the-abcs-of-real-estate-investing-ken LifeFeeling

What this amusing story communicates is all too true: that property managers are at the
mercy of the property owners. And as a property owner you may feel pretty powerful. But
don’t abuse this power. Choose wisely in the first place, treat each other with respect, and
stick with your property management partner. They in turn will reward you with a high
level of service and the returns you are looking for. Turning your property into a revolving
door of property managers is not only inefficient, it will undermine your success. Look for
the long-term relationship that builds momentum and profits.
But as a property owner, you have to recognize when a property management company
should be fired. These are the things I won’t tolerate when it comes to property
management:
• A company that doesn’t assume a partner mentality and doesn’t communicate to the
property owner things like market conditions that affect supply and demand.
• A company that neglects the physical condition of the property. If the property
manager sees a piece of litter on the ground, he or she should not step over it.
• A company that has high employee turnover in any area; this makes building a
relationship difficult.
• A company that has inconsistent or incomplete reporting.
Those are valid reasons to fire your property management company. I like to set the
expectation level from the very beginning, right in the management agreement. Then I
discuss it with the company. Many of these expectations are regulated state by state so be
aware of your state laws and do not accept any service below government standards. On the
flip side, you do need to have realistic expectations. If you paid too much for the property
and expect the property manager to perform miracles and bail you out, you will be
disappointed.
While I may be a bit biased about property managers and the high level of service that a
very good property manager can deliver, I can relate to those owners and investors who
believe that property management is easy and anyone can do it. I can relate to them because
these are the owners who are the focus of my property acquisitions. Invariably, properties
managed by owners are full of income-generating potential because the owners just are not
experienced or interested enough to manage the property right. They are prime acquisition
targets.
The Domino Effect
Property management can be characterized as a whole bunch of small decisions. Make
the right choices all along the way, and the road can be smooth. But make the wrong
choices take shortcuts, burn bridges, anger residents, or rip off service providers and your
challenges will be greater. You can choose to take the right path, or take the wrong path, the
choice is yours. But if you chose the latter, your one bad choice can have far-reaching
effects. It’s like a domino effect and here are some examples of what I mean: