Property Management issue

[Sing Ho]

Hey BP,

Need your opinion about PM situation I have with my PM for one of my properties. I had a quote from my PM to fix up and clean up a unit in my building for purpose of getting new tenant in. I was quoted one price but after some work the price went up 200 bucks on their management website. I checked the cost of the work listed and it is just a bunch of different prices and list just shows maintenance. No clue what the charges were for. When I asked about the higher price and why they did not ask for approval, I was told this "Typically for these types of items a further approval is not warranted and our maintenance workers were given the okay to complete as necessary so not to waste time, and we were still able to keep it close to the original estimate." Seems like they can up the price and make things up as they go along.

Is this common practice for PMs? Mind you, this is my first time I am dealing with a PM and I am still learning about how they run and do their business. I been with them since April of this year and so far I am not too satisfied with them. This is just one of the things I have an issue with them. Is this how it works. Do I need to look for another PM. I did ask alot of questions before I signed with them and they sound pretty good at the time but they are not living up to my expectations.

[Andrew Johnson]

@Sing Ho My management agreement has something along the lines of what @Kim Meredith Hampton mentions.  Basically, if the item is under $300 they don't need my approval.  If it's over $300 they need to get my approval and I can ask them to get competing bids.  The reality (for me) is that I want all of the small stuff done without them contacting me.  That's half of the value in property management.  Sure, they might charge me $35 or $99 to rekey a lock, maybe I could find competing bids, but I really just don't want the hassle.  However, when I do look at my monthly reports I have receipts for everything.  It's actually a pain to go through because each small charge has a PDF'd invoice with it.  And if they used their handyman there are actually receipts for the materials that the handyman used.  I mean I love the transparency but the PDF reports get long!  

Anyway, it sounds like this is your first time using a PM.  My advice, get used to "not being satisfied" and focus on the big things.  The PM will never have the same focus that you would on your property, the same urgency, etc.  It all goes hand-in-hand with being an absentee landlord.  Worry about a unit that's vacant for 3 months and costing you $700/month in lost rent.  In essence, worry about the $2,100 and not the $200.  

Not to mention (devil's advocate) you never really know the cost to turn a unit around until you get inside.  And if your PM stops to take bids, call you, has to resend the maintenance team out again later in the week, etc. it all takes time.  That time is lost opportunity cost for you because they can't show the unit and get it re-rented.  So I'd HAPPILY pay an extra $200 to get a unit turned around and ready for showings in 48 hours than debate line-items or get bids and it cost me $150 (a 25% savings!) but take 2 weeks.  The lost opportunity cost of the two weeks is greater than the marginal savings.

But, hey, this isn't to say that you have a good PM.  Just some thoughts to consider.