Welcome to Part 3 of “Making More Money,” our series on how property managers can earn more from their properties. Last time, we covered renting to college students and other types of less-typical tenants. This week, we take a look at how you can earn more by supervising maintenance for your clients.
Every property needs routine care. Keeping it clean, removing snow, touching up paint, and fixing toilets, all these tasks come with the territory. Depending on which property manager you ask, marking up routine maintenance is a brilliant moneymaker, or it runs against best practices because overseeing maintenance should part of the value package you provide to your clients.
If you own or manage a few units, the key to keeping maintenance management cost effective, according to David Last, the founder of Last2Development, and veteran property manager Tami Hunt, both based in Boston, is to handle as much of the work as you can yourself. For larger businesses, though, it makes sense to hire a handyman or woman — or a staff if you oversee hundreds of units.
Of course, if you hire employees, you’ll need additional liability insurance to cover them (and depending on how many hours they work, you may have to provide them with health insurance and other benefits). But if you hire talented people, you could make your clients giddy by saving them a bundle – or you could make money by marking up the cost of handling routine maintenance, like fixing railings and installing new doorbells and locks.
Everyone shudders at the thought of calling plumbers, carpenters, electricians, or roofers — specialists who bill by the hour at substantial rates. “It doesn’t take a master carpenter to fix a railing or a plumber to fix most clogged sinks, though,” Last says. By hiring experienced and talented generalists to handle maintenance, you won’t have to pay a plumber $100 or more per hour to fix a routine broken pipe.
In the Boston area, for example, a great handyman or handywoman may cost you only $30 or $40 per hour. That’s a whopping 60 to 70 percent savings over the cost of a subcontractor who charges $110 per hour.
Rewards
There are two primary benefits you can achieve by managing maintenance for your properties or your clients’.
Reward #1: Save your clients money, or markup maintenance to boost your income
The former will make you a rock star in your clients’ eyes if you save them hundreds or thousands of dollars by fixing routine problems yourself, instead of calling in subcontractors. If you manage properties that aren’t owned by you or your employer, you can markup repairs to bring in extra revenue. The margins are typically modest, though, because clients won’t stand for paying exorbitant prices for routine maintenance tasks.
Reward #2: Fill vacancies faster and keep great tenants
Ensuring curb appeal and cleanliness are some of the simplest and most cost effective ways to appeal to new renters and encourage existing tenants to renew their leases. A clean and inviting building or community and low vacancy rates will impress your clients and give you excellent leverage when the time comes to renew your management agreement. And if rents increase and your management fees are based on a percentage of monthly rent, you earn more.
Finding the right maintenance team
Last says the key to success is finding the right people for your maintenance staff. The best way, says Hunt, is still the old-fashioned way: word of mouth. Whether you’re looking for full-time or part-time help, don’t be afraid to audition them first. And when you find a maintenance superstar, look to form a long-term working relationship.
“Throughout my career, I have hand-picked certain maintenance staff that I attempt to bring along to a new company when feasible,” she says.
Our next article will look at the way to make the most money for those who work manage units for third parties: overseeing capital improvements.
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