Hey, BiggerPockets, it's Matt. And today we're going to talk about property management and
what it takes to have a good property management company versus a great property management
company. Now, I know a little bit about this because we own our own property management
company and we manage our own assets and some assets for other people. And we also have
properties that are remote from where our main office is located that we hired a property
management company to run for us. So these are what I found over the years on what the
parameters of property management are, what makes them good versus great.
So first, let's talk about property management in general and we'll talk about how to break
it down. So you've got the tenant, okay? And then you've got the owner, okay? And I view
the property manager to be the conduit, the person that pretty much sits between the tenant
and the owner, and is a lot of times the voice of one to the other. And this is where the
PM sits. Okay? Right here in the middle. And the property manager's role, as I see it,
is to be the voice at times for the tenant to the owner and to address things that are
of importance to the tenant.
What are things like that? Well, okay, let's talk about maybe things that are important
to the tenant. Okay, how about maintenance? Just general upkeep. How about just when the
tenant first moves in, how about any assistance that the owner may need to provide in getting
the utilities switched over? The property manager would deal with that. Perhaps we've
had to provide a letter or a copy of the lease to fax over to the utility company for the
tenant on the owner's behalf. Glad to do that.
So just any other, just third party representation on the tenant's behalf to other entities,
such as utilities, such as the local town, such as perhaps agencies that are assisting
the tenant and paying their rent, like section eight. The property manager is the conduit
to assist the tenant with their needs, that typically an owner would step in if there
wasn't a property manager in place. So just general third-party representation. Okay?
Now, that's pretty straight up. Now the property manager also represents the owner for their
needs. Okay? So owner's needs, what's the biggest need that the owner has, right? This
sounds silly, but it's true. Rent. The owner needs rent. The owner property, the owner
has expenses that they need to maintain the property, be that a mortgage and all kinds
of other expenses, so they need rent from the tenant so the owner can continue to keep
the property in good working order. And the property manager is there to collect that
rent from that tenant. And that's probably the biggest role that an owner would say the
property manager has is to collect rent.
So obviously, to place the tenant that the property manager has to do in the first place,
to create the tenant to begin with. So to fill a vacancy that's there, and that's there
for the tenant as well to represent the owner in a vacant unit and to present it and to
talk about what the unit, what the amenities the unit has, and to negotiate on behalf of
the owner with the tenant and everything on leasing. So that's there too, so leasing.
That's new leasing and that's also lease renewals, because if you're a good owner, then you're
making sure you've got constant lease renewals every year, you're renewing your lease contracts.
So leasing and renewals, right?
So that's really the owner's needs. The owner needs rent on time. And, unfortunately, if
the tenant doesn't uphold their end of the bargain, then the property manager has to
unfortunately file eviction on the tenant or press the tenant for rent if the tenant's
not able to do that, or leasing and renewals and things like that. And then, some other
general things that come in, in the property manager representing the tenant and the owner.
And these things boil down, if you're a good property manager and you're doing what you're
supposed to do, then you're collecting rent on time from the tenant and you are keeping
the property in decent working order on behalf of the tenant, handling tenant maintenance
requests, doing whatever it is to keep the property up. That is good property management,
rent paid, work orders completed. Okay?
And I would say probably 80% of property managers are good property managers, at the least.
And there's those that are not even, that don't even qualify as good, that can't even
collect the rent on time for you or can't even accomplish maintenance. But this is the
baseline if they can do this. So let's talk about great property management. So, I use
green for great. Okay?
So great property management is where it comes in, and there's other things that are outside
the basics here. And so, this is what I call upholding quality. Okay? Quality of what?
Quality of living. Okay? Quality of living. What does that mean? Okay, well, it's outside
of addressing work orders. Quality of living for the tenant might mean, if you've got a
multifamily, so we had this happen regularly. We got a multifamily, you got a tenant on
the second floor that is disturbing the tenant on the first floor. Well, if the property
manager just abdicates that and says, "Well, it's not my problem. You'll have to talk to
the tenant yourself or you'll have to not bother me with that. Or you'll have to, even
worse, call the police and have the police come to deal with the tenant upstairs," or
something like that.
If the property manager won't defend quality of living in the building, it doesn't really
serve the tenant and benefit the tenant's quality of life. That's not great property
management. It's good property management to abdicate it and say, "Oh, you know what?
That's not my problem." But good property management upholds quality of life. Okay?
And what does quality of life lead to? Well, it's the next thing also that I hold this
property, and this is a hard one to gauge, but it's something I think that you want to
talk to property managers to make sure it's even important to them. And that's called
tenant happiness. What do happy tenants do? Happy tenants that are happy in their properties
tend to stay longer, they tend to treat the place like it's home for them, and they tend
to pay their rent on time and they tend to be happy in where they are. Now, there's plenty
of people in the world you're never going to make happy, even if they're only paying
you a dollar a month in rent and there's nothing ever wrong with their place. They're still
not going to be happy. I have those tenants too, that there's just nothing you're going
to do to make them happy all the time.
But there are other things to maintain tenant happiness, such as quality of life, like addressing
neighbor issues that may come up. So let's write that down and we'll talk about how to
do it. So that's tenant happiness. Okay. Here's some things for tenant happiness, just some
ideas. Okay? You want tenants to feel appreciated. We've got enough tenant base that I reward
my tenants every here and again. Every quarter, I do a drawing and I give away a $50 gift
card to one tenant that's paid their rent on time over that quarter. And I do another
drawing in a year, if a tenant's paid their rent on time for an entire year, I do a drawing
and I give away one flat screen TV.
And I make sure tenants are aware of this, that they're aware that we do this and everything
like that. It makes them feel rewarded. It makes them feel appreciated. And you better
believe we blast out to all the other tenants, hey, just so you know, you could have won
the flat screen yourself, or get yourself into the drawing and make sure that your name's
in the hat. You got to pay your rent on time though, and that.
So tenant happiness is appreciation. It's showing some pride in the property. If the
owner shows pride, they'll show pride. And pride doesn't have to be investing tens of
thousands of dollars into landscaping every year, but it could be just keeping the property
clean and taking care of pest management, having an Orkin guy go out there and spray
every here and again, if it's a larger multifamily. So doing things like that to keep tenants
happy and to maintain overall building quality is great property management.
And the last thing is upholding building quality. Okay? That's quality of the asset. That's
taking a stand for the owner as well. Now, these other things, I would argue all day
long with any owner that doesn't think I should be giving away a flat screen TV every here
and again to their tenants, because I can show you statistics that those tenants stay
longer. And when they know that there's some sort of reward for them, I can show you statistics
just of rents paid on time, more frequently, and tenants staying in properties longer if
they feel like the property manager really cares about the place that they live and it
feel like there's that sense of home for them.
So now, building quality. This is real deal that that helps the owners out. And I'm talking
about preventative maintenance. If the only time that the property manager sends somebody
out to the property is when the tenant calls and says, "Hey man, my toilet's overflowing,"
or "Geez, this tree that's next to my house is completely leaning into the place," and
as a property manager, you perhaps could have gone out there and seeing that the tree was
about to start leaning into the house and cut it down or groomed it or something like
that to stop it from doing that.
Just all kinds of examples like that, of things that a property manager can do to prevent
emergency maintenance, or to just prevent longterm deterioration of the property. So
roof inspections, just doing walkthroughs to make sure tenants are keeping the properties
clean and making sure they're taking good care of it. If the property manager's not
doing building quality maintenance through preventative maintenance walkthroughs and
reminding the owner, Hey, man, it's been like two or three years since you've even had the
roof inspected, or we should probably have that boiler serviced, or things like changing
the filters on the heating units, all kinds of those things that maintain longterm building
quality.
If you guys are interviewing property managers, they should do some of these quality issues,
because this is great property management. It keeps your asset in good shape and your
asset has longterm longevity, and your tenants are going to stay longer if the property manager
is doing some things to maintain quality of life. They don't have to give away flat screens
like I do. They got to do something though, or at least seeing that they care a bit about
the longterm happiness of tenants, longterm longevity and quality of life in the unit.
Remember guys, this is the baseline stuff, collecting rent and handling work orders.
You got to go above and beyond that. If that's all you're worried about, that's their job.
That's the baseline thing that any property management company should do. But the property
management company that's going to give you tenants that are going to be willing to pay
a premium for your property, and eventually people that will be willing to pay a premium
to buy the property from you. Or when you consider a property manager that has some
consideration, and I'll consider it a major consideration, for quality issues.
So that's it for today, guys. So I want you to just leave comments below if you've had
great property managers that were considering quality, or if you've had awful property managers
that couldn't even do this. Just tell us some stories, share some thoughts on property management
that you guys may have. And also, for your property managers that are watching this,
I'd love to hear from you on some ways that you help maintain building quality. If you
call yourself a great property manager, I want to hear from you too. So thanks again
for watching guys and have a great and profitable week.