How to manage your management company? The management company is your hands and feet from a distance
How to manage your management company?
The management company is your hands and feet in the distance when you are in the country. After investing in the US for over 7 years, I realized the importance of proper asset management. Management companies can make a very profitable asset or cause the asset to generate a minimum return of a single percentage. In this post I will try to teach how I run my management company.
What is the revenue model of the management companies?
Management companies in the United States charge a monthly rate of 10% -8% for their services when there is usually a minimum below which they have not dropped. For example, in Atlanta you will typically pay at least $ 100 per property per month.
In addition, when a tenant changes or you are looking for a tenant for the first time, your property manager will advertise the apartment throughout the network, will determine with potential tenants and will receive from tenants interested in renting the following data:
First name and Last name
Date of birth
Details about the current apartment they live in and the details of their current landlord
The details of the place in which they are employed
Pay checks
Based on this data the management company will conduct a background check and select the best tenants and this pleasure will pay another month of rent when your new tenant starts paying next month.
Where do the management companies really make the money?
The real challenge in working with management companies begins when tenants start asking for repairs to the property or leaving the apartment and then have to repaint, repair carpets, sometimes change windows or repair tenants to the fridge / oven / dishwasher / dryer, etc. Here they begin to invite professionals and may start a "celebration of expenses".
The less honest management companies also charge a certain percentage of these repairs to the professionals in amounts that can also reach hundreds of dollars beyond the cost of the repair itself. So when a tenant leaves - I act a different way.
Leaving the management company.
exactly like that.
Among tenants I recommend finding a good realtor or person who will see the property and find you the next tenant. If there are minor repairs that really need to be done - I work with a local US maintenance manager who invites the professionals, asks for some quotes and takes care of the refurbishment at the most affordable price. The management companies, of course, will usually oppose this. It is important to find a flexible management company that is willing to let you manage the repairs on the property.
Thus, at the end of the year remain with a higher profit line.
post Scriptum.
I've also started improving the tenant filtering process - and I'll write about that in the next post…
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Eitan Bar-On
Thanks for the post! One of the things everyone talks about is managing your relationship with the local staff, with an emphasis on the management company. But it seems that the way you presented here is the complete opposite of this… Suppose a tenant changes every year / two years, so you are basically changing management companies at a high rate. What's more, if you have two or more properties and one of them the tenant left, then you take the property out of the management company, they probably do not accept it so kindly, but what about the other properties? Isn’t it better to do tighter control over the renovation they do and reduce their profit from hundreds of dollars to a smaller amount and also preserve the relationship?
Thanks for the post! One of the things everyone talks about is managing your relationship with the local staff, with an emphasis on the management company. But it seems that the way you presented here is the complete opposite of this… Suppose a tenant changes every year / two years, so you are basically changing management companies at a high rate. What's more, if you have two or more properties and one of them the tenant left, then you take the property out of the management company, they probably do not accept it so kindly, but what about the other properties? Isn’t it better to do tighter control over the renovation they do and reduce their profit from hundreds of dollars to a smaller amount and also preserve the relationship?