Our property management company has expanded enormously over the past few years, and during that time, we’ve failed pretty epically on more than one occasion. We’ve gone from a dedicated manager and a couple of close allies to being a far-flung company with more than two dozen dedicated full and a few part-time workers. We’ve learned lessons that we literally didn’t know existed to be learned a few years ago! Lend us an ear while we share a few of them with you.
Download Your FREE copy of ‘How to Rent Your House!
Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at Do linsk site have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
4 Lessons We Learned as Our Property Management Company Grew
Lesson #1: Not all properties are right for every property management company.
Over the past few years, we’ve said “yes” to a few properties that we really shouldn’t have, and we’ve paid the price. We’ve always handled residential homes in the Metro Detroit area. We’re very good at that. But we were hungry, and it led us to take on a few properties that, in retrospect, we probably weren’t ready for. We tried listing and managing a couple of commercial buildings. We tried to help out a few investors who had been sold bad properties in bad areas. We even tried to handle a few properties that were distinctly outside of our normal territory, though not by all that much.
Related: 10 Unforgettable Lessons From My Loser Rental Property
The lessons came raining in. We parted ways with each of those clients; at least one of them left with our blessings and a referral to someone more appropriate to their needs. We learned that it’s better to say “no” the moment we’re asked about a management job if the property in question is entirely outside of our realm of expertise or not a good fit for our business model. That “no” might disappoint a potential or existing client in the short-term, but not nearly as much as they’ll be disappointed if we say “yes” and then turn out to be unable to meet their expectations.
Lesson #2: Not all investors are right for every property management company.
In the same vein, we learned over the past few years that some people just don’t work well with our way of doing business. Sometimes, it’s a clash of management styles. For example, we’ve consciously decoupled from a few investors who were super-involved, hands-on types who didn’t seem to want us to actually do anything to or with their property. We would discover a need for maintenance, collect bids from contractors, create a work order, send them the paperwork, not hear back for several days, and then suddenly, they’d send a late-night email proudly announcing that the work was done and that we could move forward with marketing. Or we’d get all our marketing geared up and start showing a property, only to have the owner tell us they already found a tenant.
Other times, it’s a clash of personalities. We’ve taken on several property investors from overseas, including a few from places where the local culture couldn’t get much further from the to-the-point, no-nonsense, call-it-like-you-see-it attitude that typifies Detroit. One of our overseas clients became immensely agitated when we told them point-blank that the work they had just had completed (by some independent contractor not hired by us!) was insufficient and we weren’t going to be able to market the property until we went in and fixed some bits they had out-and-out failed to address. They were upset not because of the bad news (that’s just par for the course if you’re a property investor), but because we made no effort to soften the blow and no effort to apologize for not softening the blow. Calling a spade a spade just isn’t how things are done everywhere in the world—lesson learned.
Lesson #3: Keep the manager/investor relationship uncluttered.
Detroit’s unique real estate market spawns some very interesting “entrepreneurs.” One particular ex-client of ours had acquired several properties and then sold equity in those properties to a bunch of third parties, creating a whole set of SFRs that had “hybrid owners.” This isn’t all that unusual by itself—but then he insisted on being the contact point for all of them and on delivering all communication from us to the other owners. The problem was that by inserting himself in the communication process, he created a number of delays and inefficiencies that made it all but impossible to get straight answers to simple questions in a timely fashion, let alone funds for needed repairs. There’s almost certainly a property management company out there who would love to deal with him as a client—but we’re not it.
“Clutter” in the manager/investor relationship doesn’t have to be in the form of another human being. We’ve also nearly lost a couple of clients due to a much simpler form of complication (there’s a strange turn of phrase): language. This has happened two ways—once because we had a client who simply didn’t communicate in English as effectively as they thought they did, and another time because our VAs didn’t communicate in English as effectively as we thought they did. We learned to keep our communications as simple and straightforward as possible and to never assume that our clients were doing the same thing.
Lesson #4: A property management company divided cannot stand.
This lesson came from within. Our VAs were almost all individually hired, with only a few being referred by others who had already joined us. And while we still have regular team-building meetings so we all know each other’s names and faces, we trained each department in relative solitude. The VAs who did each job talked to the departments that were the most closely related—maintenance and inspections, inspections and marketing, marketing and leasing, leasing and accounting—but the groups that weren’t immediately in each other’s faces had almost zero idea of what one another did.
That might not sound like a big deal, but it led to a slow, pervasive apathy, because many of our people didn’t have any feeling of importance in the overall picture. That led to a kind of subtle malaise during which calls weren’t getting returned with any sense of urgency, problems that cropped up were pushed on to the next guy instead of being tackled by the first person equipped to understand them, and generally balls were dropped and cracks got slipped through.
We found a solution in the form of a full-company meeting in which literally every person described their job and which other people in the company relied on them and how it furthered the ultimate goal of maximizing owner profits. Knowing exactly who was “upstream” and “downstream” from them and how their job performance was making other people’s jobs easier or harder did a huge amount to get everyone on the same page and re-dedicated to doing their jobs with a more proactive perspective.
There are more, of course—a few years is a long time to learn—but some lessons we’re still processing, and others are awfully hard to put words to. But we look forward to sharing some more in the future. Until then, we’ll leave you with our now-company-standard salutation, one we love because it reminds us that the control is in our hands:
Make it a great day!
What lessons have you learned in your years as a property manager?
Let me know with a comment!