It’s tempting, isn’t it? To jump at the chance to reduce your property management fees and to sign up with that budget property management company in Los Angeles that promises to do everything you need for a fraction of the price that you’re currently paying or for a very attractive flat rate. Maybe you’ll even get the first month free!
We always caution real estate investors and rental property owners to be wary of these too-good-to-be-true offers. They probably are too good to be true. Property management is not a transactional purchase. It’s a relationship-based business that requires trust, transparency, and mutually beneficial goals.
When you start to think about the price of property management services, consider thinking instead about the real costs that come with management – or the lack thereof. There’s the property management fee you pay and the leasing fee. You know what those costs are, especially if you’re paying for all-inclusive property management and you know you’re getting everything from marketing to screening to lease enforcement and renewals.
The cost of bad property management is much higher than the price you pay for exceptional management.
You partner with an LA property management professional because you know how easy it is to make mistakes when you’re renting out a property on your own.
Imagine if you’re paying a property manager to make those mistakes on their own.
Imagine if you’re paying to clean up those mistakes.
That’s a cost you cannot and should not have to face.
Invest in the right management company, not the cheap one. Let’s explore why this is so important.
Mistakes Budget Property Managers Tend to Make
At Bell Properties, we often welcome new clients to our company who have come to us from budget property management experiences. They’re skeptical and they’re worried, and we can understand why. It’s hard to recover from a bad property management experience.
Here are the most common mistakes that we see low-cost management providers make.
High Turnover
Nothing is going to eat away at your return on investment (ROI) like high tenant turnover. You need to hang onto your good tenants so that you have a stable and recurring cash flow happening. You also want to avoid those expensive turnover costs whenever you can. It takes a lot of time, a lot of effort, and a lot of money to turn a property over between tenants. You can charge a departing tenant’s deposit for any damage that is left behind, but those wear and tear updates and upgrades are up to you, as the property owner. You’ll have to make some improvements. You’ll have to market the property again. Screen tenants again. Schedule showings and collect applications. Turnover means vacancy costs and extra maintenance expenses. If you’re working with a budget property manager, they’re less likely to focus on tenant relationships. They may not invest in tenant satisfaction. They could be slow to respond to maintenance issues and other resident concerns. That’s going to drive your tenants out of your property, and increase your costs.
Stagnant Rents
Maybe your LA rental property is subject to strict rent control laws. You should still be raising the rent at renewal time, within the confines of the law. A profitable rental property is steadily bringing in more money for the owner of that property. You’ll need to ensure your rent is established at a market rate. It should be profitable while remaining accurate and competitive. When your tenant expresses an interest in renewing the lease agreement, that’s great. But, if your property manager does not raise the rent to keep up with the market, you’re losing money. Those budget, flat-rate property management companies are not going to earn any more or less when your rent goes up. There’s no incentive to keep your rental rates as high as the market will allow.
Knowledge Gap
It’s a problem when you know more than your property manager does. You’re looking to hire an expert, but someone who charges $100 a month no matter what your property needs is not likely to have the expertise you are looking for. Your own investment property or portfolio requires an investment from you in expert property management. The laws around renting out properties in California are getting stricter. The market is behaving in ways that require constant attention. Technology is changing and evolving at a rapid pace, making it essential for us to keep up. We’re hiring, training, and developing our staff all the time to ensure we’re providing the best in leasing, management, and maintenance. Someone who charges very little simply does not take the industry seriously, nor are they concerned with their professional development. That’s dangerous. You’d never choose the cheapest brain surgeon to perform your craniotomy. Be discerning. Remember that you often get what you pay for. If you want efficiency, experience, and expertise, prepare to pay more than a basic flat fee.
Local Market Presence is Weak
There’s a time and a place to give your business to large chain establishments. Property management isn’t that time. You need a strong local presence. Not only does this matter to your tenants, who want to know their property managers can respond right away if something goes wrong, it’s also important to the preservation and protection of your property. A management partner who knows the market well will be able to price your property more accurately. We will understand which marketing channels are likely to work best when it comes to identifying and attracting the best tenants. A local expert will understand the laws, ensuring your property does not violate any habitability standards and keeping security deposits, rental increases, and inspections within the parameters of the law. We know eviction laws. It’s also important that your property manager has relationships with local vendors, contractors, and service professionals. If your management company does not have a plumber who can respond at a moment’s notice, what will happen when there’s a sudden leak at your rental property?
Balls Get Dropped
If your property manager is working for cheap, things will get missed. They likely don’t have the capacity to keep up with everything that’s required in the effective management of your investments. Things will be forgotten. Appointments will be missed. There’s no interest in being proactive. You’re the one who suffers if a maintenance invoice isn’t paid or a pest control contract isn’t renewed. What if they don’t screen tenants thoroughly and you end up with someone who has a record of evictions? Suppose they don’t return a security deposit on time, and now you’ve been ordered to pay the departing tenant three times the amount of that deposit in penalties? A good property manager is planning ahead, putting processes in place to protect you and your property, and remaining compliant with all state, federal, and local laws. Don’t put your property at risk by hiring a budget property manager.
These are just the most common issues that owners come to us with, once they’ve had a terrible experience with a low-cost, low-service management company. You don’t want to add your own list of problems to this account.
How to Choose a Property Manager in Los Angeles
There are several factors that should go into your decision when you’re choosing a property management partner. You want to explore their reputation, both within the industry and among owners and tenants. What do vendors think, who have worked with them in the past? Why do their existing owners continue to renew their management agreements?
You want to know they’re experienced, that they have systems in place, and that they invest in continuing education and professional development.
You want a management company willing to invest in great tenant relationships.
You want an investment in technology, too, because efficiency leads to productivity.
Pricing is important – we’re not disputing that. But remember that you’re looking for value, and value rarely comes with the lowest possible price tag. When you compare pricing structures from management company to management company, don’t simply put the price tags side by side. Take a look at the services you’re receiving in exchange for those management fees. Will your lease agreements be updated regularly in accordance with new laws and language? Will you be protected if a tenant moves out two months into the tenancy?
You want to compare services, communication, and resources as well as prices.
The cost of a bad property management experience is difficult to recoup. The price of a good property management experience is worth the money; the professional management pays for itself.
At Bell Properties, we have transparent, straightforward pricing. You can choose the service tier that best meets your needs and that of your investment portfolio. You’ll also receive solid, serious management support from a talented team of professionals who know the market and understand the industry.
Let’s talk about what’s best for you and your rental properties. The budget property management option is only going to lead to higher costs, more frustration, and a disorganized tenancy.
We can do better. And so can you. Contact us at Bell Properties.
