Ok people, I am going to pull back the PM curtain in hopes to dispel some of these ridiculous assumptions and misconceptions. @Nathan Gesner has already laid down some of this but seems few are picking up on it.
First of all, all this BS saying a PM is out to get someone because "oohh, aahh, gonna get-em for a few hundred on this" is just asinine. NO! We have 0 interest in drumming up some big time-suck and distraction to drive what is truly a very small amount of added $.
Here is the reality. As a legit PM Company our #1 focus is TIME EFFICENCY. And that makes profits for EVERYONE.
Someone has a ~$4k improvement work to be done. So what happens in efforts to get 17 bid's to try and save $1k, 25% off the job. THAT TAKES TIME. Easily expect it to burn up an extra month just doing that, because in case you havn't noticed vendors are not sitting around with nothing to do, THERE BUSY, more demand then supply for vendors, so yes, that's a month burnt up on feeling out prices. And with rent's at $2k, congratulation, you just threw away $2k to save $1k, a 100% NEGATIVE ROI.
Often we Pro PM's have to educate our novice Landlords of this math paradigm, it is called Opportunity Cost. The cost of time, in exploring discount potential. We have to guesstimate the legitimacy of that exploration, how much it could save, and then cost of time to do so. Ever hear of the math that if Bill Gates saw a $100 bill on the ground when walking into work, it would cost him almost $200 to stop and pick that up? Yup.
As a Professional PM Company we are focused on efficiency and performance, FULL-STOP. It's literally in our name; PROPERTY MANAGEMENT. No, we are not focused on making $ on maintenance, if we were, we would stop doing PM and just be a Remodeling Company! More then enough work to do it.
Maintenance is a big pain in our azz, arguably the #1 pain in our azz because it is blocking our ability to get a property leased which we DO make $ on, and in maintenance we have all this brain-damage and time-suck of getting vendors out, scope of work, communicating with owner etc etc.. The 10% fee on it is to MITIGATE our time-suck. Do the math, it's $400 on a $4k project, exactly how many labor hours do you think $400 covers? And before any idiotic comments of oh $400 covers a lot for a $15hr person NO, it doesn't, because after all the lovely costs of employment a $15hr person DOES NOT COST $15hr, there $30+. Don't believe me, ask an accountant, there is like 14 tax's paid on employees or some ridiculous #, I don't count em anymore but it's a list, a loooong list.
So most often even after a 10% fee we are loosing $ on maintenance. So yeah, we want that done and out of our lives and back to the business ASAP.
Our focus on maintenance is EFFICENCY. The cheapest person is ALWAYS a hack. There going to do crap work, mess things up, take longer because we need them back out 3 times to fix what they messed up, and it ends up costing MORE. The most expensive is some retail shop, who doesn't "get" rental property, and the property owner (rightfully) will be up in arms over the price blowing up our e-mail/phone demanding answers and guess what, will quit services so we did all that for nothing because we make $ on PROPERTY MANAGEMENT.
The answer is somewhere in the middle. Again, our EFFICENCY focus. That combination of quality and price, better known as VALUE.
So yes, when we find a VALUE service vendor, we build relationships, reoccurring services. We come to a place of getting them out to a property 1st, vs 17 bids. Because again, 17 bids LOOSES $ FOR EVERYONE.
And here is the deal, from the worst novice clients I hear the #1 stupid answer of "when I did it myself it only cost ___" well DUH, of course it did, your "guy" was FREE! Nothing can compete with free. So yeah, it's gonna cost more.
And here is the thing, EVERY Pro PM Company I know, mine included, is more then happy for a Property Owner to SELF-CONTRACT the work. Please, have it, and thank you very much. Again, we are a PM Company NOT a Remodeling Company. Our maintenance service is for your CONVENIENCE, it sure as hell isn't for ours, it's our #1 loss leader. Again, the time-suck of it all.
Getting quality vendors today is hard, wicked hard. The #1 reason I loose vendors today is because they tell me they have crossed over into more retail and are just flooded with high paying retail. I applaud them, it's great for them, I don't blame them 1 bit, I would too in there shoes. It's very hard for us Pro PM's to get the quality vendors, it's constant effort at recruiting because we basically have to find rising star's over and over and over again.
Reality is our best most profitable operations is a property with LT tenant in place, things humming along on cruse control. THAT's efficient time. And end of day that is what we are selling, TIME. We have a locked in $ with a landlord which means our internal labor time is locked, to make $ we have to use less to create a profit margin, and enough to mitigate those times when it's more. And to RETAIN clients.
FYI, we have ~2,000 properties under management today in the T.C. market center, that is where I am coming from in things. A person will never get close to this mark ever without being a master of efficiency for all. Efficiency = $'s.
Our goal is to get the most $ for rents on a property, maki it as passive as humanly possible, for as long as humanly possible. And when maintenance items come up, to keep them to ROI as much as humanly possible, keep it EFFICENT as humanly possible, and get back to the primary ASAP. And RETAIN clients which requires ROI for our clients. It's just that simple.
