Management Makeover - The Ultimate Guide to Maximizing Your Property Management Income

Chapter 2

I GET BY—OR DO I?

It drives me crazy to work with someone who does just enough to get by, and never tries to do anything more. I was taught to strive to be the best at whatever I attempted.

The problem is, most managers don’t even know they are working just enough to get by and some owners don’t know they could have better. Then someone like me contacts the owner to let them know their asset could be managed at a higher level. And then the manager is gone, trying to convince another owner they can do the job and weren’t fired because of their production.

If you are an owner of a company, pay attention to those who only get by. They are costing you money! And if you manage real estate for someone else, only getting by is not going to get you to the next level of compensation, particularly if it is based on the revenues of the owner’s asset, which, by the way, you have probably been tasked with increasing.

When you aren’t fulfilling your job to its greatest potential, you are actually increasing the probability of having problems that could have been avoided with capable oversight. When you do only enough to get by, you won’t be ready for those problems when they do arise. Arm yourself with knowledge and do things right the first time so when there is an unavoidable problem, you can solve it quickly and correctly. There will be enough problems without you creating them by just getting by.

Many in real estate management believe that if something can go wrong, it probably will. Every day can bring a new horror story. Being prepared to handle whatever might go wrong is imperative.

Let’s Just Use a Cake Pan—Really?

A ceiling was leaking in an apartment of a large community that was a recently acquired management account. The maintenance crew cut the drywall in the ceiling, looking for a broken water line. What was found was a cake pan full of water sitting on the drywall under a pipe. Instead of repairing the leaking water line properly when it first leaked a couple of years earlier, the cake pan was placed under it to catch the water so it didn’t leak through the ceiling. This worked for a while. Unfortunately, water finally filled the pan and it overflowed, causing the leak into the apartment. Know what my problem was? The maintenance person in charge who found the cake pan was the maintenance person who put it there in the first place.

This maintenance person had decided to do something easy to temporarily fix the problem. He was getting by and collecting his paycheck. This decision didn’t serve him well in the end because he was now quickly terminated from his position. Unfortunately, the rest of the maintenance staff was subsequently terminated as well. They had also been taught to do a job to get by, and their attitude simply couldn’t be changed.

The cause of this situation rested squarely on the shoulders of the community manager. She should have made sure her staff was properly trained. They should have been told what was expected of them. It sure wouldn’t be to cut as many corners as possible so that things could be taken care of in the future. This was the time for Benjamin Franklin’s “Don’t put off until tomorrow what you can do today.”

The manager should have been overseeing repairs and inspecting work done by the maintenance staff. Sure, you can’t be everywhere all the time. But if your staff knows you will be inspecting repairs, they will be sure to complete them all properly. The manager is ultimately responsible. Leaving your staff without oversight doesn’t even meet the “I’ll get by” level of management.

I’ve heard other real estate investors and managers tell similar stories, so this is not a unique situation. Is it any wonder personnel issues pose one of the largest problems in running a business?

Slumlord

The owner of the real estate company I first worked with positioned his properties to be the best in the area in which they were located. I quickly embraced the concept and managed accordingly—best properties and highest rents.

So when we acquired an account from an investor who had recently purchased an apartment building I felt was a “slum,” I was apprehensive. This was certainly an asset in distress where cash flow was nonexistent. It was one of the most difficult turnaround projects I had ever encountered.

During the initial inspection with the manager, we went into an apartment kitchen that had a space about two feet wide between the countertop and the range. I didn’t understand this new design concept.

According to the manager, an electrical wiring repair had been made behind the wall, leaving a large hole in the drywall. The manager had been instructed by the investor to spend the minimal amount possible on repairs. To solve the problem of the hole, he simply moved the range over two feet to cover it.

The manager told me he showed the apartment, but no one wanted to rent it because there was no countertop next to the range. Well, excuse me, but isn’t the purpose of a rental apartment to rent it? Who the heck doesn’t complete a repair? This isn’t just getting by; it is screwing the investor. This manager should have thought through the situation to find a reasonable solution. Instead, he approved the cost of the wiring repair because it had to be completed, but left another very minimal repair undone in order to save money. He took the direction to spend little too literally. He learned that not trying to find solutions might get you by, but it doesn’t improve the condition or cash flow of an asset.

This is what we did to solve the problem. The hole in the wall was repaired at a very small cost, the range was moved back into its original space, the apartment was more thoroughly cleaned, and the apartment was rented. Simple. Since the condition of the apartment had been improved, we raised the rent twenty dollars per month. I shouldn’t have to tell you nicer homes rent for more than those in poor condition, not to mention you acquire better residents.

A vacant home is generating no income. The longer it sits vacant, the less money there is to put back into the asset, the less money to pay the bills, and less money in the investor’s pockets. This apartment rented quickly once proper repairs were done to make it market ready. Finally, it was generating income. And in two months, the increase alone paid for the repairs not previously completed. Yep, forty dollars was all it took.

The entire apartment building was cleaned, minor repairs made, and apartments were rented. Just getting by cost this investor big in the beginning. Doing the job right made him money in the end when the building was sold for significantly more than the purchase price.

Investors, if you aren’t sure how to make this work for you, give me a call and we can talk about how I can help you streamline operations and make more money than you are making now. I am a turnaround specialist who has improved the bottom line for many assets.

Managers, it can be done! It’s all in the effort you put into the task. Getting by won’t get it done. Do some thinking, find solutions, and follow through with the appropriate solution.

Speaking of Finding Solutions

I feel compelled to share this story, although I am not particularly proud of it. An inspiring woman was promoted from a pool monitor position to the manager’s assistant. She was then promoted to community manager. This in itself indicated that her job performance was impressive. Never having been a manager before, she needed training to learn all that was required. One very busy morning for me, she called to ask what I wanted her to do about a particular issue. After she told me the problem, our brief conversation went something like this:

Manager: “What do you want me to do?”

Me: “What should you have done instead of asking me that question?”

Manager: “I shouldn’t have called you.”

Me: “Not without recommending some solutions to the problem.”

Manager: “I’ll call you back later.”

That was absolutely not the right way for me to handle that phone call. Being busy is no excuse to be that abrupt with someone. I haven’t forgotten it, because I made that manager feel badly. She didn’t forget it either, because later she mentioned it numerous times. What it did, though, was teach her in about one minute that solutions should always accompany a problem.

True to her word, she called back later and I supported the solution she recommended. From then on, she always had solutions—good or bad ones—for the problems she encountered. There is always a solution. It may be to do something or it may be to do nothing, but there is one. Don’t leave it up to someone else to figure out what needs to be done. That is only getting by.

Put Some Pants on and Do Your Job

The real estate management business requires oversight of contractors and various improvement projects. Be ready for this. Sometimes there will be an engineer or other...