We are talking to you about cups of coffee today, and that might sound strange since we are professional property managers and investment property specialists. But I’m going to do a factual presentation and you’ll soon see the relevance. Everything I’m talking about in this scenario has happened this year, in 2017. It’s a true story.
Coffee and Costs
We recently inherited a situation from a woman named Bernice. In December, Bernice was fed up with her property manager and decided to find a new one. She searched around and found two or three property management companies in Orlando offering a 5 percent property management fee. She was drawn to it and wanted to save money. I’m going to tell you what happened. This is the third case we’ve heard of in less than two months, and it’s important you hear it.
Companies offer an advertisement for a 5 percent property management fee, which is obviously very cheap. Bernice decided to sign up with one of these discount management companies.
Property, Rent, and Fees
Bernice rents out a single family home in Orlando for $1,500 per month. The company she signed up with quoted 5 percent, which is $75 per month. That means Bernice should get $1,425 per month after she pays her property management fee.
Because her property is in an area we know, we would have done the management for 8 percent. Our normal management fee is 10 percent, but we know this area and we target it for our services, so we dropped it to 8 percent.
So, if Bernice had chosen us over the discount management company, she would have received $1,380 every month. That’s a difference of $45 per month. Immediately, the discount company looks like a better deal. But, let’s break it down and think about the real difference. With the discount management company, Bernice is saving $1.47 per day.
Here are the facts. Bernice left that company in April. Here’s how the numbers should have looked:
| Discount Company | Warner Quinlan | ||
| January | $1,425 to Bernice | January | $1,380 to Bernice |
| February | $1,425 to Bernice | February | $1,380 to Bernice |
| March | $1,425 to Bernice | March |
$1,380 to Bernice
|
| April | $4,275 to Bernice | April |
$4,140 to Bernice
|
By April, Bernice should have received $4,275 in rents for the year. But, she had received $0. That’s because the management company did not send her rent in January. They did not send her rent in February. In March, she got nothing again. At that point, she gave up.
So, Bernice has paid $4,275 to that management company, which equates to 100 percent fees. She is receiving no money into her bank account. Compare that to what she would have received with a more reputable company.
Choose a Reputable Orlando Property Management Company
This is important: there are three companies we know of who are doing this. Investors from Canada, Australia, and Minnesota have come to us with similar stories. Not only have they not been receiving rent, the security deposit for the tenant has also disappeared. In Bernice’s case, that’s $1,500. A more reputable company will pay owners on time every month, structure their services well, and represent a much better value.
Back to Coffee
We talked about a cup of coffee. We have seen the difference here is $1.47 per day. The coffee I bought at Starbucks this morning was $2.61, and I have it every day. Look at what you can receive for less than a cup of coffee. You can rely on professional maintenance and high quality services.
Please consider this when you are looking for a new Orlando property management company. If you have any questions about property management fees or investment homes, contact us at Warner Quinlan, Inc.
