EXCERPT: Our property management company has expanded enormously over the past few years, and during that time, we’ve failed pretty epically on more than one occasion. We’ve gone from a dedicated manager and a couple of close allies to being a far-flung company with more than two dozen dedicated full and a few part-time workers. We’ve learned lessons that we literally didn’t know existed to be learned a few years ago! Lend us an ear while we share a few of them with you.
Not all properties are right for every property management company.
Over the past few years, we’ve said “yes” to a few properties that we really shouldn’t have, and we’ve paid the price. We’ve always handled residential homes in the Metro Detroit area. We’re very good at that. But we were hungry, and it led us to take on a few properties that, in retrospect, we probably weren’t ready for. We tried listing and managing a couple of commercial buildings. We tried to help out a few investors who had been sold bad properties in bad areas. We even tried to handle a few properties that were distinctly outside of our normal territory, though not by all that much.
The lessons came raining in. We parted ways with each of those clients; at least one of them left with our blessings and a referral to someone more appropriate to their needs. We learned that it’s better to say “no” the moment we’re asked about a management job if the property in question is entirely outside of our realm of expertise or not a good fit for our business model. That “no” might disappoint a potential or existing client in the short-term, but not nearly as much as they’ll be disappointed if we say “yes” and then turn out to be unable to meet their expectations.
Not all investors are right for every property management company.
In the same vein, we learned over the past few years that some people just don’t work well with our way of doing business. Sometimes, it’s a clash of management styles. For example, we’ve consciously decoupled from a few investors who were super-involved, hands-on types who didn’t seem to want us to actually do anything to or with their property. We would discover a need for maintenance, collect bids from contractors, create a work order, send them the paperwork, not hear back for several days, and then suddenly, they’d send a late-night email proudly announcing that the work was done and that we could move forward with marketing. Or we’d get all our marketing geared up and start showing a property, only to have the owner tell us they already found a tenant.
Other times, it’s a clash of personalities. We’ve taken on several property investors from overseas, including a few from places where the local culture couldn’t get much further from the to-the-point, no-nonsense, call-it-like-you-see-it attitude that typifies Detroit. One of our overseas clients became immensely agitated when we told them point-blank that the work they had just had completed (by some independent contractor not hired by us!) was insufficient and we weren’t going to be able to market the property until we went in and fixed some bits they had out-and-out failed to address. They were upset not because of the bad news (that’s just par for the course if you’re a property investor), but because we made no effort to soften the blow and no effort to apologize for not softening the blow. Calling a spade a spade just isn’t how things are done everywhere in the world—lesson learned.
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