Let’s face the ugly truth about business, “the elephant in the room”; we are all here to be paid and management companies are no different. During my time in this business and industry, I have seen many investors lose their money while contractors get rich concerning the apartment complex or real estate investment. It feels as though they are simply not sharing the same target. We all want to get paid; however, there are only a few of us who are proud of our product and who feel satisfied when a deal closes, knowing we made it happen! Management companies are receiving an average of x% of the collection. We have also recognized that these management companies have very little to zero responsibility for the budget.
Owners usually do not manage the daily operations of their real estate investment, and certainly not in detail. They trust a management company to achieve a 99% occupancy rate for an apartment complex. This situation can bring the property into a challenging position, where the management company is not looking for vendors and only satisfied with the one that delivers on time, including a price that is 30% above market or 60% above negotiation. They are generally happy with 1541 different contractors as they do not need to deal with employees or train new ones on the necessary occasions. They settle for 5 office personnel to run a 400 apartments complex because they “truly” need a maintenance manager, a property manager, 2 leasing agents and a secretary. In many instances they add a bookkeeper, assistant manager and a random person named John!
Owners I am Begging You
You desire peace of mind knowing that the people you hired are not abusing your funds. Simply ask them to justify what they are doing and check as to whether they are correct (they are probably not). If they are telling you they need a single vendor and 5 office personnel to manage your apartment complex, ask them to pay for it, out of pocket – because they are really just being lazy, disinterested and looking to maximize the cash they can get from you.