SS244: Commonly Overlooked Benefits of a Property Manager

SS244: Commonly Overlooked Benefits of a Property Manager

In this Strategy Saturday, Charles Carillo explains the Top 5 Benefits of Property Management for Investors. While many landlords think managers only collect rent, Charles highlights overlooked advantages: objective tenant screening, organized bookkeeping, vendor pricing power, legal compliance, and deep market knowledge. These benefits help landlords reduce stress, avoid costly mistakes, and grow their portfolios more effectively than self-managing.

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Talking Points:

  • Alright, let’s get into it. When it comes to property management, many investors believe that the role of the manager revolves solely around handling the day-to-day operations and managing the tenants; however, some commonly overlooked benefits might go unnoticed but are still very valuable. In this episode, I want to share some of these benefits and explain why landlords and investors should consider them when deciding whether to hire a property management firm. Let’s start with what great tenant management really looks like when emotions are removed from the process…
    • 1. Optimized Tenant Management. Property managers remove any emotional factors, ensuring a thorough vetting process. In addition to a basic background and credit check, most managers employ additional screening methods that many mom-and-pop landlords will not perform. More in-depth screening typically results in better tenants who stay and pay longer. Additionally, their firms are set up to handle tenant communication at all hours, including 24/7 emergency calls. Now while tenant screening keeps your property stable, this next one can directly affect your financing power…
    • 2. Better Bookkeeping. Most mom-and-pop landlords have terrible bookkeeping. It is not concise or complete, which makes it a nightmare to sell or refinance the property. And speaking of saving time and money, good property managers bring serious advantages when it comes to repairs and renovations…
    • 3. Better Vendor Management and Pricing. Good property managers maintain extensive vendor contacts that they utilize regularly. This typically equates to a significant source of business for the vendors, allowing property managers to negotiate better pricing for their clients. Managers are skilled in managing projects and vendors, often more effectively than the property owners themselves, adding to the value that property managers add. Additionally, a large part of what property managers do is work with vendors and contractors, making them experts in what a job entails and its associated costs. Furthermore, many property managers have handymen on salary, which makes many repairs faster and less expensive than hiring a handyman for every repair. Next, let’s talk about legal protection—because this is where many small landlords unknowingly put themselves at risk…
    • 4. Improved Legal Compliance. Most landlords do not understand their local tenants and landlord laws. They are unaware of the rules and protocols for handling tenants who fail to pay rent. When they can start evictions, what they need to document, and so on, this puts small landlords at a dramatic disadvantage. You can verify this yourself; next time you’re at a local real estate meetup, ask a small mom-and-pop landlord how they handle non-paying tenants, and then ask a property manager. You will surely get two dramatically different responses. And lastly, one of the most valuable—yet underrated—advantages of having a property manager is their understanding of your local market…
    • 5. Superior Market Knowledge. Good property managers know their market. They know the market rents, which unit types rent the fastest, what kind of tenants stay the longest, which parts of town have been most successful for their clients, and where to avoid. They know what you need to offer to rent your unit quickly and will also know when it makes sense to perform renovations. 
  • As you can see, a property manager is so much more than just someone who collects rent or handles midnight calls. They’re a knowledgeable partner that can protect your time, improve your profitability, and help grow your real estate portfolio faster and with fewer headaches. If you’re still deciding whether to self-manage or hire a firm, don’t forget to check out Episode SS231, where I break down exactly how to evaluate that decision based on your goals.

Transcript:

Charles (00:00):
Many investors view property managers as little more than rent collectors answering 10 calls when issues arrive. However, what if I told you that property managers offer a range of benefits often overlooked? Welcome to Strategy Saturday! I’m Charles Carillo and today we are discussing the commonly overlooked benefits of a property manager and why a hiring one might be the smartest move for you and your bottom line. So let’s get started Afterwards, you’ll have a whole new perspective on what a great property manager really brings to the table. So when it comes to property management, many investors believe that the role of a manager revolves solely around handling the day-to-day operations and managing the tenants. However, some commonly overlooked benefits might go unnoticed but are still very valuable to the investor. In this episode, I wanna share some of these benefits and explain why landlords and investors should consider when deciding whether to hire a property management firm or bring it in house.

Charles (00:47):
Number one is optimize tenant management. So property managers remove any emotional factors ensuring a thorough vending process of new tenants. In addition to a basic background in credit check, most managers employ additional screening methods that many mom and pop landlords will not perform more in depth. Screening typically results when better tenants who stay and pay longer. Additionally, their firms are set up to handle tenant communication at all hours, including 24 7 emergency calls. So the systems all in place. You you’re really just plugging in your property and when you take the emotion out of it, it’s harder when there is emotion in it as a mom and pop landlord because you’re gonna be pushed to kind of bend your underwriting criteria because you know you’ve got that mortgage payment coming up and you want that tenant to cover it. But if you are the property manager, you’re not really worried about that as much.

Charles (01:34):
You are worried about having people go through specific steps that they need to check off all those places before they can come and move into the property. Number two is better bookkeeping. Now most mom and pop landlords have terrible bookkeeping. Horrendous. If you buy any property, I mean it’s terrible for the most part, right? You’ll see some that are really good, that have like a really good in-house like property management, but it’s very rare to come across that. Most of the time it’s like a weird spreadsheet or it’s like some legal pads or it’s like some old grid paperwork that you know, I don’t know. But it is not concise, it’s not complete and it makes it a nightmare to sell fin to property. Now this for the buyer. If you’re buying a property that has a mom and pop seller, this is fantastic, a lot of legwork, but many people won’t go through the work of trying to decipher what happened there.

Charles (02:18):
You go in there, you can do that. However, the thing that was that once we take over the property, we don’t want that anymore. We want to have clear books and very complete books. So when we go and we refinance or we sell, you’re gonna get the top price because it’s gonna be clearly outlined. Here are the bank statements. They correlate directly with these, the rent roll and the T 12 and everything lines up perfectly when you go to the bank. They’re gonna love that as well. Okay? There’s not gonna be any issues. Number three is better vendor management and pricing. So good property managers maintain extensive vendor contacts that they utilize regularly and they typically equates to a significant source of business for the vendors, allowing property managers to negotiate better pricing for their clients. Managers are skilled in managing properties and vendors and often more effectively than the property owners themself adding to the value that property managers add.

Charles (03:07):
Additionally, a large part of what property managements do is work with vendors and contractors, making them experts in what a job entails and its associated costs. So this is great when you want estimates or if you’re having some work done and maybe you’re not using a property manager’s client or contractors or maybe those property managers contractors are busy and you go out and you get a bid yourself, you bring it back to your property manager and they go, this looks fair, this looks a little high, this might be a little low. These are the things that you can get feedback from someone that’s seen these bids literally probably on a weekly basis from all their different properties. Now furthermore, many property managers have handyman on salary, which makes many repairs faster and less expensive than hiring a handyman for every repair. Also, trying to get handyman out to your property is very difficult.

Charles (03:50):
And the thing is, just because there are property manager doesn’t mean they have good contacts. I’ve had some property managers because they’re not paying for the work. So maybe that contractor’s good for the property manager ’cause they show up, but they might be, and I’ve seen many times, two, three, I’ve had plumbers before that property managers had quoted that were three x what I could find, the plumbers that I had in my contacts. So it’s important that you vet ’em. You just don’t like give ’em like, okay, just do whatever you want. But the thing though is that in many situations the main thing that they have is if with the unlicensed people that they have working like the handyman and stuff, this is where your biggest savings is gonna be. Because if you have a clogged toilet at 7:00 PM okay, and you send over a plumber, it’s a much different bill than sending over a handyman after hours, even with their, you know, their higher pay cost, whatever, it’s a completely, you’re talking 3, 4, 5 x difference, right?

Charles (04:37):
In pricing. So having very competent handyman that are on staff with your property manager, it’s a vital resource and you can’t just find those people like off like Craigslist or something and they like know they’re gonna do a good job. You know what I mean? You have people and they’re on salary there, they’re gonna be there all the time with that property manager. You can use them as you need it, perfect for people to have small portfolios. Number four is improved legal compliance. So most landlords do not understand their local tenants and landlord laws means they’re unaware of the rules, the protocols for handling tenants when tenants, when they fail to pay rent, what they do, when they can start evictions, what they need to document during that process and so on. And this puts small landlords at a dramatic disadvantage and you can verify this yourself next time you’re at a local real estate meetup.

Charles (05:19):
Ask a small mom and pop landlord how they handle non-paying tenants and then ask a property manager and you will surely get two dramatic different responses. And I did this once five or six years ago at a meetup. I was talking to it. They had a property manager. He knew exactly the timeframe, so I was he was telling me, he goes, yep, on this day this is what we do. Three days in and five days in, this is what we’re doing. The file’s going after five days of non-payment, it’s going to the attorney all they had everything set and systemized. And you compare that to a mom and PO investor and they’re like, yeah, if they don’t pay, I can’t hear from them. I try to work with them over like a three weeks or four weeks and all this type of stuff. And when you’re waiting that long, you’re never gonna get paid.

Charles (05:54):
It’s just what it’s, it’s very difficult for people to catch up. I probably can count on one hand how many times when I self-manage properties, how many times people actually caught up on back rent. You know what I mean? Most of the time it’s the beginning to the end. So catching it immediately and having the system in place is going to tell that tenant you mean business and it’s gonna get them to pay or to work out a deal with you or to leave whatever it might be. Number five is superior market knowledge. So good property managers know their market, they know the market rents, which unit types rent the fastest, what kind of tenants stay the longest, which parts of town have been most successful for their clients and where to avoid. And they know what you need to offer to rent your unit quickly and also know when it makes most sense to perform renovations.

Charles (06:35):
Now the other thing too is that this happened to me directly when I was speaking to property managers and I would ask ’em about different towns and I moved on to Florida and they would tell me, these towns are good. We’ve had issues in this town here in particular, which was where I’d moved next to. And it was one of those things where it could be two things and that property manager is not verse with that town. But when you speak to multiple property managers and they have the same sort of feedback, then you kinda get an idea that this is a very tough place. It’s difficult to make money. I probably will stay away from this and it saved me a lot of issues before even getting involved with a property there. Property manager is more than just a rent collector or someone who answers emergency calls from your tenants.

Charles (07:09):
They’re an important partner that can increase the profitability and the value of your property or removing yourself from the day-to-day property management tasks, allowing the real estate investor to better use your time in scaling their real estate portfolio. And if you’re unsure whether to hire a property manager or self-manage, be sure to check out episode SS 231. That’s SS231. So please remember to rate, review, subscribe, please submit comments and potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com. Look forward to two more episodes next week. See you then.

Links Mentioned In The Episode:

  • SS231: Hire a Property Manager or Self Manage

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