3 Hidden Costs of Property Management
September 20, 2016
By Nick Mertens
VP Property Management, Atlas Real Estate Group
People are always asking me, “is property management really worth the cost and fees?” Well, that depends heavily on who your property manager is. Below I’ve outlined three main hidden costs of property management, but that when handled well, they can all be huge value add’s.
• Potential Cost – $100-$9999
• Time Factor – How long does it take to have a new tenant in the unit?
• Marketing – Is your property manager premarketing the unit so there is minimal downtime between tenants?
• Vendor Costs – Is your property manager using someone that is quality, affordable, and efficient? Does their vendor give them preferred pricing due to volume?
• Rent Rates – Are the rents they are charging in line with current market rates? If they aren’t, are they adjusting prices to meet market demand quickly rather than waiting weeks or months at a time and causing lengthy vacancy?
2. Asset Preservation and Maintenance
• Potential Cost – $10,000-$100,000
• Consistent Inspections and Evaluations – Is your property manager properly evaluating the property to maintain and/or improve its value (not just checking but documenting areas for improvement)?
• Budgeting for Larger Repairs – Is your property manager budgeting for larger repairs and anticipating the timing of expenses accurately?
• Potential Cost – $1000-$1,000,000
• Property Inspections – Is your property manager regularly checking the property to make sure it is safe, free of water/moisture penetrations, and in healthy condition?
• Preventative Actions – Is your property manager building strong customer relationships? Having strong relationships means small issues are identified early and don’t lead to big problems.
• Litigation – Did your property manager put a strong lease in place? Are they current with legal issues and fair housing laws?
• Background checks – Do you know who you’re putting in your building? Has your property manager appropriately vetted each tenant?
Biggest Value = Goal Alignment and strong short-term and long-term decision making
Ask yourself, “are my property manager’s goals aligned with my own? Is my property manager consistently giving attention to the three items listed above? Do they own their own rental-income producing properties and understand my perspective firsthand?” Experience is one of the most valuable traits an effective property manager will have.
Tags: property management
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