Maintenance Nightmares

July 13, 2020

Tim Ferriss talks about finding the lever in your business that if pulled makes everything else easier or unnecessary. For property management there are two things we focus on because they maximize returns for the investor and keep tenants happy:

  • Vacancies 
  • Maintenance

I’m going to tell you the dirty little secret of the industry, the thing that no one wants you to know. Most of the large management companies are marking up your maintenance and they are not telling you.

How do I know?

I worked with them. You see as I was doing remodeling on apartments for my investors and had extra bandwidth to take on more jobs. So I reached out to the largest property managers in the Houston area, signed up to be a vendor, and went to an information session. Rule #1 as a vendor - never talk to the owner. The last thing they want is to fix a property they manage without them getting their cut. Rule #2 - bill the management company and add 15% because the management company is going to take 15% off the top as a “marketing fee”. By making the agreement with the maintenance company and calling it a “marketing fee” they never have to tell the owner they are making 15% on every maintenance call. That’s not the only hidden fee.

Tenants are charged fees for signing leases,, signing renewals, late fees (that your management company probably keeps all of), monthly renewal fee charges, etc. C class property has substantial late fees typically. The largest management companies in Houston keep 100% of these fees. It's not a problem unless they don't disclose they are doing it. In their mind if you aren't paying it they don't need to tell you.

And you are losing money because of it. If there is one thing I don’t like, it’s dishonesty. 

After just a couple of jobs, I cut all ties with slimy management companies. This doesn’t even mention the fact that these national companies require photos before and after, paperwork, tenant signed agreements, etc. that add weeks to the process. Let me give you a breakdown of how a simple maintenance job took 3 weeks:

  1. Maintenance ticket filed with management company by the tenant
  2. Tenant told to schedule potential times for vendor visit
  3. Work ticket approved by management company and sent to owner
  4. Issued approval by owner
  5. Management contacts my maintenance team
  6. Maintenance team accepts the job
  7. Given address and have to go there and take photos of problem during scheduled time (note a lot of times it’s difficult to schedule with tenants)
  8. Photos have to be uploaded and an itemized invoice provided
  9. Owner approves total 
  10. Management company then approves for us to begin work
  11. Schedule 2nd time with tenant to visit
  12. Allowed to do job and must take photos of job
  13. If any additional work is found have to go through the process again
  14. Do work and take photos (often less than an hour)
  15. Take after photos
  16. Wait for tenant to get home so they can sign that the maintenance was done
  17. Complete the job in software
  18. Upload after photos, tenant signed document, and invoice
  19. Get approved

That is 20 steps to fix a dripping sink or a leaking toilet. Can you imagine the process if we go in and find additional work that needs to be done? Add a new item and you are looking at over 35 steps! Do you think tenants get upset that it takes 3 weeks to fix a leaky sink? 

One of the make ready jobs I worked on for the largest property manager in the Houston area was on week 6! We often have units filled by then. We have done full gut remodels in less time. It’s insane. The owners and tenants are both unhappy and the only winner is the management company.

So instead I focused on what I felt were the core principles of maintenance:

  • Take care of maintenance as fast as possible if under a material amount of money (varies by owner)
  • Lower maintenance costs by maintaining our own in house maintenance team
  • Involve owners for large items and resolve decisions in 24-48 hours
  • When licensed work is needed get multiple quotes

A typical job for StageCoach Management is just a few steps:

  • Maintenance needed and filed with StageCoach by the tenant
  • Maintenance work order is assigned if minor fix
  • For major repairs owner is immediately contacted by their preferred communication channel
  • Approved and repair scheduled
  • Repair performed

We have 5 steps where the other company has 20. Do you think maintenance companies going through 20 steps to do a minor repair are charging a premium? Just the administrative overhead takes the company 2-3 hours minimum. 

We charge $50 per hour and materials at 5% to cover transportation to and from the supply store. Most owners who switch to StageCoach save 20-25% off their previous maintenance costs. If you have enough units we begin to just have you pay a partial salary for a maintenance worker saving you even more money.

Fast maintenance leads to happier tenants which leads to lower turnover, and makes you more money. It reduces vacancy time, and makes you more money. Frankly, I don’t see another way to do it.

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