Nine Costly Mistakes Property Managers Can Avoid Making
To find out more, we asked a panel of Forbes Real Estate Council members to share some common mistakes property managers can make, and what can be done to avoid them. Here are some things to watch out for:
1. Scaling Without Systems In Place
I see a lot of property managers that fail once they hit a certain scale because they don’t have systems in place. They get to a certain point, such as 200 doors, where they need to have solid systems and processes. If not, they fail in serving their clients. Owners start losing money and the entire business goes downhill quickly. Vet your PM and understand how they are going to deal with growth. – Noel Christopher, Renters Warehouse
2. Going With The First Tenant
You need to find the right tenant, not the first tenant. To find the right tenant, you need to attract them. Don’t keep putting off repairs and maintenance. By showing them you take pride in maintaining the property, they will treat it with respect and it will cost you less in the long run. – Sam Grooms, WhiteHaven Capital
3. Not Being Aware Of The Property’s Physical Condition And Components
This lack of awareness can result in system failures and high capital expenditures where small improvements or regular maintenance could have diverted more significant costs. Two strategies to prevent costly, preventable repairs are hiring a third-party inspector for an annual property visit and report, and to develop a system for reviewing work orders by category to see if there are any trends. – Lee Kiser, Kiser Group
4. Being Reactive Versus Proactive With Maintenance
Property managers have a tough job. They are paid to field the phone calls and the 1 a.m. maintenance requests that we, as owners, pay them to handle. The common mistake that property managers make is simply being too reactive versus proactive. Often, a small repair issue becomes a capital expenditure when it goes unresolved for months (or years). Simply said, the most common mistake is neglect. – Spencer Hilligoss, Madison Investing
5. Not Checking the Contractor’s References
A big mistake many of us make is hiring a contractor who looks great on paper. Always call a minimum of two references. The wasted time, money and inconvenience of hiring a general contractor who cannot handle the project effectively and efficiently results in frustration all around. Also, walking on the site of a previous project helps you align your styles and expectations. – Susan Leger Ferraro, Peace, Love, Happiness Real Estate
6. Imprecise Accounting Practices
It is essential for investors to be able to rely on accurate records from the property manager. Precise accounting is of the utmost importance. Reputable property managers use software to manage your accounting and will send monthly statements. – Beatrice de Jong, Open Listings (YC W15)
7. Failing To Properly Prepare A Vacant Unit
Poor property managers fail to adequately prepare your vacant unit for turnover to a new tenant. Everything should be clean, even the windows. Walls should have a uniform texture, with holes removed. If you attract a tenant that accepts an unkempt unit, then that tenant will keep it the same way. A clean unit also reduces vacancy. To attract a respectable tenant, show a respectable property. – Keith Weinhold, Get Rich Education
8. Poor Service
The rental space is a lucrative business, but poor property management can hurt you. Property managers should be mindful of falling into situations that can become costly or ruin reputations. If the tenant informs the property manager about a problem, ignoring the situation can lead to costly repairs or disgruntled renters who may leave, causing high turnover and potential vacancies. – Bobby Montagne, Walnut Street Finance
9. Installing Smart Home Tech
All too often, overeager property managers will jump at the chance to install the latest connected home devices in new apartment buildings. Hardware can get outdated quickly, and buildings rarely have the expertise in-house to solve the inevitable bugs and technical failures. Most connected devices are better suited for a savvy homeowner than an institutional multifamily developer. – Brad Hargreaves, Common
Source: forbes.com
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