All Forum Posts by: Greg R.

 I agree with a lot of what you say especially about time versus money and the associated costs (I covered this in my earlier response).  I also agree labor costs are higher than hourly wage as you explained well.

However, 1) My PM, in the same town, would do that list for less than 50% of that quote.  2) My PM does not mark up the maintenance/repair costs.  They charge a PM fee that includes managing their team for maintenance/repair items.  

I am OK with both scenarios: 1) charge a little extra for flat PM and not charge for the various items where they could itemize the smaller costs or 2) charge less for the PM and charge for the various itemized smaller costs.  

In the end the PM is likely making a similar amount of money as PMs (contrary to many owner views) are not getting wealthy just on their PM fees.  As long as all parties understand what the costs will be (i.e. maintenance markup is documented) there is no wrong approach.

Note my PM has their own maintenance employees that are competent.  I can make work orders that are not just maintenance.  For example, last month I made a request to paint stripes for parking because vehicles were parking in positions that did not allow optimal use of the parking lot.  In about a week, because it was low priority, they painted the stripes and they are perfect.  5 parking spots was less than $150.  Very reasonable cost (tape and paint, remove tape).

@Greg R.

What area is this? Sounds a little high. I’d get one more quote. I’m in the Dallas area and it’s expensive to get good reliable help these days. Just the way it is now with a labor shortage. I pay high, but my crew is convenient and gets it done on time.

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.

1. Why are they suggesting so much work needed for a 450sq.ft. studio? Either this place is in bad condition or your PM is taking you for a ride.

2. The prices look fair for what they are doing. If you don't want to pay $40 to install a CO2 detector, then find your own professional or do it yourself.

3. If your PM doesn't care about the property as much as you, why would they bother with all these improvements?

4. The higher the rent rate, the more money the PM makes. So they do have a vested interest in keeping the property in top shape, renting it for hte highest rate possible, and reducing vacancy. Unless they are stupid, their interests align with yours.

"Nobody will care for your property better than you."

This is a tired line from so many Landlords. Dig deeper. I see a lot of DIY Landlords that make comments like this and then a review of their rentals show deferred maintenance, below-market rent rates, non-paying tenants, and other problems. The majority of my Landlords make more money after hiring me and their properties are better maintained.

 Greg is your PM hands-on or having more corporate vibes? The PM that's more 'corporatist' tend to be money-pit for repair, I avoid any big name if I can, that's the lesson I learnt.

The vertical blind and replacement labor floored me.  Mine are $70 and take 4 minutes if the wall brackets are already in.  Their invoice is like $500. 

With my PM, I had 'notify me before you send a licensee' order.   The PM wasn’t licensed to swap a plug or fixture and I saw their previous owner invoices.   I'd do the faucet and GFCI / receptacles myself. 

While there you can evaluate whether complete repainting, floor clear coat, etc are even needed.  Are all turnovers going to run $100/sqft?  LOL

Aloha,

If you are used to doing this work yourself, of course it is going to seem exorbitant. A quick calc comes up with $3675 for labor, including $595 for plumbing and electrical labor. What does a properly licensed and insured plumber or electrician cost in your area? Here it is typical to see $125 - $145 per hour, plus a trip charge. Locksmith is actually about the same. Apparently there was at least some troubleshooting for the electrical switches and GFCI. Regarding the plumbing, I routinely request that "old style" stop valves (multi-turn gate type) be replaced with quarter turn ball valves that have a much longer operational life. It is good preventative maintenance to replace the flex supply lines before they burst and do real damage. Without a pic of the faucet, I have no judgment on that decision, but if showing excessive corrosion and/or age of plastic components, depending on overall condition of the unit I will likely change as well. Old, or cheap, faucets will start leaking, again potentially causing damage if stems are leaking back into the cabinet or wall. A single service call is cheaper than multiple trips for issues that could have been addressed during turnover.

What is the going labor rate for properly licensed and insured carpenters/painters in your area? Work the numbers backwards to see approximately how many hours of labor they are charging for. You stated "the PM proceeded to get the maintenance company..." That sounds like a third party, not in house maintenance staff of the PM. What does your Management Agreement state with regard to repair expenses...does PM mark up, or is it charged at cost, or?

You should have spent more time learning about the process and costs for turnover before signing a contract. All PM's are NOT created equal! When was the last time this unit had significant work, like complete paint or any updates? Maybe the PM has a higher standard of what is offered for rent than what you have in the past...we have no way of knowing. How long was the last tenant in it? Who screened and placed the tenant?

This looks pretty fair to me on paper, but you have a bigger issue in my opinion. 

Lots of investors lose sight of the forest for the trees in exactly the same way you are- you're assuming everyone is out to get you and doesn't understand theh processes as well as you do. 

You need to decide if your PM is good or if you are just too involved. Your PM is your business partner and it's vital that you trust your partners, obviously. It's not unreasonable for your partners to make money too- it should just be totally transparent and you should all be on the same page. 

Best of luck!