How to Supervise my Property Manager?

[Michael D Kaminski]

Greetings!  (First post on a BP Forum!)

I have a portfolio of properties (more than 20 units) that are being handled by a single property manager. I get the owner's statement every month (from Buildium) that shows rents, vacancies, property management fees, maintenance expenses, etc. We are also in a period of stabilizing the properties so we also have significant CapEx, most of the construction being handling by the property manager's in-house crew.

I am getting the feeling that my property manager is taking advantage of me by charging too much for maintenance fees and CapEx. Only for example, should replacing a toilet cost cost $400 instead of $200? Is there a way to analyze the owner's statement so that I can challenge the property manager, aside from gaining all the experience with "reasonable" costs myself so that I could analyze on my own? I guess my question is whether there are services that would do this type of analysis? (On a non-BP podcast, I hear the speaker suggest using a VA to do this same analysis.) I still have a day job so chasing down different quotes is difficult, but maybe I need to find someone to do that? Is that the only way?

Any advice would be appreciated.  Thanks.  

[Michael Diossa]

First question to ask is, are they doing their job and well? are the tenants happy with the services in a reasonable matter?

Second- Doing a quick google search the average cost to replace a toilet by a professional is around that price of $400. Granted you could do it yourself and save close to half that.

A PM can save you money by giving you the right suggestions for unit turnovers to increase the rent and yield more. 

A PM should be hired to alleviate the stress and responsibilities that come with being a landlord not with the idea solely on profit. 

Personally the most effective bet is too call other local PM companies yourself because only you can truly express your concerns and maybe get better pricing.It should only take 15 mins per call.

Keep in mind usually smaller less experienced organizations will give you a cheaper option.

[Michael D Kaminski]

Thank you!  Good points!  

[Adam Bartomeo]

We charge our owners $50/hr and the toilet install would look like this:

1hr to drive to and from HD, 1 hour to remove the toilet, 1 hr to install the toilet, $100 - $150 for materials = $250 - $300. If you are being charged $400 they are probably using a licensed plumber with higher rates.

From HomeDepot.com - The average cost of toilet installation ranges from $185 to $400 for all labor and materials.

[Drew Sygit]

@Michael D Kaminski where are you getting your $200 amount from?

[Theresa Harris]

If you feel the costs are too high for repairs, then ask to do them yourself...however, you need to make sure they are done properly and accept responsibility if there are problems.  In the long run, it probably won't save you money unless they truly are ripping you off.  If you feel all of their prices are too high, then go with another PM, but you get what you pay for (most of the time). If it is only a few that seem high, ask them for a breakdown.  I will say for myself, I'm fine paying $X to install a faucet (for example), but when it is broken down into $A for travel, $B for labour...it bugs me-stupid, I know, but I'm being honest.  To me that should be rolled into the quote.  I shouldn't have to pay more because they organized their work to zigzag back and forth across town.  (and yes remember I said I know it was stupid as I'm paying it either way). 

[Michael D Kaminski]

Sorry.  I was just using that as a hypothetical.  

[Michael D Kaminski]

Quote from @Theresa Harris:

If you feel the costs are too high for repairs, then ask to do them yourself...however, you need to make sure they are done properly and accept responsibility if there are problems.  In the long run, it probably won't save you money unless they truly are ripping you off.  If you feel all of their prices are too high, then go with another PM, but you get what you pay for (most of the time). If it is only a few that seem high, ask them for a breakdown.  I will say for myself, I'm fine paying $X to install a faucet (for example), but when it is broken down into $A for travel, $B for labour...it bugs me-stupid, I know, but I'm being honest.  To me that should be rolled into the quote.  I shouldn't have to pay more because they organized their work to zigzag back and forth across town.  (and yes remember I said I know it was stupid as I'm paying it either way). 

 Thank you for the response!

[Gregory Schwartz]

I absolutely love this question! The fact that you’re actively involved in the process and looking for ways to keep your property manager accountable is such a crucial first step. It shows you're committed to growing your investment, and that’s exactly what a good property manager (PM) should be helping you with—they are stewards of your hard-earned money.

I would suggest approaching the conversation like this: “Hey, I’ve noticed that maintenance expenses this past quarter seem a bit higher than usual. Could we sit down and review these together? I’d love to work with you to get this down to an average of $XXX per unit per month.”

Then ask, "What other strategies do you have in mind to help maximize my ROI?" This puts them in the driver's seat, solving the issue with you.

[Michael D Kaminski]

Gregory:  Thanks!  I love your script.  I will do so.  I do have a meeting already set.  Mike 

[Lynn McGeein]

My husband's day job is very important to him, too, but our portfolio is just as, if not more important to our future. How much extra do you have to work to cover the difference in higher costs? Taking a day and getting a few estimates is really the best way to understand if management is way too high or just reasonably high, and you just may find some great contractor relationships that save you $$$$ for years. We've had long-distance properties under the same management for years and really like our managers. But when their quote for larger projects is unreasonably high, we drive down and work on things we know are labor-cost-intensive through management while waiting for contractor estimate appointments. When in between contractor relationships, I'll schedule 3-4 estimates because some don't even show. There's no point in idly waiting - we have travel bins ready to go with things like window screening, exterior trim paint, gate latch parts - they're always broken, deck screws, toilet replacement parts, outlet covers, etc. Several times we've found contractors that saved us thousands off management's estimate, especially when we've requested some renovation in addition to turnover. We found a painter that saved us so much on about 7 years of turnovers, and an excellent flooring guy, but they've now both retired. We recently found a licensed contractor reasonable enough that we now call him for things that aren't an emergency, initially saved us thousands off management's estimate for repairs due to a break-in during a turnover (apparently management calls an outside contractor to quote potential insurance claim repairs, and he was beyond ridiculously expensive). We still use management's team for emergencies and easy turnovers, worth it on those because we don't want delays. FYI, over the years, we've also learned to save a lot of money wasted on excessive management labor costs (we call them "stupid trips") by planning the occasional weekend to drive down, inspect our units and address any labor-cost intensive items that we can do over a 3-day weekend. Works really well when we could also line it up the day a unit went vacant so we could handle all the dumb stuff that they charge so much for in a turnover, then let their crew handle what we didn't want to do. Great for both saving hours of high labor costs and finding things management doesn't notice. Like once we found that a tenant moved a gutter downspout, eroded the soil under heat pump pad and caving in enough to shortly damage the heat pump. Even just a back door frame starting to rot due to rain splashing up, we put up a diverter and fixed the frame. There are so many items that you'll find early, easily fix & extend useful life, by just devoting one weekend to several units, instead of letting them becoming major problems with major expense, which is usually when tenant and management notice. I know many are hands-off, want to just let management handle it all, but it's a huge investment for our future and we know we've saved so much with minimal involvement.  

[Leroy K. Williams]

Quote from @Gregory Schwartz:

I absolutely love this question! The fact that you’re actively involved in the process and looking for ways to keep your property manager accountable is such a crucial first step. It shows you're committed to growing your investment, and that’s exactly what a good property manager (PM) should be helping you with—they are stewards of your hard-earned money.

I would suggest approaching the conversation like this: “Hey, I’ve noticed that maintenance expenses this past quarter seem a bit higher than usual. Could we sit down and review these together? I’d love to work with you to get this down to an average of $XXX per unit per month.”

Then ask, "What other strategies do you have in mind to help maximize my ROI?" This puts them in the driver's seat, solving the issue with you.

Property Managers receive this polite request for a talk all the time and we know how to read between the lines.  If your properties under management are generating steady income for you close to or even exceeding your initial expectation, yet you scan the work orders and find more fat that can be trimmed which would yield even more profit. Well that is a sign of greed.  

If a maintenance item "could" be done for less, it doesn't mean that it should be.  There are critical items such as -Plumbing, HVAC, electrical items, roof repairs, appliance repairs- that you want extremely competent professionals to handle to ensure that you the PM and owner avoid liability and to ensure you aren't shelling money out again for the same issue because you were being cheap the first time.  

As with anything you can find examples of PMs who abuse this, however, if its not blatant and excessive try your best to relax because I promise if you keep pressing that button you will be looking for a new Property Manager.  Word to the wise.  

[Gregory Schwartz]

@Leroy K. Williams not sure i agree. What is the purpose of a PM if it's not to grow the wealth of the owner? That should be the number one goal? Unless I'm missing something. 

If the property manager is getting paid, the repairs are made correctly and in a timely manner and there is fat to be trimmed. Then you should trim it. That is just part of the process for any investment or business. 

That being said, don't micro-manage a good PM. Trust but verify. 

When I managed properties the owner would regularly call me in his office.... why did we spend $1/sqft to paint this apartment, why did we replace a fridge, what does it cost $2500 to do a simple make-ready on a 1 bedroom luxury apartment? He wasn't micromanaging he was spot-checking. I had the answers that showed I did my job keeping his expenses as low as possible while also keeping his tenants happy and his property in top condition. 

[Karl B.]

And this is why I self-manage. I pay my plumber $100 to replace a toilet. I bring the toilet and a new wax ring to the property and remove the old toilet when he's done with the job. Then I donate the toilet to the local Habitat for Humanity Restore for a tax credit.  

Call or e-mail three local, licensed plumbers in your area and ask them how much it would cost for a toilet swap. I would be shocked if you don't find a plumber who will do it for $150-$200. It takes less than an hour to do, that's for sure. Then show the paperwork to your PM, who is no doubt padding his or her pockets if you're being charged $400.00.

[Leroy K. Williams]

Quote from @Gregory Schwartz:

@Leroy K. Williams not sure i agree. What is the purpose of a PM if it's not to grow the wealth of the owner? That should be the number one goal? Unless I'm missing something. 

If the property manager is getting paid, the repairs are made correctly and in a timely manner and there is fat to be trimmed. Then you should trim it. That is just part of the process for any investment or business. 

That being said, don't micro-manage a good PM. Trust but verify. 

When I managed properties the owner would regularly call me in his office.... why did we spend $1/sqft to paint this apartment, why did we replace a fridge, what does it cost $2500 to do a simple make-ready on a 1 bedroom luxury apartment? He wasn't micromanaging he was spot-checking. I had the answers that showed I did my job keeping his expenses as low as possible while also keeping his tenants happy and his property in top condition. 

Gregory, I get it and agree that the objective of a good PM is to grow the wealth of the investor. In my view we achieve this primarily by scaling not by recalibrating the way your PM does business.  In your example of being called into the office you were obviously working as an employee of an investor or PM however this example doesn't work well when compared to the function of an independent management "company". Companies typically have business models which of course are not set in stone, however, changing the way a company operates should not be imposed by a single client simply because it works better for them and not the management company.  We have to keep in mind that the PM is running a business that has to make a profit. 

I want to reiterate that I am not advocating for inefficiency or waste. I am suggesting that a good PM understands the pros and cons of how they operate. You hired the PM to Captain the ship, you, the investor, must surrender the helm and let them do what they do best.  

[Jeremiah Dunakin]

Quote from @Karl B.:

And this is why I self-manage. I pay my plumber $100 to replace a toilet. I bring the toilet and a new wax ring to the property and remove the old toilet when he's done with the job. Then I donate the toilet to the local Habitat for Humanity Restore for a tax credit.  

Call or e-mail three local, licensed plumbers in your area and ask them how much it would cost for a toilet swap. I would be shocked if you don't find a plumber who will do it for $150-$200. It takes less than an hour to do, that's for sure. Then show the paperwork to your PM, who is no doubt padding his or her pockets if you're being charged $400.00.

 This 💯. Changing a toilet is as basic as you can get. In and out and n 1/2 hour. 

1. Turn water off

2. Unhook line 

3. Flush toilet 

4  vac out water

5 remove two flange bolts 

6 clean flange and put new wax rings on

7 place toilet on new flange bolts tightened bolts

8 reinstall water line 

9 check for leaks

it’s an easy job that should not take long at all. 

[Jeremiah Dunakin]

Quote from @Adam Bartomeo:

We charge our owners $50/hr and the toilet install would look like this:

1hr to drive to and from HD, 1 hour to remove the toilet, 1 hr to install the toilet, $100 - $150 for materials = $250 - $300. If you are being charged $400 they are probably using a licensed plumber with higher rates.

From HomeDepot.com - The average cost of toilet installation ranges from $185 to $400 for all labor and materials.

 2 hours  to replace toilet? That’s tough. It’s a half hour job at most. 1 hour to take toilet off. 1 hour to install. It’s two bolts a wax ring and disconnecting water.

[Adam Bartomeo]

@Jeremiah Dunakin You have never timed it have you? Next time, try a time it to see how long it takes. Not only taking out the toilet but removing it from the property, disposing of it, and all of the water clean up. You cannot just through it in the trash. Also, getting the new toilet in the property, unboxing it, putting it together, and testing it. "It’s a half hour job at most", extraordinary!

Maybe you can come work for us with your superhuman toilet installation skills. LOL!

[Matthew Paul]

The PM is a for profit business , they are not there to "save" you money , they are there to get the job done .

You can ALWAYS get things done cheaper , but is your PM going to schedule 3 contractors for estimates and wait 1/2 a day for them to show up for free?  

I am a contractor , I am not there to save the customer money , I am there to solve a problem , I am in business to make money .  If you want to save money , do it yourself or find your own contractors , and at that point expect your PM to put you on the back burner . 

@Jeremiah DunakinA half an hour job ?   You forgot getting the toilet , carry it up the stairs , assemble the toilet , fix the broken toilet flange , disassemble old toilet carry down the stairs , trip to the landfill .   I estimate 1.5 hours just to replace a wax ring ( Including travel time )  

[Jeremiah Dunakin]

Quote from @Adam Bartomeo:

@Jeremiah Dunakin You have never timed it have you? Next time, try a time it to see how long it takes. Not only taking out the toilet but removing it from the property, disposing of it, and all of the water clean up. You cannot just through it in the trash. Also, getting the new toilet in the property, unboxing it, putting it together, and testing it. "It’s a half hour job at most", extraordinary!

Maybe you can come work for us with your superhuman toilet installation skills. LOL!

No I have never timed it. I will say I’ve probably changed 6/7 toilets. Never took an hour to remove it or an hour to install it. 
1. shut off water supply line(turn handle) 15 seconds
2. flush toilet 10 seconds
3. vacuum and drain water 2 minutes maybe 
4 lay out cardboard(from toilet box) put out trash bag
5 remove 5/16 nuts one on each side with hollow shaft nut driver 2 minutes
6 pick up toilet and place into bag 2 minutes
7 clean up old wax ring from flange and inspect flange 2 minutes
8 place wax ring 1 minute
9 install new flange bolts 1 minute
10pick up toilet and place on new ring if you didn’t ring right maybe 5 minutes 
10 tighten down new bolts 2 minutes 
11 cut bolts and install caps 2 minutes 
12 reinstall water line 1 minute and turn on 
13 flush to check for leaks 
14 caulk back of toilet seal if you choose 1 minute
15 carry away toilet to truck 10 minutes tops. 

this a 30 minute job. The trip to store well that depends on where u live. I understand charging for that. The two hours to remove and install one, unboxing it ? If an handy man cant open a toilet box he need to hang his tools up.

Have you ever installed a toilet? 
I could post numerous videos of guys doing it in way less time than 1 hour let alone two hours. 

[Adam Bartomeo]

@Jeremiah Dunakin I have an hourly position for someone just like you! Lol! We will have you install toilets all day long and make a killing! Lol!

[Jeremiah Dunakin]

Quote from @Adam Bartomeo:

@Jeremiah Dunakin I have an hourly position for someone just like you! Lol! We will have you install toilets all day long and make a killing! Lol!

Lol well if my shop ever slows down I will look you up. Best wishes