge since it is likely there are more items they “don’t know” that you don’t want to pay to find out. The price of property management should be upfront and straightforward.
Nick D'Agnillo is the CEO & Founder of 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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