Does size matter when it comes to choosing a property management company? If you're a property owner, there's a good chance you've asked yourself this question when vetting property managers. After all, there are property management companies of all sizes out there ranging from huge conglomerates to one-man shops. Is size a good metric to judge a company? Luckily, you don't have to use this metric to rule anyone out…Because size actually doesn't matter...expe
According to the CCIM, there are over 25,000 property management companies in the united states. There are so many to choose from that deciding on a single property manager can be difficult. You might be inclined to lean towards the large team at the conglomerate, but if those companies are filled with licensed managers who don’t know what they are doing, or don’t have a knowledgeable broker or office head supervising the office, things can fall apart quickly. Things that traditionally go wrong are:
1. Paperwork gets sloppy - Inexperienced property managers who are unaccustomed to the volume of paperwork required, can cause their clients to not be legally compliant. Software systems can help organize paperwork, but so can having the knowledge and experience to implement processes around documentation. If your company doesn’t know the phrase “if its not in writing it didn’t happen” then you are going to be in trouble.
2. Repair requests can go missed (or have lengthy delays) - This can happen when the inexperienced manager does not know the standard cost or the right vendor to call for specific property problems. You can’t expect a licensed manager to have the expertise of a professional contractor or plumber, but they should know what is going to need multiple bids or owner approval and what is going to be a quick and inexpensive pick.
3. Inspection issues – Inspections are the number one component that get missed when an office is unorganized or short staffed. Instead of complete interior inspections they'll defer to a few quick photos that are ill timed and not followed with the appropriate written inspections. Move-In walk-through's, Move Out walk-through's and mid-term inspections can be sacrificed or rushed because the manager or company isn’t using the correct management software, doesn’t have their files organized or is simply “overwhelmed” by the sheer volume of day-to-day property issues.
So where should you start in considering a property manager? There are some basic factors that you should always consider: Broker and Head manager experience, insurance, management fees, cash reserves, etc. We discuss this in our series on what to look for in a property manager. The most important factor of all, though, is having the vision to manage problems appropriately. After all it's called property “Management” for a reason. It's a profession, and like any other profession, takes experience and talent to truly master. Things like "Verbal agreements” are formulated out of inexperience, and can cost clients (you, the owner) money. So the next time you start considering a new property management company, concern yourself mostly with the competence and experience of the manager, and less with the size.