Low cost competition is coming, they're here, oh they spend a lot on advertising, should we in property management be scared?
As we all know you get what you pay for all things being equal. While you might buy toilet paper at dollar general you won't be buying your next car from them because when it comes to reliability we're all willing to pay to ensure performance.
So what about low cost property management companies? I've had multiple conversations lately with first time investors about how one particular company told them how they could get them more in rent then we estimated. Mind you we're all looking at the same comps and I shared them with every owner. However the lure of riches has pulled more than one person astray from logic. If someone is promising you something that they can't statistically prove your gut should be telling you to say no and go elsewhere.
Those of us in the property management field that care about our industry and our futures refuse to use tactics to lure in clients only to disappoint them later. I was always taught that if you say you can or will do something you darn sure better be able to do it. (Texas accent inserted).
I'm looking at some of my listings and comparing our leasing performance….
My listing: Listed at right price, leased in 3 days at list price.
Low cost providers listing: Listing $100+ too high to start, leased $101 below list and took 34 days to lease.
How much of a bargain did their customer get? Rent was $1700 in this example so let's say one months income wasted, $1700. Divide that by the 25 months our tenants stay on average and you've just wasted $68/month by going with the low cost flat fee provider. Now you get to enjoy their low quality service because they don't have the monthly income to pay for sufficient staffing, training or systems.
What was the difference in the assumed management fee for us vs. them? If they charge $99/month. We probably would have this property at 8%, which not only ties our success to the owners but ensures we can deliver excellent service and honest information through proper training and education. So we would have charged $136/month. Variance of $37 monthly between the two companies. Add back in the $68 loss of income and that low cost competitor just cost you $31/month more than the company with the best reviews in the Austin, Texas.
When it comes to the largest investment most people will ever make why would you trust someone who will tell you a magical story and who just opened their doors recently? Base your decision on facts and tried and true performance whether it's our company or another of our caliber.
Low cost = Low corporate gross income = low performance, low skills, low experience
The good news is for you investors out there, 46% of PM's in the U.S. charge 10% and maybe only a couple above that. So you're not going to have to pay for the Porsche to get performance. You may have to pay for a ford or Chevy however to get reliability.
If you're looking for someone who can deliver honesty and excellent property management services in Austin Texas please give us a call. Save your coupons for the grocery store. You deserve high quality affordable service. If you're willing to hire the right company and you'll get higher performance ($$$$) and reliability.
PM's feel free to share these stats with your local audience.