Many times potential clients come to me and say that they are shopping around for a property manager. I think this is not only a smart thing to do but a necessary thing to do. Property management has gotten a bad rep throughout the years because of its low entry costs. In the state of South Carolina an individual could become a property manager for under $1,000. This means that there are a lot of property management companies out there that believe it is as simple as marketing, filling the vacancy, and collecting their cut. To do this business right there is much more to it than that!
As a property manager I am charged with not only protecting you from bad tenants but also protecting you from yourself at times. For example, some people move out and leave a lawn mower, weed eater, washer and dryer, window unit, microwave, and toaster behind for the tenant to use. Most of these people are leaving it because they are buying new ones or don’t have room for them. They intend to allow the tenant to use these appliances for the meanwhile and when they break down the tenant will simply have to buy their own. Wrong. South Carolina law states that anything left in the residence is assumed to be included in the lease agreement. That means that when the washer or dryer breaks you pay to fix it or buy a new one. When the lawn mower breaks you pay to fix it or buy a new one. Same thing with the weed eater, toaster, microwave, window unit, and anything else you choose to leave for the tenant to use. Therefore, a good property manager will bring this to your attention and hence protect you from yourself. So is your property manager protecting you to the fullest extent?
A lot of clients that are shopping around also ask “how many properties do you manage?” This is a very popular question. I understand from the outside looking in how this might hold some weight in your decision. However, I want you to think about the root of your question. When somebody asks how many properties a company manages they are really trying to find out if the company is capable and knowledgeable enough to trust with their property. There is no magic number. If I told you I manage 300 properties you may think that I am good at what I do or you may think that I won’t have time for you because I’m too big. If I say that I manage 50 properties you may think that I don’t have enough experience or you may think that it’s a good thing because I will have more time for you. What about 100, 130, 200, etc? Think about this, the Ponzi scheme was named after Charles Ponzi who cheated investors out of over $20 million in a year. Did he have a lot of clients? Yes. Did that make what he was doing correct? Not at all. It goes back to the famous saying “if your friends jumped off of a bridge would you?” Does experience come with numbers? Yes. However, so do bad habits in some cases. I know of a company that has been in business for over 15 years and has over 150 properties. If you are just looking at these numbers it sounds like they’re doing everything right. However, this company isn’t running criminal or credit checks on all the people in the house. They would only run the checks on the main income holder. What does this mean to you? Well, you could have a sex offender, drug dealer, felon, or anybody living in your house. Those numbers don’t look so good anymore. It goes back to your root concern of “how will you manage my asset?”
Finally, the saying “you get what you pay for” is exactly what you get in property management. Free is not always good and good is not always free. When is the last time you received a free gift that ended up being a family heirloom? Think about this, you ask the kid down the street to mow your yard for free and the kid takes a week to mow it completely and there are sprigs sticking up everywhere when he finally did finish. Can you really complain? So when your property management company says that maintenance will be free can you really be mad when it is done late, shoddy, or isn’t recorded? Plus, is free really free? Or is it like when the car dealership says they will pay your taxes and they add it to the backend? If I have a vendor that does work for me for $20/hr and I tell the vendor to write it down on their invoice as $25/hr and then send that invoice to you, you think you are getting free maintenance. Meanwhile, I’m making $5 an hour and the whole reason you went with me was because I offer free maintenance. Some people don’t charge a leasing fee or they charge a low flat rate leasing fee which makes you think they can do the same job I do for cheaper. These same companies hand out your key to prospective tenants to go view the property themselves. Unattended. Essentially, this allows the property management company to show multiple properties at once without ever leaving the office. Why is this bad? There are currently scams on the internet where people are high jacking listings and under pricing them by $400-$500. When people call the scammers they are told that they are the home owner and that they are living too far away to show the property. They then request the prospective tenant to send them a deposit along with some general information in order to receive the keys. They may trick multiple people in to sending hundreds of dollars in “deposits”. In Arkansas I have heard of these scammers going even further by actually obtaining copies of keys to the property so that the victim can actually go view the property. Then when they go to move in there is already a family living there! How do they get these keys? Well there are a couple of ways. First, they are obviously signing out the key from these companies practicing this method and passing it off for an accomplice to make a copy. Second, maybe the property manager isn’t changing the locks after each tenant vacates. Again, you need to ask “how will you manage my asset”.
So in the end it is not simply a matter of free, experience, or convenience. It is a matter of practices lining up with law and prevention. A good property manager doesn’t just follow the law. They go above and beyond even if it means costing you a little more money. Not because they are money hungry but instead because they are trying to protect you and the tenant from lawsuits and harm.