08 Feb Why We Don’t Do Limited Service Property Management
As a professional property management company, we get investment management inquiries from a variety of sources. We previously received an inquiry from an owner/investor in the Austin area, which made for a great educational opportunity to answer a question we get from time to time, “What do you charge for limited service property management?”
Spoiler Alert: We can’t answer that question, because as a professional property management company we cannot alter our services and pricing on a per property basis.
Doing so wouldn’t allow us to provide the necessary services that are required to ensure that a real estate investment is successful. Not to mention that it would put our business operations in chaos as we work hard to make sure that certain processes and procedures are in place and followed to make everything run smoothly.
It’s important to keep in mind that professional property management companies bring experienced working knowledge managing a number of scenarios that can go wrong with a rental property. Additionally, they ensure that your investment is marketed correctly to get the best tenant in contract for the long haul; abide by local, state and federal rules and regulations as it pertains to owning and managing properties; handle the day-to-day communication with tenants; stay on top of all maintenance issues and repairs; and so much more.
Professional property managers don’t just collect rent for investors, they ensure that their investments meet the owners bottom line – aiding their financial goals.
But let’s dig into the inquiry we mentioned previously, just to explain a bit further…
Here’s an overview of the Limited Service PM inquiry we received (all personal information has been withheld to protect all parties involved):
Property Type: Single Home or Condo (valued under $250k)
Address: See Note Below
Zip Code: 78753
Property occupied by owner
Comments: “I am looking for a house to buy in Austin, TX. It will likely be
in Northeast Austin (N of 183/290, E of Lamar). I am seeking limited
management service. I travel a lot so I need someone to look in on the
house every two week (eg for a water break or other major item) and to have
the lawn mowed. That’s all I need. Can you provide this service? What would
you charge? Thank you.”
So, with this in mind how could a property management company best help this potential rental property investor? Let’s jump right into the money stuff.
Businesses set up processes and services for a reason and typically it’s not only to make money. These processes and services are in place because…
- The market desires them.
- They are either required to or are the best course of action given the service provider’s experience in their respective industry.
- They are cost effective for the client and the company.
Simply put, any service provider that is willing to alter their business model to suit one customer would not stay in business very long. Not to mention, that cheaper prices for less service (and quality), usually never serves the client/customer’s best interest.
A good way of looking at it is if a property management company is willing to reduce their prices for you then they might equally be willing to reduce rental income for you as well. If they don’t believe in their services, why should you?
LET’S LOOK AT THE NUMBERS…
To look in on a rental property every two weeks would require someone to drive to the property, incurring a trip charge of about $60 roundtrip everytime, and would regularly create a disturbance for the tenant. This would already equal more than our monthly minimum and would infuriate the tenant – if not force them to sue the property owner for not giving them peaceful use of the premises they are paying for.
Now let’s tackle the issue of mowing the lawn.
This would actually be lost revenue for a bill which is typically paid for or completed by tenants in this particular area. We know this to be a fact, because we’ve been managing properties in the Austin market for over 17 years now. If this were a $1,000,000 property where inclusion of lawn services are expected, then we’d be having a completely different conversation.
THE BOTTOM LINE
So what would we charge for the type of service this particular investor is looking for? Well, to put it plainly, we wouldn’t. We don’t take clients money and offer them a poor, ill advised service in return. As a professional property management company, we offer quality, dedication and honesty.
To all owners, investors, and future clients, if real estate investments aren’t your game, there is no shame in that! When we go to the dentist or the car mechanic, the last thing we do is start asking for services we think we might need. We ask them for their prognosis and what our next steps should be, because they are the professionals in their field after all.
If you don’t know the ropes, it’s 100% okay. But it’s imperative to do your research and find those with experience in the business you trust. None of us know it all but many of us specialize and are experts at what we do. If you’re seeking a dentist, we can’t help you. If you’re seeking an expert in real estate investments and property management services in Austin, Texas, give us a call today. That we can do to perfection.
By: Matt Leschber, 1836PM Founder and Kayla Gonzales, 1836PM Marketing Manager