Property Management Transparency
As homeowners, we must know and understand where our income is coming from. Plus, we must know how much money is coming in to balance our finances. The same holds true for investments in Real Estate. When receiving a check from the property management company, we must understand the numbers as property owners.
Where’s my money?
It is very frustrating not understanding why the check from the property management company $200 or $500 short. This makes it very difficult to balance our books on our investments. This is where the importance of transparency from your property management company becomes important.
Choosing a property management company can be a very daunting task. There are thousands of property management companies to choose from, all with different fee schedules and each one promising you the world.
However, once the honeymoon period is over, it’s all about making money.
As property owners, we need to have the visibility or the transparency to understand why money was spent and have that justification documented and available in some type of owner portal regularly maintained by the property management company. This clear level of transparency is generally accomplished via a real-time customer portal. This portal will allow for clear lines of communication through which all interactions are maintained and stored indefinitely.
So why is this important?
Understanding where our money is being spent allows us to try and maximize the value of our property and thereby get the maximum return on our investment (ROI). The bottom line is if someone is taking money out of our pocket to spend on anything, there needs to be some type of approval process in place to justify those expenses, document approval, audit the expenditure, and finally archive the entire process. For example, in this portal, a property owner should be able to:
- Get request to spend fund with justification
- Document decision
- Provide proof of expense
- Audit expenditure (provide proof money was spent as designated)
- Archive entire transaction
One thing that we ask for is a monetary spending limit on non-emergency repairs in the unit. This allows for us to provide a higher level of service to the tenant, get things done in a more timely manner and keep tenants in place for longer periods which limits turnover and ultimately out of pocket expenses for our owners. When expenses are going to exceed our preset monetary amount, we will contact the owner and layout what options there are and give our opinion of what to do.
This also offers an additional layer of protection for the property owner. This level of transparency holds all stakeholders involved accountable for any decisions or indecisions associated with any expenditures.
This will also undoubtedly have legal ramifications should legal intervention be required.
Choose Wisely
As Steven Spielberg wrote in the iconic movie Raiders of the Lost Arc, “Choose Wisely.” Dealing with a property management company can be a love-hate relationship. Yes, they are providing you a service. However, at the same time, any action on their part may be considered billable; that means you are paying the property management company to manage that repair/maintenance for you. One thing to be weary of is “A-la-carte” agreements where you are paying a lower commission rate, but being charged a fee for each individual workorder and/or anything extra done on the property. These types of agreements can cause your expenses to balloon fairly quickly.
When choosing a property management company:
- Make certain they understand your objectives
- Check that they are reputable with verifiable references (Do your homework!)
- Do they have a real-time owner portal for communication/transparency?
- Do they offer a device application for today’s mobile life?
As with anything, the amount of time you invest in choosing your property management company will ultimately be reflected in your return on investment.
Hashtags: #propertymanagement #propertymanager #floridahome #floridarentals #rentalmanagement #projectyourinvestment #investmentsafety #rentalhacks #rentallife #vacationhome #floridatravel #venice #nokomis #osprey #englewood #northport #florida #centeralflorida
