The Hidden Dangers of Property Management Marketing Gimmicks and Guarantees
October 26, 2016
Don’t let these slick marketing tricks ruin your investment.
Don’t Let Property Management “Guarantees” hurt you in the long run
Many management companies use the gimmick of offering “guarantees” to entice property owners to use their services. These are practices designed to sound like they protect you, but can actually cause significant harm to your investment instead. The old saying “If it sounds too good to be true it probably is.” applies here.
In general, any time a company engages in marketing tactics where you are getting something for nothing or getting a “money back” guarantee, be realistic about how they will really be making money from you. How will they cut corners? How difficult and expensive will it be to actually collect any money from them when they fail to deliver on their promises?
Their gimmick: A tenant in just a few weeks.
What it really means: They will be desperate to rent your property to anyone who views it and has the money on hand to move in.
The cost of evictions, loss of rent and property damage from undesirable tenants will surpass any gains from the quick rental process.
Our tried and true strategy: Quality marketing and thorough tenant screening get you the best tenant in the shortest possible time.
Their gimmick: A free month or two if you sign with us or money back guarantee.
What it really means: They need to find shortcuts and creative ways to charge you
The first month managing a new property is the hardest. Many times when an owner seeks a new manager it is because of difficulties of some type. Common issues are rent collection, property condition and tenant behavior problems. Even if the property is running on an even keel the tenants need to be contacted and told how to pay rent and the property must be entered into the system.
Management companies must make money and pay their employees. So they will either cut corners on the work that needs to be done, or make it up later with higher maintenance and administrative charges.
With a money back guarantee, a certain percentage of owners will view this as a way to get free services and insist on getting money back no matter what the quality of service. So ultimately the remaining owners will end up paying higher costs to cover unscrupulous owners who take unfair advantage.
Our tried and true strategy: We give you good honest work for the price, in a sustainable business model that is a win-win situation for both of us. We don’t markup maintenance costs or force you to have an escrow account.
Their gimmick: Tenants pay admin fees
What it really means: Do you want to pay to see a property that you are considering renting? How about an extra fee every month? No? Well neither do good tenants. They avoid your property because they have lots of options. Undesirable tenants have to deal with the expense of admin fees because they don’t have other choices.
Our tried and true strategy: Attract desirable tenants with good marketing and well prepared properties.
Their gimmick: Eviction protection and 1 year tenant guarantees
What it really means: These are actually extra monthly fees you pay as insurance to the management company. Many of them push it aggressively because it is a money maker for them.
Our tried and true strategy: Properly marketed properties and well screened tenants. Keep tenants satisfied and in place with good customer service and timely maintenance. We have only had 5 evictions in the entire time we have been in business and most of those were inherited from other property management companies not screening well. Owners are better off putting their money in the bank.
As a business person, you can now see that the true way to save money is to go with a company who has great customer service, a high tenant satisfaction rating and extremely low eviction rates instead of flashy sales gimmicks.