A lot of people in real estate HATE residential property management.
Tenants understandably get pretty upset when they’re paying good money for an apartment and things break. And, on the flip side, no one calls up her landlord when things are going great and says “Hey! Thanks for my apartment! It’s wonderful!” So the business is pretty rough emotionally.
And the money often isn’t that great. If you’re managing an apartment building for 6% of the rents and you have a tenant paying $1,000 for an apartment, you’re getting paid $60 / month to collect the rent, respond to maintenance requests, handle the accounting, etc. That’s a very bad deal.
So it’s kind of a messy business… all hassle and not enough compensation.
But, at Adaptive, we love property management. Why?
- Our buildings are in great shape. The vast majority of our units are recently gut-renovated. And I don’t mean slapping some lipstick on… we replace plumbing, electric, windows, roofs, etc. So, while we obviously have maintenance issues (particularly in the period immediately following renovation, while we’re still shaking out minor construction issues), in general, we deal with many fewer maintenance problems than companies that manage older buildings. That means less hassle for us and generally happier tenants.
- We attract tenants who appreciate our product. Our buildings have a point of view. The design choices aren’t random. They tend to appeal to a specific type of person who sincerely appreciates design and is willing to pay for it. What we’ve found is that, in general, these kinds of tenants pay their rent on time and take care of their apartments. So, we spend comparatively little time dealing with tenant-related nonsense like evictions, collections, etc.
- The product commands high rent. Because the units are great, we can charge good rent. 6% on a $3,000 apartment is $180 / month, which is a MUCH more reasonable amount to be paid for the effort involved.
I understand why other companies see property management as kind of a red-headed stepchild, something they have to do but don’t really like.
But we actually love the business and intend to be in it (and happily so!) forever.