Should you Hire a Property Manager that does the Maintenance?

Selecting a property manager may be one of the most important decisions you make for your rental property investment. Recently I purchased a 12-unit apartment building in a low-income neighborhood in Saint Louis, Missouri. I bought it in a short sale. Since I was an out-of-town investor, I needed a property manager as soon as possible so I can go back to running my business- in other words, my full-time job.

Depending on your property’s condition, you will require a certain type of property manager. As for my 12-unit building, most of the units were rentable as far as occupancy inspections were concerned. However, being the new landlord that I am and wanting to make a rough diamond shine with a goal of bettering the margins with increased rents, I decided on hiring a property manager with a background in general contracting.

The idea was to have my property manager manage the building and simultaneously do renovations. While I was back home slaving away, the property manager would go to Home Depot to make purchase orders for ongoing renovations. I would then get a call from Home Depot and the sales clerk would run down a list of the items being bought by the property manager. The sales clerk would then ask me for my credit card information to process the payment. Home Depot makes the process nicely convenient for you when you’re out of town. In the beginning, all seemed to be working well.

It wasn’t until I started noticing that the purchases were getting more and more expensive per day. In one situation two sheets of drywall were purchased to fix a hole the size of a tennis ball. The purchases were becoming exaggerated and I started to become suspicious. However, my suspicion served little to any use since when you’re away from your properties, you can’t really say “No you don’t need to buy that much caulking for the bathroom ..” and so you’re at the mercy of whatever the contractor says.

I realized that I was somewhat powerless in managing the details of the expenses and materials being purchased. This is a situation you don’t want to be in since you’re bound to have a hemorrhage of cash from your pockets and not necessarily directed to your property’s improvements.

Property Manager's Mess
Property manager’s aftermath of worked completed #1
Property manager's mess
Property manager’s mess after replacing windows

I finally had to pull the plug on the project since I realized I had no idea if the purchases corresponded with the work being performed. Nor could I really tell what was the quality and progress of the work at hand.

When I finally arrived back in Saint Louis, it did not take me long to realize how poor of a job the property manager had done with the renovations. In addition, I soon realized I had paid a premium for materials. Materials I suspect that were bought with my credit card but used on other unrelated properties or projects. The paint on the walls was done carelessly and was sloppy at best. The old window replacements were left in the unit broken up with large and microscopic pieces of glass throughout the rug. It literally took me weeks to thoroughly clean the unit to get it rental-ready. The new ceiling fans were hanging at a 45-degree slope. And in one situation, a tenant had stated that the property manager had arrogantly claimed to be the new landlord. It was a bad decision to hire this property manager all around.

Whether you’re in a hurry to get your new property investment ready for the market or decide to kill two birds with one stone by hiring a contractor while you’re at your full-time job, I strongly suggest you don’t do it! Be there while the renovations are in progress. You’ll soon realize that by being onsite, you will be able to prevent many things that could have gone wrong. You’ll be able to confirm what really needs to be purchased and what does not. And more importantly, you’ll be on top of the quality and materials to get the best result for your investment property.

An additional advantage to being onsite is that you’ll pick up a few learning tips on how things get done which will help your bottom line if you do it yourself for your next renovation. It was a tough and expensive lesson to be learned. Nowadays I do most of my work since I can save thousands of dollars and I know I’ll get it done right one way or another. Occasionally I’ll hire a contractor but only if I’m onsite to approve what gets bought and the quality of the work being performed.

Cleaned rental property
After cleaning property manager’s mess, rental ready property
Rental ready property
After a week of cleaning, it was rental ready

Author: Luis Fernandez

Luis Fernandez is a businessperson in the hotel and software industry. When not glued to a screen, he listens attentively to his 4 years old's imagination.

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