one of our greatest joys at dwell management is knowing that the work we do has helped ease another person’s situation. being an owner of investment property can be very stressful. even the most seasoned owners have difficulties at times and we are passionate about helping people just like you through those unfavorable times. below are a handful of stories about real people that have become clients of ours. you might find similarities to your own story or maybe you’ll simply realize that you aren’t the only one who’s struggling. nevertheless, we’d love to help you get to a better place with your investments and be able to sleep easy at night.
the do-it-yourself story:
paul contacted us one spring to inquire about having us manage for him. he had always managed his own rentals but was having a very difficult time getting one of his homes filled. when we met with him to do the site inspection, it became evident why. the home had not been cleaned and while it wasn’t the worst i’d ever seen, there was food smeared on the cupboards and the stove, crayon drawings on the walls in the basement and a musty dirty smell. i chatting with paul about what would need to be done to get the unit ready for rent, he sighed and lowered his head and said he knew, but he was just waiting for a tenant to put down their deposit so he had the money to do the turnover.
he confessed that the home had been vacant for 9 months and that he had become overwhelmed with the piling bills and his frustration had mounted to a place of immobility. he said he had been advertising the 4 bedroom home at $1500 and had some showings but no one willing to bite the bullet and believe he would get the home cleaned up before they moved in. i explained that this was a common response because tenants simply don’t know who they can trust and it’s much better to have the home looking it’s best, so we’re not asking them to gamble.
i asked paul to talk with his friends and family and try to come up with the funds we needed to get the house turned over. a few days later, he called me and said he had the money and would be bringing it by to deposit with us so we could get the house ready to rent. we were so glad that paul managed to make this work. this is a common catch 22 in property management. sometimes, you just have to spend the money to get a home rented and keep you from going under.
we immediately got our subcontractors on the job and had the house ready for rent in 5 days. we advertised the home for $1995 and had several showings. in less than a month, the home was rented for the asking price, which was $495 more per month than paul was asking and after subtracting our fee of $179.55, he was still up over $300 per month! paul realized then, as many of our owners find out, the value of professional management.
the i’m-paying-how-much? story:
a few years ago, as a favor to a real estate developer i’ve known for years named dale, i spent some time reviewing one of his friend’s financial statement from the property management company who was managing his very large portfolio. the management company is one of the largest in town and had been managing john’s portfolio for some 15+ years. this all got started because dale was spreading the word that i’d started a management company and was planning on charging 50% of the first month’s rent and an all inclusive monthly fee of 9%. john thought that this was too much as he was only paying 50% of the first month’s rent and a 4.5% monthly fee. he knew this was partially due to the volume of his portfolio but became curious when i said that mostly likely he was paying more than he thought since his manager wasn’t charging a flat fee.
i began looking over the most recent monthly statement he provided me and began highlighting all the extra charges. things like:
- fees for hiring maintenance on top of the expense of the repair
- a fee of $2000/month for “software license” for the program they used to keep his records
- copy fees
- telephone and internet expenses for their office
- late fees paid by the tenant which were retained by the property manager
- continuing education fees for taking the classes required to keep a license
- training fees for training staff and on-site managers
and this is just the start of it…
i was completely shocked. what i saw was a company who passed on their expenses of running a business to their owners. i wondered how owners as smart as john didn’t notice this. it made me sad and disappointed when i added up all the fees and extra charges to discover that the total percentage this particular owner was paying wasn’t anywhere near what he had been quoted…
…it was 21.6%
ouch. john wasn’t very happy as you can imagine. he was such a large investor and a busy man that he’d never really paid much attention to the extra charges as he considered his main goal to go out there and find and buy more property. he had no idea that that he was been “scammed” as he put it.
over the years, i’ve been tempted to cave on this and just become like the rest of them…we’d certainly make a lot more money. but i was taught a long time ago that money isn’t everything. at the end of the day, i know we are a good value and it’s why we stand by our decision to be different.
(note: john is not a client of ours as we are a small company working from home and simply don’t have the means to manage his huge portfolio. but we felt pleased that we were able to shed some light on his situation and increase his negotiating power with his management team, or someone else of his choosing. further, his situation is an all too common one in our industry and his story is one i find myself sharing often with owners who are wooed by low percentage management fees)
the i’m-trying-to-save-money story:
matt is a long time investor who’d never hired property management because he’d always been told by other property owners he’d known that hiring professional management was too expensive. when we told matt the fact that we are often able to raise rents enough to cover our management fee, he wasn’t sure we could do it.
you see, most owners who are managing their own rentals, do so at a below market rate in order to try to avoid problems. but this move often creates that which they were trying to avoid. we see owners taken advantage of most often by predator tenants when they know the owner is managing the place themselves.
when we showed matt some comparable rent prices for his units he decided to take the plunge. within a year, we were able to raise his monthly rents by $295 thereby covering our monthly management fee of $271.35. further, we rid him of a “friend” tenant that was taking advantage of him and causing him undue stress. then, we added utility bill backs on his duplex which is saving him about another $90 each month for a total of about $115 more in his pocket and all he has to do is wait for his check to come each month.
the i’m-in-way-over-my-head story:
michelle was referred to us by rebecca’s massage therapist when michelle went in for a massage to relieve the massive stress she was under with her first ever attempt at managing a rental. michelle had recently gotten married and moved into her husbands house, leaving her condo vacant. she thought “how hard can it be?” and decided to advertise her condo for rent. the advertisement stated that she was a “first-time landlord and would be flexible on rent in order to get the right person.” …and boy did that attract the wrong person all together.
when the renter moved to town the complaints started and never ended. all this after michelle had waived the security deposit and pet deposit and not requiring the tenant to sign a written rental agreement when they refused leaving her with no assurances and the renter knew it.
michelle called me about 6 weeks into trying to deal with this situation and on the heels of the tenant threatening a law suit. michelle was fearful and knew it was time to hire someone to help. we immediately made an appointment for all parties to walk through the unit and made a repair list. further we told the tenants that we don’t manage any units without a written rental agreement and asked them to sign one. and here’s where they refused. further, they weren’t excited about michelle hiring a professional property manager and asked her to cancel her contract with us and they would work with her. michelle didn’t fall for their trick!
we worked with the tenants for a mutually agreeable move out date and they moved on…taking with them the towel bars and light bulbs and anything else they could quickly remove to take with them. now, michelle’s unit is rented with a written agreement for $195 more than she was asking. this means that minus our fee of $89.55, she’s still ahead by $105 each month and will never be victim to a predator tenant again.
the dwell-saved-me-a-bundle story:
judy called us one afternoon after she saw one of our for-rent signs in her neighborhood. she had been thinking of moving out of state and wanted to try to get an idea of how much her house would rent for. as we got to talking, judy told me that she had been talking with a friend who might rent her house for $800. i told her that i thought it was worth much more but couldn’t be sure without looking at it first.
we set up an appointment for my walk through and based upon our discussion, judy hired us and boy was she glad she did. we listed her house and got it rented for $1195…almost $400 more than she was going to rent it for.
just before judy moved out, she had a service tech come to service her furnace and found out at that time, that her furnace really needed to be replaced. the tech who came was someone she’d had work on her furnace in the past and someone she trusted. she got a bid from him to replace the furnace which came in at $2800. i told her, i thought we could get her a better bid and we called our hvac contractor who replaced the furnace for $1625! judy couldn’t believe the savings! and we handled the hiring, overseeing and payment of the contractor for her. we often find that contractors don’t seem to give very good deals to home owners and this was another example of that.
if you are thinking of hiring us to manage your house, it’s a good idea to hold off on any repairs until we talk. for one thing, you may not need to put those granite counters in for us to get a really nice rent rate on your home. further, our contractors can do the same work at a cost savings of usually 25-75% if you just wait and let us help you. if you want to oversee the work, that’s no problem at all; we’ll get you in touch with good people who won’t try to take you to the cleaners.