The Risks of Budget Property Management: A Cautionary Tale
Several years ago, an investor purchased a fourplex in a small community consisting of seven similarly styled properties arranged in a horseshoe layout. While the investor maintained a good relationship with a fellow owner within the courtyard, the remaining five properties were owned by two out-of-state landlords who opted for a low-cost property management company based in Kansas City.
The investor, recognizing the value of cohesive management across the entire courtyard, proposed consolidating all properties under a single property manager. This unified approach would allow for streamlined decision-making, increased operational efficiency, and improved overall community appeal. However, the out-of-state owners declined, unwilling to pay a higher management fee or recognize the potential long-term value of a professional, hands-on approach.
Fast forward two years: those properties under budget management were plagued by break-ins, long-term vacancies, and mounting tenant delinquencies. Eventually, one of the out-of-state landlords reached out, eager to switch to professional property management after realizing the cumulative damage their investment had suffered.
Delinquencies: Hidden Revenue Losses
Upon taking over, we discovered that the properties were hemorrhaging revenue. Across all units, the owner was losing approximately $14,000 in rent. Of this amount, $5,000 was permanently lost due to repeated Section 8 inspection failures that resulted in abatement—revenue that could never be reclaimed. While the remaining $9,000 might be recoverable through collections, the process is time-consuming and unreliable, further delaying cash flow recovery.
Vacancies: Poor Standards Lead to Lost Rent
One “ready-to-lease” unit had reportedly been on the market for six months with no takers. When we inspected the property, it was immediately clear why: the unit had been poorly prepared, with substandard repairs and maintenance. It was no surprise prospective tenants were walking away. Every additional month of vacancy represented significant lost income for the owner.
Security: A Lack of Tenant Confidence
A string of break-ins at the property had tenants living in fear, leading to higher turnover rates and additional financial losses. A safe and secure environment is a fundamental expectation for tenants, and it is the responsibility of property management to address these issues promptly. Unfortunately, this wasn’t happening under the budget management firm, further eroding the property’s reputation and tenant satisfaction.
The Cost of "Cheap" Management
When you choose a low-cost property management company, you often get what you pay for. Budget firms may save you a few dollars upfront, but they often require you to stay heavily involved in the day-to-day management of your property, including tracking delinquencies, monitoring vacancies, and ensuring maintenance work is done correctly. Without consistent oversight, you risk significant financial losses and the long-term degradation of your investment.
Why Work With Us?
At [Our Property Management Firm], we take a different approach. We selectively partner with a small number of investors, keeping the number of properties we manage intentionally low. This allows us to provide hands-on, detail-oriented service and ensure your property operates at its fullest potential.
When you work with us, you can rest easy knowing your investment is in capable hands. From proactive tenant screening and retention to responsive maintenance and property security, we treat your property as if it were our own.
Take the first step toward better property management today. Schedule an introductory call here: https://calendly.com/eddie-kcvppm