As a fellow investor that started with little experience (bought my first property before joining REIN) I can appreciate how easy it is to underestimate "property management". After all, there is not one particular thing about property management that is very difficult.
Managing rental ads, notices, paperwork, maintenance, phone calls, keys, rent collection, etc. are all individual tasks that we are all capable of.
However, the complexity lies hidden until you combine hundreds of small tasks with different personalities (tenants, owners, neighbours, workers & properties -- yes properties have their own personalities!) with governing bodies (Landlord-Tenant Board, City Inspectors, By-law Officers, Fire Department, etc.) and then simply expect that your best intentions/ideas will go as planned.
This is where most people (Property Managers included) get in trouble. Nothing goes as planned and they get caught in a "reaction cycle" where they can never get ahead despite having a genuine desire to want to do just that.
I'm sure your PM never intended to over-charge you for maintenance work that was never discussed in the first place. Rather, a tenant called to complain about a maintenance problem. They responded to verify the validity of the complaint. Work was in fact needed. PM made a note to call owner then called handyman to quote, handyman never showed up. Tenant called back to complain. PM still not 100% sure what the solution is or what the cost is to fix it. Still intending to call owner, just need some more time to find reasonably priced solution. Tenant calls a third time, threatens to call the city if problem not fixed immediately. PM then has to hire the first person who'll respond to the call -- usually not the best person for the job. Handyman overcharges for poor quality workmanship. Handyman offers to go back and fix it, never does. PM wants to make it right and will fix themselves. No time, doesn't fix it. Needs cash flow. Invoices owner for the overcharged, poor quality work and then realizes they never told them about problem in first place so owner is left feeling surprised and ripped off. Excuses are made, another tenant calls about a broken do-hickey and the reaction cycle repeats itself.
Of course this is all avoidable if your Property Manager has the right systems & software with qualified people who know how to use the software and follow the systems to ensure they remain PROactive, not reactive.
So the next time you're looking for a new property manager ask them some detailed questions about how they handle upcoming vacancies, tenant concerns and maintenance requests, monthly reporting & owner communications, etc.
If you're satisfied with their systems then find out how many units/doors they have under management (most PMs are more than happy to tell you this number) and then ask them how many staff members they have.
Depending on the types of properties they manage and the software they use, the average property manager will need one staff member for every 30-50 units under management. This ratio will be different (I.e. 1:150) if they are managing hundreds of units in only a few larger Multi-family buildings.
Another major challenge for PM's is handling growth (seasonal demand and new clients).
It is rather easy to start a property management business (especially in Ontario where there is no regulation) but the real challenge comes when a single property manager reaches the 30 to 50 unit threshold and now needs to hire, train and manage their first employee.
At this point their whole position changes from having created your own job to becoming the owner of a property management business. Everything changes... Spreadsheets no longer work the way they used to and the thoughts that filled your head now need to be documented for others to read.
If they are growing then this transition can put a stranglehold around the business and it's likely that communication & service levels will drop. If they do then be prepared to roll up your sleeves and do what you need to do ensure your property is being adequately managed and tenants are being looked after.
An on-site inspection should be completed (by you) then discuss (don't blame) your findings with your PM. Create an action plan with key goals & dates to get things where you want them to be. Then monitor those dates and if things continue to slip be prepared to take further action.
Following this process will also prepare you in the event you need to transition to a new property manager. At least you'll have a better understanding of the problems and a clear set of expectations you can discuss (and measure) with your new PM.
P.S. I speak from experience. I'm the proud owner of Cornerstone Select Properties Inc. ` A full-service property management company serving Hamilton and the surrounding area. I'm also a 7-year REIN member and wanted to share my perspective so other investors can proactively manage their real estate business and those who help them support it.
