The number one complaint I hear about managers isn’t that they do a bad job. It’s that they seem to cost to much.
Clients seem to begrudge their managers when a property has great tenants and is ticking along with no major repairs. There’s no real expenses. $1,000 worth of rent comes in and the only deduction is the management fee. Usually I’m seeing 10 to 14 per cent for decent single-family property management.
Sure, it sucks when there’s no visible costs and you’re paying $100-140/month for the pleasure. But when the property goes vacant, think of how much time goes into getting the property re-rented.
1. Receive notice
2. Confirm vacating date
3. Schedule out inspection
4. Conduct out inspection
5. Arrange repairs/renovations
6. Supervise repairs/renovations
7. Bill/invoice for repairs/renovations
8. Arrange cleaning
9. Supervise cleaning
10. Bill/invoice for cleaning
11. Generate/mail statement and cheque for tenant’s deposit
12. Advertise rental (1-2 newspapers and 3-7 websites)
13. Screen calls
14. Arrange showings
15. Evaluate applications
16. Conduct credit checks and background checks
17. Do move in
18. Process damage deposit and first month’s rent
19. Generate and provide statement to owner
Every time a tenant turns over, it’s a cost of about $2,000. That’s both the costs above and the lost rent while it’s vacant. In the $1,000/month rental scenario, that suite has to keep running for over a year to make back what they just spent in time and hard costs.
Compare that to your lawyer who makes $800-1000 for a week’s work (most of which is done by assistants), or your Realtor who makes $5,000-10,000 per deal.
Property management is a nickel and dime business. It’s a hard industry to make money in and harder to do an exceptional job. You should hire the best people possible, overpay them and cut them some slack.
Chris Davies is a Realtor and investor in Edmonton, Alberta. Check out www.yegapartments.com.
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