I may be slightly biased, but I would strongly recommend everyone interested in pursuing real estate investment work with a professional property management company. Not only do they take an incredible burden off of you as an owner, but the structure that property management companies have established can often be priceless to investors, especially if you’re working with a larger company.

My approach with prospective clients is always to address their objections while focusing on the value add my company provides. To address the main objection, of course I charge a management fee, and perhaps you can do it yourself, but consider what you’re giving up to self manage. While you are answering your tenants’ every beckoning call, and fixing every minute issue, you’re not analyzing your portfolio, identifying potential investments, or enjoying the greatest freedoms that real estate investment are meant to provide. I strive to make my fee the most valuable investment my clients’ make each month.

I like to think the service my company provides is invaluable, but if I were asked to define our value adds it would be easy to do. First and most obvious value add is the freedom and peace of mind knowing that your property manager is going to be on call 24/7 for you and your tenants, so you can finally get some much needed rest, and maybe even take that vacation you have been planning forever!

It’s not just about the freedom though, working with professional property managers gives you access to their network, and the economies of scale they often enjoy. My company establishes strong relationships with both national and local vendors so when it comes time to purchase products or hire services we don’t need to waste time haggling over price. The most eye opening savings I’ve realized was when a tenant of ours brought a bed bug infestation into their unit after returning from vacation. After an initial inspection the pest control company returned with a bid for $1,500. Shocked by the price I immediately consulted our ledgers to look up past extermination costs to find we were paying $900.00 before for similar sized units and types of treatment. Thankfully, and rightly so, the pest control company honored the lower price and agreed to that pricing schedule moving forward.

There are countless examples of these savings, and my most recent experience with our local flooring company proved the prosperity associated with our economies of scale when it came time to upgrade units. You’ll come to find that flooring is one of my favorite reinvestments, so naturally the first task in updating our units during turnovers on our most recent acquisition was to do away with the terrible, cheap vinyl and over worn carpet. In discussing our plan with the local vendor he was ecstatic to hear we were planning to upgrade 100 units over the next couple years. He went from $1.5 per sq/ft down to $1 once he knew he’d be able to by pallets in bulk for our units over the coming years. Per unit that savings sometimes exceeds $1000.

Even if you’re only investing in a duplex or a small complex, it’s simple to see the value add in these economies of scale. Of course economies of scale aren’t the only reason, and maybe not even the best one. Being a large property management company means having a full time, professional and reliable staff. As we grow, so to do our staff in size and experience. I would easily say our administrative and maintenance staff are the key difference between our properties and the next guys.

We operate our management company with hospitality being a key focus. Our tenants are our customers, without them none of us have jobs, and certainly there are no returns on investment. Ensuring our tenants enjoy their homes pays dividends over time. The word of mouth that our tenants spread through the community attracts new tenants, and builds our reputation of service and respect.

In addition to the great word of mouth we receive, our scale and our strategic marketing allows us to flood the market with our brand, and achieve the best visibility among our competitors. Naming our company Patriot Properties also made it simple to establish a theme for our brand. Each of our properties proudly bears our signage adorned by Old Glory. The American Flag is the most impactful and also reasonably priced addition to any of our properties, and helps make our communities feel like home for our tenants.

There are thousands of reasons working with a quality property management company is the right choice, and I hope to continually highlight these reasons as I continue to update this blog. Of course, I caution everyone to use your resources, and get plenty of references before you sign a management agreement! The last thing you want is to end up in a situation with a negligent manager that’s more of a slum lord than a landlord.

This brings me to a preview for my next topic, establishing expectations for clients. How to structure your management agreement to allow and budget for upkeep and improvement. Working with a client that won’t reinvest in his or her property is a complete waste of time. The management fee you receive won’t be worth the low quality tenants, and high volume of complaints associated with the lack of upkeep. It’s always important to remember you’re properties are your brand. The better all of your properties show the higher service you can deliver to all of your clients and tenants.

Thanks for reading and stay tuned for the next post!