How property management fees can can cost you $0.00?
This is one of the most common questions we get. Why would I ever pay a property manager? Well, because it doesn’t really cost you anything that’s why. Robert Kiyosaki, who wrote rich dad poor dad, is quoted as saying “a great property manager is key to success in real estate. A great property manager is MORE important to me than the real estate." So let’s talk about why Robert Kiyosaki said this and why it doesn’t really cost you much of anything to hire a great property manager. So let’s say Bob owns a home in north county San Diego and Bob gets a job in Texas. Logic and wisdom tells Bob don’t sell rent because nobody has ever owned a home for 20 years in San Diego and looked back and said man I wished I would’ve sold that house 20 years ago so, Bob decides to rent it out himself and manage it so he doesn’t have to pay those high property management fees.
Let’s compare two scenarios. In Scenario #1 Bob is the property manager, and Scenario #2 Bob pays Raintree Property Management 8% a month to manage his property.
Bob decides to put his property up for rent for $2,500 a month on Trulia, Zillow and Hotpads which is what most DIY landlords do. He doesn’t get much interest and decides it must be too high and drops the rent to $2,400.
He’s also busy so he misses a few showings. Then one day he gets a call from a VERY qualified tenant that’s moving to San Diego from Chicago for a corporate relocation. The prospect says he’s seen the pictures online, and he’s very interested to see the property. BUT he’s only got 2 hours before he has to leave and go to the airport to fly back home to Chicago.
Bob misses this showing, too, and never hears from that prospect again. Now the property has sat on the market for 30 days, making no money for Bob.
Let’s look at Scenario #2. Bob calls a realtor friend of his and says, “Hey I’m thinking of renting my property myself. What do I need to do?” The realtor says to call Raintree Property Management and let them help you.
Bob calls Raintree and they say “no problem” and because they know the rental market better than Bob, they list his property for $2,540 instead of $2,400. Question: Why would Raintree be able to rent it for $140 more a month than Bob? Because with the click of a button, Raintree can list it on Trulia, Zillow, and Hotpads plus on over 30 other websites. As a result, Raintree Property Management gets 1 or 2 inquiries a day and has multiple showings a week. Most importantly, Raintree doesn’t miss any showings because for every single property, they have availability 12 hours a day/7 days a week. Raintree Property Management invested in property management showing technology and guess what? They don’t miss that tenant prospect from Chicago with the 2-hour showing window. The property gets rented at $2,540 a month.
Now let’s compare the two scenarios. When Bob listed the property himself, it sat on the market for 30 days. When Raintree came on the scene, the property only sat on the market for 21 days which saved Bob $762. Because Raintree listed it on more websites with professional pictures and because they can show every property twelve hours a day/seven days a week, there were multiple applications from potential renters.
Bob’s home rented for $140 more a month which increased his rental revenue by $1,680 a year. Between the increased rent and fewer days on the market, Bob’s effective management fee expense is $0 dollars a year; and this is without placing a cost on Bob’s time managing the property.
Bob has a corporate job so his time is expensive. A survey was made of a large percentage of property management owners, asking them how much time they spent managing their rental property. Owners said between managing their property and leasing their property, they spent 93 hours a year doing property management.
If you add in Bob’s time in saving 93 hours a year, not only did hiring Raintree Property Management not cost Bob any money, it saved him thousands of dollars a year.
In addition to Bob’s getting free property management, he also gets a higher quality tenant because Raintree Property Management has a systematized approach to tenant screening.
Also, when Bob was looking for a lease agreement, he had to find one online; and it was only four or five pages in length. Raintree has a much longer and comprehensive lease that is full of addendums and all kinds of language to protect you as the landlord.
Raintree has been able to help a lot of Bobs. In addition to the fact that paying a property manager doesn’t really cost you anything, having a property manager also reduces your risk.
- Do you know how to properly screen tenants to avoid a fair housing claim?
- Do you know what a protected class of renter is?
- If someone applies to rent your property and you deny the applicant and they are in one of the protected classes do you know how to property deny the applicant?
- If you have a pet policy and you get an application from someone that lists an assistance animal on the application do you know how to screen the assistance animal without creating a problem?
- Do you know how to properly gain entrance into your property to do a system check on the smoke and carbon monoxide detector?
- Do you know what your lease says about smoke and carbon monoxide detectors?
- Do you know how to properly increase the rent within the law?
- Do you know if you need to have rent cap and just cause addendum because of the new law that was passed in 2020?
- Do you know how to do a deposit disposition?
- Do you know what addendums you need for your property?
- If a tenant breaks a term of the lease agreement what do you do about it?
There is a ton to think about when you are your own property manager So hopefully this explains why Robert Kiyosaki said what he said about having a great property manager. Here at Raintree property management we care about 3 things.
- We care about your bottom line
- we care about people
- we care about providing elite level customer service through the use of the latest technology that’s why our logo has a technology look to it.
When we say we care about your bottom line and we care about people those two things are directly related. We want to help our owners be as financially successful as possible because most of the financially successful people I’ve met are also the most generous people I’ve met supporting many great ministries and non-profits. This is why I believe increasing your bottom line helps people because as Irene Kraus a nun inducted into the healthcare hall of fame said "Where there is no margin there is no mission" meaning we can’t help people without money so if you want us to help your bottom line please give us a call.
We manage rental properties in the following areas: Carlsbad, Oceanside, Del Mar, Encinitas, Escondido, Oceanside, San Marcos, Solana Beach and Vista. If you have a property management related question please feel free to reach out and we are happy to help. If we can't answer it, we are also a member of the California Apartment Association so we can find an answer there.
