Complete Guide to Components of Property Management

To expand on my previous blog post I would like to concentrate on a few of the consumer and industry changes in the Property Management Business. As the proprietor in a management business for more than 17 years, I’ve got two business models to choose from that I have two of: 1)) full service, and 2)) lesser than complete service. Let me explain. The first is the classic PM model, which covers all of the above (soup up to nuts) which is just as easy as receiving the monthly “mailbox check” for the owner…which is now , naturally, the monthly H payment to the bank of choice. The list of traditional PM services typically includes:

· Rent

· Collection

· Tracking

· Late Fees

· Tenant Receipts

· Rent Increases

· Maintenance

· Trusted & Vetted Vendor Pool/List

· Maintenance Requests (emails text messages, calls Online)

· Coordinate Vendors

· Bids

· Quality Control

· Facilitate Access

· Troubleshooting

· Leasing

· Phone Calls

· Marketing/Advertising

· Showings

· Draft/Execute Lease Package

· Walk Through (Move In & Move Out)

· Screening (criminal, credit, eviction, references, etc.)

· Admin

· Pay All Property & LL Bills

· File and Record Storage

· Bookkeeping & Trust Accounting

· Financial Reporting

· Online PM Software (Tenant & Owner Portals)

· Annual Vendor 1099’s

· Legal Tenant Notices

· Site Visits

· Photography

· Phone Calls (Business Hours & 24/7 Emergency)

· Security Deposit Dispositions

· Local, State & Federal Compliance (Code Enf., LL/T Laws, Fair Housing, etc.)

· Section 8 — Housing Authority

· Owner Consultations (calls, texts, emails, etc.)

It is not an exhaustive checklist, yet it does provide at the very least a base schedule of PM services that are available daily. Based on the state you reside in and area, an LL is likely to look at paying a between 8 and 10% of the rents they receive to cover the full management of the company. So, if the rent is $1500 per month and the LL is likely to be paying the PM as much as $150 per month. Note: When selecting a PM, it is important that you must always ask about the services included in the monthly cost, but be sure to inquire about the additional services that may not be covered and are will require an additional price sheet. Hidden charges can be costly and at the close of the year, your management fee could hurt your bottom line.

There are also a number of value-added or additional services (legal and transactional.) that a reputable management company might be able offer but that’s something for another blog. For the DIY-er many property owners try to increase their cash flow by managing their Investment Property. For those with full-time jobs with little interest in garbage, tenants and toilets is a lot of stressful and time-consuming. However, many people do this successfully, and it can be a fantastic option to increase your returns If you’re willing to consider it an opportunity to earn “active” income rather than passive.

There is a third option that has emerged on the market, and it is more of a hybrid approach. In the past 17 years working in this field (as with other industries) I’ve observed two major shifts: 1)) technological advancements; and secondly) in expectations from consumers. This first one is illustrated by online tools like management software screening, screening maintenance coordination, rent collection as well as electronic signatures, bookkeeping as well as other. The second is the capacity and willingness for some investment firms to search for and acquire properties by themselves. My argument is My belief is that and is my personal experience that an individual who is DIY LL will be spending each month a sum equal to or more than what the cost of a hybrid service is. It is a Hybrid Model simply providing all of the components of a full service but not the ones that require physically present at your property (ie. visit the property for scheduled showings or walk-throughs, as well as on-site quality inspections).

The main question is what value is your time? The actual cost could surpass or match the cost of this hybrid solution, however when you consider the value of your time, the decision is simple. I’m hoping that this article will trigger an additional discussion, and perhaps some constructive comments of DIY property owners who’ve had success running their homes on their own. I look forward to getting feedback from you with your own perspective or personal experience regarding this subject.

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