Many real estate investors typically start out managing their own investment properties to “save” money. This was the case with our Philadelphia investors who came to Bay Property Management Group Philadelphia with both management and tenant challenges. This is a Property Management Case Study to help show how in an effort to save money by managing his rental himself; he actually cost himself thousands of dollars and a ton of headaches over a very short period of time.
When Bay Property Management Group (BMG), a Philadelphia property management company, was initially contacted to review the challenges with this rental property it was clear what needed improvement. From the revenue side of things, the property was renting 5-10% below fair market rents for the Fairmont area of Philadelphia near the Art Museum. The owner seemed to be doing an unusual amount of repairs and upgrades for a property renting in this area for $1595 per month.
From a legal perspective, the owner’s documents and due diligence had some serious flaws, specifically some language in the lease that would not allow the landlord to charge a tenant for any damages done to the property. And, potentially even more serious was the fact that the landlord had placed the tenant in the property without a valid certificate of rental suitability, and in Philadelphia, a landlord can not begin the eviction process without a tenant signed certificate of rental suitability in hand.
So, just after a short conversation and review of all the documents, there were some significant steps to be taken to fix the problems.
The tenants had already started to push the landlord around a bit with frivolous cosmetic repair requests and a few marginally malicious requests where they had complained about a door not shutting correctly where then a few days later the door was completely broken off the hinges. The landlord correctly interpreted this as an underhanded (and potentially illegal) way for the tenants to show him they were unhappy with how quickly he had fixed their previous repair requests. So after a few months of similar issues where the landlord had complied with all legally pertinent requests, things were beginning to get out of control. We see this too often with tenants. Once they feel like they can take advantage of a landlord, they keep pushing and pushing. In this situation, they eventually pushed as hard as to quit paying their rent altogether. Thankfully the owner contacted Bay Property Management to help him come up with a solution to this rapidly escalating problem.
BMG stepped in and immediately took the steps necessary to start the tenant eviction process. The tenant, having probably been through this process before, started to pay rent slowly but was chronically late or behind the full amount that was due. After consulting with the owner, Bay Property Management moved forward with filing a judgment to compel them to pay the entire judgment or move out. The tenant, having figured out that they were now dealing with a professional company that was now going to hold them responsible, quickly moved out and BMG was able to clean up the property and find great new qualified tenants at an 8% higher rent rate than the previous rent the owner was getting. This is why screening potential tenants is so critically important. Putting the wrong tenants in the property can cost you months of rent and significant damage to the property. Bay Property Management Group guarantees tenants for 6 months.
In this situation, the landlord got started in the right direction. He bought a nice property in a good part of town. He worked hard at trying to make his tenants happy. However, when the tenants decide to try and manipulate that kindness for their own financial benefit, it can become a serious headache for any landlord. One of the many advantages of a professional Philadelphia property management group like Bay Property Management is that they can operate as the unbiased actor in this puzzle. They bring the legal experience, previous tenant relationship experience, and overall best practices to the table that can save landlords thousands of dollars and miles of paperwork.
Saving Money With A Property Management Company
Conservatively, looking back it is clear that our Case Study Landlord saved at least $2000-3000 in both unnecessary repairs and damages to his investment property and potential ongoing legal fees to evict the tenants. Couple that with at least an extra $1500/year in lost income it is easy to see why handing the property over to a property management company would have been the smart choice. The reason companies like Bay Property Management Group are able to get slightly higher rents than your average landlord is due to advanced technology and marketing strategies that your everyday homeowner does not have access to.
When you look at the costs of having a professional property management group help manage your properties for you, it always makes sense to look at the hard costs in dollars it takes to bring in a professional. However, when something goes sideways (and it almost always does at some point) with a tenant, a neighbor, or even with the property itself, we feel that more often than not you will be far better off with a property manager working for you along the way. We are sure this landlord felt so after his tenant adventures.
If you would like more details about this Property Management Case Study or would like to talk to any of our professional property managers, please reach out to us by either calling the office directly at 267-244-7215 or emailing our office manager at [email protected]