Should Your Property Manager Be Paying Your Bills For You?

MANAGING RECURRING BILL PAYMENTS IS NOT THE BEST USE OF YOUR PROPERTY MANAGER’S TIME OR RESOURCES

Call me old-fashioned, but I still prefer to go see my doctor when I’m feeling sick. I could go online and attempt to self-diagnose and try some things that Google Search has curated for me, but when it comes to my health, I prefer to invest in working with an expert. Living my healthiest life seems worth the time and expense. When it comes to my investment properties, I take the same approach. Hiring a reputable property manager gives owners the best chance of getting the most value out of their multi-family or single-family rentals.

With that being said, when I go to see my doctor, I really hope I’m not sitting in a waiting room while he’s manning the front desk fielding phone calls and scheduling appointments. That’s not an appropriate use of his talents and know-how and I’m not receiving the value I signed up for. The same holds true if you hire a property manager who offers to pay your recurring bills for you. These are things that can easily be automated. Your 16 year old could set this up for you in exchange for being able to sleep out on Friday…you should not pay a professional for such a simple service…and if your property manager does offer this, you know they’re not maximizing value for their customers.

MORE ON RECURRING BILLS

Recurring bills are any payments that are set to a monthly or quarterly schedule. These include mortgages, taxes, insurance, water bills, sewer bills, and any other set periodic costs tied to the building. A quality property manager won’t pay these for you, but instead will tell you to set up auto-payments. If your manager is paying your bills then they’re likely paying all their other clients’ bills, which means they’re not spending their time efficiently in terms of servicing your physical property and increasing the value of your assets. If you have maintenance bills or construction bills or you owe the town because the fire marshall had to come out for an inspection, your property manager should be helping you out with those issues. Those are directly tied to the property and are not likely something you can plan for. But if you’re paying someone to do what a computer can do for you, you’re wasting your money. A good property manager does their best to keep you from wasting your money.

LEARN MORE: IS YOUR PROPERTY MANAGER MAKING MONEY “WITH YOU” OR “FROM YOU”???

TWO SEPARATE ROLES

Yes, the best reason to hire a property manager is to allow yourself greater free time while enjoying passive income accumulation. You’re hiring a professional to help your money make money…but you can’t take your hands off the wheel entirely. The property manager is meant to manage the property and the occupants and the maintenance. They handle the day-to-day, the surprises, and they work hard to iron out these conflicts swiftly and affordably as they arise. They should operate with an eye toward providing solutions to current obstacles while keeping an eye on long term goals and value creation. You, as the owner, are in charge of managing the expenses. For recurring bills, you need them set up in your name and then you can easily set them to auto-payment so your manager can do what they’re best at and what you’re ultimately paying them for.

LEARN MORE: BEST PRACTICES: CONSISTENCY FOR ALL CUSTOMERS

ONE OTHER CONCERN

There’s one more piece to this equation that hasn’t been brought up yet. Any failure to pay these recurring bills could be ruinous and cost you thousands to tens of thousands of dollars. If you opt to put the responsibility of paying your mortgage into someone else’s hands, and they fail to deliver month after month after month, you could easily end up in a position where you end up losing the property. When it comes to expenses of this magnitude and importance, you really want your own finger on that button. And…what if your rental units are vacant and there’s no money coming in and no money in your account? Is the expectation that the property manager will lend the money and pay anyway? That situation could get very ugly for all parties. The goal is to decrease conflict whenever possible…this arrangement has the potential to do the opposite.

LEARN MORE: TO HIRE THE BEST PROPERTY MANAGER, FIND A SPECIALIST, NOT A JACK OF ALL TRADES

NEXT STEPS

Most property management fee structures are pretty similar, so it makes sense for customers/investors to try to get the most bang for their buck. If a property manager offers additional services like recurring bill payment, it might feel like a greater value, but it’s not. Kids like to go to family restaurants on their birthdays where all the waitstaff come out and sing a silly birthday song, bang on some pots and pans, and leave some free ice cream or cake in their wake. It’s a story that feels good and makes people smile. But it’s not the model if you’re looking for better value. You want to work with a company that values the specialization of their employees and puts them in positions to create the greatest value for clients. A doctor scheduling appointments is not great value. A waiter singing is not great value. And a property manager paying recurring bills, is not great value either. If your property manager, or a property manager you’re thinking of hiring offers these services, it’s likely a sign that they’re the Applebee’s or TGI Fridays of the industry.

LEARN MORE: BOOKMAKING AND RECORD-KEEPING CAN MAKE OR BREAK YOUR INVESTMENT CAREER

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Mick Lefort is the General Manager of Nexus' New Haven County Franchise Office and 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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