I remember the day clearly, Wed April 14th, 1999. I received a call from one of my property owner clients. He was working on his income taxes and he was angry, not at the IRS but at me! Even though he received a monthly statement showing all income and expenses on his property, adding it all up at tax time caused him to question the $1,200 in management fees for that year.
“Why am I paying you $100/mo to sit on your butt and do nothing?”, he wanted to know. There had only been two service call repair events that year at his home. Both were minor and less than $100 each. The largest expense for the year was management fees, and he wanted to know what I had done to earn that $1,200.
I responded by asking if his house (the one he lived in, in Nevada) had burned down that year? He said, “no” and “what’s that got to do with anything”. I asked if he’d called his insurance agent and yelled at him because, after all, that insurance agent had been paid all year for doing nothing, and in fact had done even less work than than me, the property manager. I went on to explain that property managers are paid not only for what we do, but for what we stand ready to do 24/7, 365 days a year. We are compensated for the peace of mind we provide by being on call so the owner doesn’t have to. From an owner’s perspective, we manage only that one house, but from a property manager’s perspective, we earn a living managing a portfolio of rental homes.
In order to understand why it’s a good thing if your property manager didn’t have to work hard on your property for an entire year, you have to understand the economics of owning and operating a property management company in Austin TX.