5 Ways a Property Management Company Can Cost You Thousands Of Dollars

5 Ways to Lose Tens of Thousands of Dollars On a Property Management Company

In 2015, Spencer, our Director of Marketing, got a call from an Oregon-based landlord who had bought some out-of-state properties in Alabama. This landlord told Spencer they were having trouble with their existing property manager.

How much trouble?

Turns out the landlord was paying the property manager to perform repairs…

And the property manager wasn’t completing those repairs.

The landlord was out over $100,000 at the end of the day.

We aren’t saying most property management firms are incompetent, negligent, or fraudulent. But these types of firms do exist.

So landlords need to pay attention to key traits when evaluating property managers. Otherwise, they could cost you big time.

Let’s take a look at each one:

1. Poor Onboarding Process

Onboarding entails everything after you hire the property manager but before your property’s on the market. Your property manager must walk the property, identify issues, get repair estimates, and so on.

Each step takes longer if the property manager doesn’t have their onboarding process dialed in and systematized. Communication gaps can arise, causing frustration and wasting time.

Ultimately, it could take many more weeks to get your property on the market…

And every month your property sits vacant is lost rental income.

On the other hand, a property manager with a honed onboarding process can rent to an excellent resident as fast as possible. They waste minimal gathering information about the property and marketing it.

So when you’re interviewing property managers, ask about their onboarding process. Get as many details as you can. Not only will you know what to expect, but the level of detail they provide indicates how buttoned up their process really is.

For example, if they aren’t able to give a lot of detail, that’s a red flag. They may not have a concrete, dialed-in process if they can’t tell you what it entails.

2. Poor Leasing System

Renters want things to move a lot quicker than homebuyers. Unlike homebuyers, who may take months to pick a home, renters are generally looking to move within 15-30 days.

So potential residents favor a fast and simple rental application process. They want the ability to find your property online and be able to tour it with ease. Similarly, they want quick and clear communications with the landlord/property manager.

If prospective residents encounter difficulties, they start thinking ahead to living in the property. They worry that if the property manager is dragging their feet now, what would they do if there’s an urgent maintenance need?

Therefore, a property manager with a poor leasing system can lose many of these residents, costing you thousands of dollars in lost rental income. They will move on to the next property if they don’t get what they want when they want it.

3. Poor Underwriting

Property management company costing you thousands
Guy and businesswoman talking in a job interview in an office

Underwriting is arguably the most critical piece of the rental process because it’s how the property manager screens residents.

Underwriting involves:

✅ Thoroughly screening each resident

✅ Checking for credit scores

✅ Background checks

✅ Verifying rental history

✅ Verifying employment and income

✅ Following local, state, and federal laws (such as the Fair Housing Act)

A poor underwriting process could result in subpar residents who don’t pay on time (or at all), cause disturbances, damage the property, and more. This can clearly cost you thousands.

On the other hand, a good property manager performs extensive due diligence on all the items above within the confines of the law. Investing in a property manager with thorough underwriting pays off in spades when you get amazing residents who pay on time and respect your property.

Evernest used to use a third-party for this as many property managers still do. However, experience proved this process to be so important that we brought it in-house. This gives us full underwriting oversight and aligns our underwriting team’s interests with yours to ensure you get the best residents.

Plus, it helps our underwriting team easily access our market experts for specific market information and other teams within Evernest.

4. Sloppy Maintenance

When things within your property break, it can inconvenience and sometimes endanger the resident.

Therefore, residents expect prompt communication and quick, professional repairs when they request maintenance.

A resident will not stay if the maintenance is handled poorly.

They might wait out the lease term, sure, but they will pack up and leave as soon as they can. This costs you money in vacancies and time in finding new residents constantly.

You do NOT want:

❌ Poor communication

❌ Delays

❌ Sloppy contractors

❌ Improperly-performed repairs

So pick a property manager that has a clear and specific maintenance system. They need a way to quickly respond to new requests and track existing requests. Additionally, check that technicians document the maintenance item before and after the repair.

5. Rude Customer Service

The property manager can get everything else right but ruin your real estate pursuits if they treat the resident poorly.

Remember: as soon as your property is rented, the resident becomes the asset.

Rude, inattentive, and unhelpful customer service can cause residents to avoid renewing or move out early. Once again, you will burn money and time dealing with and filling frequent vacancies.

On the other hand, friendly, attentive, and helpful customer service makes them want to stick around. The resident trusts you will quickly and efficiently address their concerns. Oh, and it might mean they refer your property to others, boosting your lead flow.

Your property manager’s customer service should also be accessible. That means providing residents with multiple ways to contact them and being available for a wide and clearly-defined range of hours.

Watch Out For These Pitfalls When Hiring A Property Manager

A good property manager will have dialed in all the processes leading up to renting the property. Onboarding and leasing should be quick and systematized, while underwriting should be as thorough as the law allows.

Once the property’s rented, your property manager should

Prioritizing these five elements can help you avoid losing tens of thousands on a property manager. We at Evernest, of course, have all five of these dialed in. You can hand your properties to us worry-free.

If that sounds like something you’d be interested in…

Go here to start the conversation with one of our property managers.

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