Just about every rent roll has them and most are equally unwilling to let them go!
When business owners believe that the more properties they have, the better off they are, they often overlook the ‘ball and chain’ effect that bad business can have on their portfolio, staff, and their bottom line.
Let’s face it, finding good property managers is just not easy, and yet, finding bad owners isn’t hard at all!
If we intend to move forward we should be prepared to regularly review our owner clients and be willing to remove landlords that are not good for business, or at least increase their fees!
Here are ten bad owners characteristics to be wary of:
1. Over-demanding and unreasonable
This type of client is just never satisfied and often needs to have control of your staff and makes communication with them difficult and unpleasant. When you’ve got good news, they’ll make you feel bad. They like to be the ones in control.
2. They’re just downright time-consuming.
This is the owner who likes to write lengthy emails, blows small issues way out of proportion, and gives you lots of frivolous requests. The time taken to read, comprehend and respond to such clients can be quite unfeasible and often results in lengthy and unproductive phone calls. Let’s face it, time is money, so is the fee income that you are receiving from this client covering the time that it takes to do business with them? We’ve done the math, and this type of owner will typically take up to double your time than ‘normal’ management.
3. Whatever your fees are, they just want less!
When you do an analysis of the owners that meet the criteria in points one and two, you will most probably find that they are paying less in fees than other quality clients. These clients are typified by lots of work with less income! This is what bad business looks like.
4. Whatever the rent is, they just want more!
If you give the owner a fair market rent assessment on their property and they then insist on charging more, one of two things can occur. Firstly, the property will remain vacant, or secondly, it will attract the type of tenants who are desperate and willing to pay anything but in the end pay nothing.
5. Spend little-to-no money on repairs and upkeep.
A bad owner is also typified by being overly reluctant to spend money on repairs and property maintenance. These properties increasingly become a safety and litigation risk! The more run-down they are allowed to become, the higher the likelihood that problems or even serious injury to tenants and their visitors will eventuate leaving you legally wide open to costly litigation action.
6. The property tends to attract a bad tenant.
The more run down and ‘tired’ the property is, the less likely it is that a quality tenant will want to rent it. Quality tenants have standards. If the property doesn’t meet these standards it is fair to say that the only type of tenant that you will attract is the type that will not respect the property or pay the rent on time, if at all!
7. Low fee properties are lower in value to the business.
Lower fees have an impact on the value of that management to the overall business. Whether it is management fees or ancillary fees, it all has an impact on the maximum value you should be getting in comparison to a quality property.
8. Will happily ask you to accept unfair safety risks.
I speak often with property managers who wrestle with owner clients who won’t fix the most serious of problems like defective smoke alarms, power points/outlets hanging off of the walls, wood rot in railing/balconies, and the like. It should be an easy decision to stop managing the property should an owner refuse to promptly address urgent and dangerous issues. If they won’t, refuse to manage the property. The fee income you receive is not worth the injury or even the death of a tenant (or their children) on your conscience.
9. Staff burnout and turnover
The more ‘bad owner’ clients you have on your portfolio, the more ‘wear and tear’ to the mind, heart, and emotions of all staff involved. This shortens their professional lifespan as property managers, increasing staff turnover which, in turn, increases overall owner dissatisfaction making property management all that harder!
10. They are never satisfied!
This type of owner no matter how hard you try just seems to be never satisfied. This makes the whole experience quite unpleasant for all staff concerned.
What to say to the boss if you want to get rid of these types of owners.
At this point of reading, you may be thinking that you agree with all of this, but you have a principal (or you are the principal) who are concerned with the future potential loss of business, saying ‘they might want to sell one day!’
Quite simply, if they are a bad owner now, what is the chance that they will be a good vendor/seller? It is fair to say that they will demand less commission, want an unrealistic sale price and become a difficult and unprofitable client with selling as well.
In a day when the focus is shifting from trying to have the biggest portfolio in town to have the most profitable one (yes, there is a difference!), we must seriously take a look at our owner client base and make decisions about what is good for business and staff alike!