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Before You Hire, Understand the Different Types of Property Managers

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Posted by Pete Evering on May 26, 2021
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Before You Hire, Understand the Different Types of Property Managers

Many people become landlords to generate supplementary income; owning an investment property can be a great way to earn money on the side, collecting rent every month as your mortgage is paid off and the value of the property steadily increases. It’s not uncommon for small-time landlords to act as property managers as well, in an attempt to save money and keep things simple. However, DIY landlords often run into one of two problems; either they’re overwhelmed by the reality of a landlord’s responsibility to tenants, or they perform their duties as a property manager unsatisfactorily, leading to frustrated tenants and the various issues that follow. So before you jump into the world of background checks, broken dishwashers, and noise complaints, consider that property management might be something you want to navigate now rather than later, and to do that, it’s important to know the distinctions between the different breeds of property managers.

First off, avoid this guy:

“That Guy”

This guy might be someone you know. He might be someone you know rather well. He (or she) might be a friend, or even a family member. This guy might also just be someone who walks around your neighborhood with a pole saw, asking you and your neighbors if they need any branches tamed, lawns mowed, or wildlife captured. They may even have a license which certifies them as fit to manage rental property. Still, to them, it’s not a job — just something they do, and they’ll do it for you without necessarily even taking payment. Perhaps they wish to scratch your back, and to receive, at some point down the line, a scratch in turn. 

It’s your responsibility to yourself to avoid such back scratchers. The casual property manager, who no doubt claims great skill and poise, can actually hurt you. They often operate without insurance, take on more jobs than they can realistically handle or track, and possess nowhere near the amount of expertise they claim, leading to shoddy repairs, lazy maintenance, and poor representation of your interests as a landlord. Disregard how economical their rates are; you’re probably better off doing all of this yourself than you are hiring that guy.

Besides, if by chance they’re any good, they will eventually figure out how to become:

The Professional

The Professional comes recommended by others who occupy shoes like yours; their portfolio of managed properties is backed up by satisfied landlords, many of them owners of single investment properties just trying to make the most of their investments while spending as little as they can on management. To that end, the Professional runs an efficient, attentive, and pragmatic operation, taking on only what they know they can handle. Of course, since they’re so adept at organization and planning, they can take on quite a few jobs at once. You might be their 20th concurrent client, or you might be their 50th. Unlike that guy, the Professional will be able to tell you the number.

This type of manager will do their very best to solve your problems creatively and thriftily to limit your costs. The Professional has likely been in this business for quite a while, so they probably have good relationships with contractors and service vendors in the area. While their rate is certainly higher than their less qualified counterpart, they will work hard to ensure your property stays in good shape, your tenants are happy (and high-quality), and you don’t walk away with less value than when you started. The one downside? This is a one-man army. If they get sick, get stuck in traffic, or get roped up by complications with another client, you may be out of luck for a little while.

Of course, that doesn’t mean more people is always better.

The Management Side Hustle

If you’ve ever dealt with a sales brokerage, landscaping firm, or other landlord-adjacent, fully staffed business, you may have been offered property management services as well. Indeed, companies that have accrued infrastructure and resources to accomplish one thing often decide to redirect surplus resources — labor hours, idle staff, and material goods — to add-on services such as property management.

Unless you hear glowing reviews, it’s best not to bother with the Management Side Hustle. Depending on how unscrupulous the firm in question is, representatives may try and talk up their management service, but it will almost always be sub-par compared even to single person operations wholly dedicated to management. Sales brokerages in particular will usually be unwilling to devote appropriate staffing and attention to property management contracts, since the returns are miniscule compared to profits made from sales commission.

If more resources and manpower are what you want, it’s best to approach dedicated management firms instead.

The Smaller Management Firm

As your budgetary allowances grow, it may become more appealing to hire a complete management firm. With a portfolio that might reach into the low hundreds, this purpose-built, fully staffed company is still compact enough to feel personal. Communication is accurate and attentive, since the customer-facing representatives of the small or medium management firm are usually experienced managers in their own right, with the added advantage of being backed up by an administration that handles records, paperwork, and other less hands-on aspects of the job. Indeed, those who cut their teeth and build followings as solo property managers often start their own small management agencies, or become employed by already existing ones, where they are able to share their expertise and experiences with others.

The Larger Management Firm

As smaller agencies take on more clients and hire more management and administrative staff, they become more efficient, more capable, and farther-reaching. As your own real estate portfolio grows beyond the abilities of solo managers and smaller firms, you may come to a point where it’s time to think about hiring a large firm.

The largest, most expansive property managers will maintain custody of thousands of properties across different cities, counties, and even states, ideally with physical offices established in the locales where they’re active. Like the best and biggest militaries, large management firms are often compartmentalized for greater efficiency, with fewer instances of one person wearing many hats. Large firms, like Utopia Management, are able to reinvest their revenue into extensive marketing and advertising, better, faster systems for clerical processing, and even in-house repair and maintenance staff; of course, the sheer volume of a large firm’s maintenance needs means they often represent enough of a portion of local demand to negotiate better contractor rates, contributing to lower costs for property owners. 

With the larger management firm, you’ll rarely run into roadblocks caused by personnel shortages; someone will always be able to respond to your call and act accordingly — and to your tenants’ calls. You won’t find a shortage of tenants, either, and there are major benefits to such a huge pool of prospective or current renters; not only do they make up a consistent advertising audience, but their numbers mean landlords and managers can be as selective as they want in choosing the right tenant for the right property.

Get Fresno California Property Management

For Fresno California Property Management Contact Utopia Management today by calling us at (800) 294-4656 or click here to connect with us online.

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