What’s the Matter With Property Management?
Every rental owner has a horror story about property management.
Almost every day, we hear stories of management companies charging exorbitant amounts for simple repairs, or taking weeks to respond to an email, or simply disappearing entirely.
According to What Does the Internet Think, which does textual analysis across the web to measure positive and negative attitudes about a given topic, 65% of online references to property management are negative.
That’s worse than lawyers, cheating husbands, and even body odor!
So what’s going on here? Why is the quality of property management so uniformly poor?
We have a few theories.
High Switching Costs
If you hate your property management company, it’s not always easy to switch to a new one. In many cases (though not with Castle), management companies lock customers into long-term contracts, or sign leases with tenants that are difficult to alter.
Even if you’re not stuck on a long-term contract, switching management companies is a huge pain. Lots of information has to be transferred over, and at least four parties (old management, new management, owner, and tenant) have to be coordinated with simultaneously.
The harder it is for customers to leave, the less incentive a business has to provide great service.
Lack of Focus
Property management is usually not the majority of what most property management companies do. More often than not, they’re brokers, developers, contractors, or all of the above, with a side business in property management.
A realtor who does a little management calling himself a property manager is like Kim Kardashian calling herself an app developer.
And when an aspect of the business isn’t the main focus, it’ll naturally get the fewest improvements.
Outside Owners Are Easy Targets
Most real estate investors don’t live near the properties they invest in. To find the best deals, you have to look outside your own backyard.
But outside investors are completely reliant on others to keep them informed about the state of their properties. Sadly, this makes them a target for scammers and disingenuous characters.
Billed for an expensive repair? You often have no idea if your house really needed it, and no easy way to find out.
Yes, not every property management company is horrible (although it sure seems like it sometimes). But structural issues in the industry conspire to make the average quality of management far lower than that of, say, dentists.
Had a property manager you really loved? Really hated? We’d love to hear about. Get in touch.
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