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At my company, we simply fix it. Owners are not involved at all. Other PMs over-involve their owners and the service level suffers due to the delays and too many Chiefs.
Steve
Without self promoting yourself. What does your company charge to manage, and by "fixing it" yourself with owner getting involved. You mean that you bill the owner or do you cover these costs?
Without self promoting yourself. What does your company charge to manage, and by "fixing it" yourself with owner getting involved. You mean that you bill the owner or do you cover these costs?
Most property managers operate the same or very similar in the accounting, but we vary wildly on the level of owner involvement and authority under which we operate.
There will be a reserve account held by the PM (ours is $500, many are only $250), and there will be a pre-authorized repair limit written into the management agreement. The "Repair Cap" is an amount up to which the PM can unilaterally make the repair with no owner involvement at all. Bills are paid from the owner account reserves/rent and appear on the monthly owner statement as an expense. And that's when the owner/landlord learns of the repair and its cost.
However, many PMs use horrible Cloud PM Software (AppFolio, PropertyWare, Buildium - all lousy accounting platforms) that pings and dings the owner with an alert every time something happens. Tenant submits a repair, owner is notified. Vendor is dispatched, owner is notified. Invoice is posted, owner is notified and can see the invoice in their "portal", and start asking questions.
I preach and teach that this is an absurd, terrible way to run a Property Management company as a Fiduciary for the Landlord. The constant alerts trigger over-involvement by owners, most of whom are "accidental" or "inexperienced" landlords, and therefore the worst people to have involved in important decision-making, but they are in a way "invited" to observe what's going on by over-informing them, and most cannot resist become anxious, worried, and want to start trying to control things. It goes downhill from there.
I'm an outlier in how I run things. None of my owners are involved in anything, for the most part. The Repair Cap is amended to say "HVAC, Plumbing or roof leaks, or any 'no choice' condition is exempt from the repair cap at Broker's sole discretion". This is discussed at the outset, I get buy in, and we make sure it's a good fit for a Landlord who wants to be hands off, out of the loop, and have everything handled turnkey for them.
So then, if you're my tenant, and it is one of the 17 days last July that was over 100 degrees in Austin. And the A/C has stopped working, and my A/C tech calls from the property and tells me it's a coil leak, unfixable, and the older system is a goner, I tell him to 'swap it out'. No delay, no owner involvement.
That's generally a $4,800 to $6,500 repair if it's a full system replacement, depending on tonnage, and the repair is initiated and completed before the owner knows anything about it.
If you are the tenant in that property, and it's one of the 17 days that were over 100 degrees in Austin last July, you have cool air again by the next day, or three days max. Usually next day though.
Other PMs would seek approval from the Landlord. Who may want "three bids". Then he may want to go with the cheapest bid, or keep looking for someone who can tell him what he wants to hear, that it can be repaired instead of replaced (we do not repair older R22 systems once the coolant leaks, we replace the entire system).
Meanwhile, if you are the tenant, it's been 5 days, you have a small baby, and all you're hearing from the PM Company is BS excuses about waiting for the owner to approve a bid.
That owner-involved scenario is unacceptable to me. So my clients all buy in to, and agree that they want efficient, fast, sensible repairs done to the property without delay.
I routinely see on my PM forums instances of tenants going without A/C 5 to 10 days while PMs go through this circus of decision-making. It's a really bad way to run the operation, and it's not good service to the tenants, who are the most valuable asset a Landlord has. Then the PMs complain about their 2.2 Yelp score and seem blind to the fact that they do in fact deliver lousy service because they are afraid to make decisions and be in control of the outcomes.
I'm not taking new business at this time, so this isn't self-promotion. Just an overview of how I do things and why.
Last edited by austin-steve; 06-06-2019 at 10:51 AM..
Reason: typos
steve....that was danged informative !
Apparently, the owner of the home next to us has a "don't ask, don't tell, don't do nuthin' " policy as I fully expect their fence to be flat on the ground after another storm or two...and I'm surprised the gate that hangs by one screw in one hinge hasn't flown down the street by now.
At least if they have to replace then entire fence, we have a small chance that the pickets will be of consistent size and color .
My grandmother would say about the three quite-capable guys who rent there: "They wouldn't hit a lick at a snake!"
Everyone is ignorant on so many topics, including you. Some of those areas are your dunning-kruger achilles heel.
If you recognize that you are also ignorant, then you can be much more tolerant of the ignorance of others.
That varies. Being ignorant, apathetic and selfish when common sense should prevail is disturbing and keeps me from really liking humans.
Now, I do not work on engines or perform surgeries, so I am ignorant and okay there.
That varies. Being ignorant, apathetic and selfish when common sense should prevail is disturbing and keeps me from really liking humans.
Now, I do not work on engines or perform surgeries, so I am ignorant and okay there.
there is no such thing as "common sense". People who use that phrase are really saying "agree with me without any evidence".
Every person is optimizing for their particular situation, not yours. Much of the disagreement in the world comes from mismatched priorities.
Most property managers operate the same or very similar in the accounting, but we vary wildly on the level of owner involvement and authority under which we operate.
There will be a reserve account held by the PM (ours is $500, many are only $250), and there will be a pre-authorized repair limit written into the management agreement. The "Repair Cap" is an amount up to which the PM can unilaterally make the repair with no owner involvement at all. Bills are paid from the owner account reserves/rent and appear on the monthly owner statement as an expense. And that's when the owner/landlord learns of the repair and its cost.
However, many PMs use horrible Cloud PM Software (AppFolio, PropertyWare, Buildium - all lousy accounting platforms) that pings and dings the owner with an alert every time something happens. Tenant submits a repair, owner is notified. Vendor is dispatched, owner is notified. Invoice is posted, owner is notified and can see the invoice in their "portal", and start asking questions.
I preach and teach that this is an absurd, terrible way to run a Property Management company as a Fiduciary for the Landlord. The constant alerts trigger over-involvement by owners, most of whom are "accidental" or "inexperienced" landlords, and therefore the worst people to have involved in important decision-making, but they are in a way "invited" to observe what's going on by over-informing them, and most cannot resist become anxious, worried, and want to start trying to control things. It goes downhill from there.
I'm an outlier in how I run things. None of my owners are involved in anything, for the most part. The Repair Cap is amended to say "HVAC, Plumbing or roof leaks, or any 'no choice' condition is exempt from the repair cap at Broker's sole discretion". This is discussed at the outset, I get buy in, and we make sure it's a good fit for a Landlord who wants to be hands off, out of the loop, and have everything handled turnkey for them.
So then, if you're my tenant, and it is one of the 17 days last July that was over 100 degrees in Austin. And the A/C has stopped working, and my A/C tech calls from the property and tells me it's a coil leak, unfixable, and the older system is a goner, I tell him to 'swap it out'. No delay, no owner involvement.
That's generally a $4,800 to $6,500 repair if it's a full system replacement, depending on tonnage, and the repair is initiated and completed before the owner knows anything about it.
If you are the tenant in that property, and it's one of the 17 days that were over 100 degrees in Austin last July, you have cool air again by the next day, or three days max. Usually next day though.
Other PMs would seek approval from the Landlord. Who may want "three bids". Then he may want to go with the cheapest bid, or keep looking for someone who can tell him what he wants to hear, that it can be repaired instead of replaced (we do not repair older R22 systems once the coolant leaks, we replace the entire system).
Meanwhile, if you are the tenant, it's been 5 days, you have a small baby, and all you're hearing from the PM Company is BS excuses about waiting for the owner to approve a bid.
That owner-involved scenario is unacceptable to me. So my clients all buy in to, and agree that they want efficient, fast, sensible repairs done to the property without delay.
I routinely see on my PM forums instances of tenants going without A/C 5 to 10 days while PMs go through this circus of decision-making. It's a really bad way to run the operation, and it's not good service to the tenants, who are the most valuable asset a Landlord has. Then the PMs complain about their 2.2 Yelp score and seem blind to the fact that they do in fact deliver lousy service because they are afraid to make decisions and be in control of the outcomes.
I'm not taking new business at this time, so this isn't self-promotion. Just an overview of how I do things and why.
A very intelligent post and hard to imagine anyone not hiring a property manager with the points you've made..
A very intelligent post and hard to imagine anyone not hiring a property manager with the points you've made..
Ha, thanks. I actually get invited around to speak at Local Property Management Chapters to teach the concept. It's called "Who's In Charge?" Last year in Tampa, Denver, Raleigh and Seattle. Also at the National Convention in Las Vegas.
You would not believe the pushback and abject disbelief I get when presenting and explaining the operational philosophy. PMs argue with me ...
PMs: "but it's the owner's property, their choice".
Me: "No it isn't. That decision-making power has been delegated to me within the PMA".
Them: "How can you just do that ... with no Notice just swap out a water heater?"
Me: "How can you just do that .. leaving your tenant without hot water or A/C or heat while you goto the owner asking if it's ok to fix something? For me, it's pre-approved in the Management Agreement, so Notice has been given, and it simply gets done".
I differentiate between the "Authorized Fiduciary" vs the "Subordinate Functionary". The former is empowered and pre-authorized to get things done as needed. The latter is disempowered and seeks permission before doing just about anything, even the most menial repairs.
The vast majority on PMS, and I know hundreds of them all over the country, have a Subordinate Functionary mindset and operate from a place of fear, afraid that any decision they make will be disapproved of by their over-involved client, so always involving the owner to get permission. Meanwhile, the level of maintenance and repair service suffers due to delays and wasted time.
Ha, thanks. I actually get invited around to speak at Local Property Management Chapters to teach the concept. It's called "Who's In Charge?" Last year in Tampa, Denver, Raleigh and Seattle. Also at the National Convention in Las Vegas.
You would not believe the pushback and abject disbelief I get when presenting and explaining the operational philosophy. PMs argue with me ...
PMs: "but it's the owner's property, their choice".
Me: "No it isn't. That decision-making power has been delegated to me within the PMA".
Them: "How can you just do that ... with no Notice just swap out a water heater?"
Me: "How can you just do that .. leaving your tenant without hot water or A/C or heat while you goto the owner asking if it's ok to fix something? For me, it's pre-approved in the Management Agreement, so Notice has been given, and it simply gets done".
I differentiate between the "Authorized Fiduciary" vs the "Subordinate Functionary". The former is empowered and pre-authorized to get things done as needed. The latter is disempowered and seeks permission before doing just about anything, even the most menial repairs.
The vast majority on PMS, and I know hundreds of them all over the country, have a Subordinate Functionary mindset and operate from a place of fear, afraid that any decision they make will be disapproved of by their over-involved client, so always involving the owner to get permission. Meanwhile, the level of maintenance and repair service suffers due to delays and wasted time.
It doesn't always suffer, if the right LL is in place. The service you describe is great for someone with multiple properties and/or long distance LL's. There's also a place for the PMS that is more of a listing service and account handler for someone with a single rental in their area.
I'll use mine as an example. I have a condo in Rainey St area and a SFH in Avery Ranch. The condo is where my GF and I stay when we visit Austin, and I VRBO/AirBnB it for the "peak" times in tourist activity (which seems to be dang near year round now). I've got a smart lock and a cleaning service, and I'm usually through Austin 2-3X per month, so I can check on it at that time to make sure things are in shape.
The SFH is where we fully intend to move back to in a couple of years. I do have a realtor friend that acts as my PM. Essentially, she does the advertising, screening, and collects the rent for a small fee during the course of the lease, and I pay a commission upon re let.
If there's a repair that needs to be made, I handle it. Granted, I know companies that do everything, so I have a network that I trust. If my AC goes out, I'm not calling for 3 bids, I call my friend Manny and fully trust him to do the job ASAP at a very fair price. Same thing with Plumbing issues, etc.
I'm also still really good friends with the next door neighbors, and have a "mow and blow" company that is owned by another friend of mine that goes every other week (built into the rental rate) and I do quarterly AC filter replacements myself. While it's not an "inspection" per se, it does give me a chance to throw eyes on the interior.
Is it worth the ~6% I save in PM service fees? Probably to me. If my situation were to change, I'd want someone in place to handle everything, much like your service. I went this route after interviewing a couple of PM services that had the same "subordinate" mindset you talked about. Hell, if I have to do everything anyway, what's the point of paying them 10%?
Long story short, there's room and reason for both operational models.
Out of curiosity, what's the standard repair cap you use?
It doesn't always suffer, if the right LL is in place. The service you describe is great for someone with multiple properties and/or long distance LL's. There's also a place for the PMS that is more of a listing service and account handler for someone with a single rental in their area.
I'll use mine as an example. I have a condo in Rainey St area and a SFH in Avery Ranch. The condo is where my GF and I stay when we visit Austin, and I VRBO/AirBnB it for the "peak" times in tourist activity (which seems to be dang near year round now). I've got a smart lock and a cleaning service, and I'm usually through Austin 2-3X per month, so I can check on it at that time to make sure things are in shape.
The SFH is where we fully intend to move back to in a couple of years. I do have a realtor friend that acts as my PM. Essentially, she does the advertising, screening, and collects the rent for a small fee during the course of the lease, and I pay a commission upon re let.
If there's a repair that needs to be made, I handle it. Granted, I know companies that do everything, so I have a network that I trust. If my AC goes out, I'm not calling for 3 bids, I call my friend Manny and fully trust him to do the job ASAP at a very fair price. Same thing with Plumbing issues, etc.
I'm also still really good friends with the next door neighbors, and have a "mow and blow" company that is owned by another friend of mine that goes every other week (built into the rental rate) and I do quarterly AC filter replacements myself. While it's not an "inspection" per se, it does give me a chance to throw eyes on the interior.
Is it worth the ~6% I save in PM service fees? Probably to me. If my situation were to change, I'd want someone in place to handle everything, much like your service. I went this route after interviewing a couple of PM services that had the same "subordinate" mindset you talked about. Hell, if I have to do everything anyway, what's the point of paying them 10%?
Long story short, there's room and reason for both operational models.
Out of curiosity, what's the standard repair cap you use?
What you describe works well, but rather than "saving" the management fee you have simply employed yourself for that amount to be on call and ready to handle whatever might come up 24/7/365.
If you enjoy it and can execute well, that's actually great. Most DIY landlords are not as organized and prepared as you.
Our standard repair cap is $500, but "no choice" situations, like a tree falling on the house, or AC broke, are exempt "at Broker's sole discretion".
What you describe works well, but rather than "saving" the management fee you have simply employed yourself for that amount to be on call and ready to handle whatever might come up 24/7/365.
If you enjoy it and can execute well, that's actually great. Most DIY landlords are not as organized and prepared as you.
Our standard repair cap is $500, but "no choice" situations, like a tree falling on the house, or AC broke, are exempt "at Broker's sole discretion".
Steve
Yep, and for people like myself, I have no desire to do that so your service is well worth the money. I am not a handy man, I do not want to be bothered to answer my phone 24/7/365 to deal with problems I would know nothing about. I don't want to have to be calling contractors, repair men, plumbers, etc., and go through a bidding process to get the best price. I am smart enough to realize that my time is better off spent doing something I'm actually good at (my job) and make money that way then expend the time on something I know little about. I'm not sure why this is even a debate (but I guess some people just have to argue and insist they are right). This isn't about being right or wrong, but rather what is the best fit for the individual. For me it's using a property manager. For someone else, perhaps it's doing it all themselves to save $200 a month (personally I can't see it being worthwhile but to each their own). If you ever decide to take any more clients north of Austin, send me a PM.
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