Ignoring Whether A Property Management Company Is A Franchise Or Not Here’s how the property management market works in Phoenix. There are a couple of large national franchises...and then local companies. Almost no one pays attention...or is even aware of this fact. Big mistake.
Why? Franchises are built on systems mandated from the main office. Franchisees pay money every month to headquarters for the right to use the franchise name and participate in franchise advertising programs as well as use franchise operations approaches. In Phoenix the main franchise options are Renters Warehouse (headquarters: Minnesota) and Real Property Management (headquarters: Utah). What difference does it make where you do business with a franchise or not? Here are two reasons why it matters:
1. “It’s Company Policy”. Don’t you hate to hear that when you ask for something as a customer and their response is “sorry, can’t, its ‘company policy’? That’s what companies say when they don’t have the ability to make a local decision. Franchisees can’t just decide to run their business ‘any old way they want to’. Their ability to stay in business depends on them adhering to the franchise agreement, and that means that ultimately if you work with a franchise, your Phoenix property is going to be controlled by a policy decided by a guy at a desk in Utah or Minnesota.
2. Is McDonald’s The Best Food You’ve Ever Had? The franchise concept was pioneered by Ray Kroc with McDonalds’ restaurants.
Ray did not know how to actually make fries, or burgers or shakes. Ray actually sold milkshake makers. But Ray was good at making systems. So Ray systematized McDonald’s and the rest is history. But think about McDonald’s...is it known for diverse and interesting local food offerings? Nope. You get the same food whether you are in Phoenix or Utah or Minnesota...same. The entire concept is built to support ‘sameness’.
That’s one of the points of a franchise concept: its the same wherever you go. No local innovation. No cutting edge new ideas. Safe, boring, 1 year behind the times. The same with franchises. They can’t allow local franchisees to experiment or innovate...it will destroy the systems of the franchise. So even if there is a better way to market your home in Phoenix, don’t expect a franchise operation to be the first to think of it. They can’t, it puts their franchise agreement in jeopardy. They have to wait for the folks in Utah and Minnesota to ‘approve’ of their idea...which takes weeks, months, or never.
How To Avoid This Mistake
1. Ask if the company is a franchise or not.
2. Consider a locally owned and managed company. Then you know they can make decisions about your home on the spot, in Phoenix. No need to wait for ‘corporate approval’ on an exception about how to treat you or your property.
Friday, July 11, 2014
Huge Mistake #2
Choosing A Phoenix Leasing Agency That Only Does Property Management You may not think this makes much sense: after all, don’t you want someone who focuses on property management? Of course you want them to specialize in property management.
But do you ONLY want them to do property management and nothing else? You do not. Here's why. Because someday, at the right time, you are probably going to want to sell your home. Now if this company ONLY does property management, do you honestly think they are going to come to you and say “hey, now’s a great time to sell your home; why don’t you sell it so we don’t get paid to manage it anymore?” No way compadre. This means that you may lose the objective opinion you need to understand if the market is right for you to sell your home or not.
A company that only does one thing only has one part of your best interests at heart. They will want you to keep renting, not sell. How To Avoid This Mistake Choose a company that does property management AND also sells homes. This way they benefit if you rent your home and they benefit if you sell. So if you go to them and ask “hey, is it a good time to sell or should I continue to rent my home?” they may are more likely to tell you the truth since they will profit either way.
But do you ONLY want them to do property management and nothing else? You do not. Here's why. Because someday, at the right time, you are probably going to want to sell your home. Now if this company ONLY does property management, do you honestly think they are going to come to you and say “hey, now’s a great time to sell your home; why don’t you sell it so we don’t get paid to manage it anymore?” No way compadre. This means that you may lose the objective opinion you need to understand if the market is right for you to sell your home or not.
A company that only does one thing only has one part of your best interests at heart. They will want you to keep renting, not sell. How To Avoid This Mistake Choose a company that does property management AND also sells homes. This way they benefit if you rent your home and they benefit if you sell. So if you go to them and ask “hey, is it a good time to sell or should I continue to rent my home?” they may are more likely to tell you the truth since they will profit either way.
Huge Mistakes You Can Make When Choosing A Phoenix Area Property Management Company
Huge Mistakes You Can Make When Choosing A Phoenix Area Property Management Company (And How To Avoid Them) Huge Mistake #1: Making It Only About The Money First, let me be clear...getting the same thing for a lower price is a GOOD thing. But, and this is a BIG but, that all depends on whether you are truly ‘getting the same thing’. Many home rental companies come into a market and offer to manage a home for dirt cheap to attract business. Here’s how the dirt cheap option usually works out: you congratulate for saving $25 a month on property management fees. Little did you know that your problems were just beginning.
You may find that the property manager who loved you so much BEFORE the agreement was signed is too busy now to return your calls. Your renters get ticked off because they are not being helped, want to move out. Or your home was quickly leased to tenants without careful screening and the “nice renters” are trashing your home. When rental management companies cut their prices, they cut their service.
Sure, they won’t SAY they will cut their service, but what do you expect them to say? If they said “Hey, sign with us today and pay us this bargain rate...and after we sign the paperwork I’m going to ignore your house because you are paying me $25 a month”...would you sign up with them in the first place? I don't think so! Pretty much all the time, you get what you pay for. Your Mom told you the truth: there is no such thing as a free lunch. How To Avoid This Mistake
1. Check online reviews for Phoenix area property management companies that seem too cheap to be true. I rarely see the lowest priced option have reviews that are worth a darn.
2. Throw out the lowest price option if its a lot lower than others. There is no secret formula; property management in Phoenix is a mature industry and there are no secrets. So if someone is way below the price of others, its not because they are smarter, its because they intend to deliver much less service. Don't trust a quote that is too low.
3. Ask Yourself: "Are They Lowballing My Rents?" How much will you really save with the lower priced option? A higher quality property leading agency will take the time to property price and market your home, so they may make you more money than the discount company. After all, if the discount guy tells you to rent your home for $1200 a month and charges you $60 for it a month, you get $1140. But maybe the low price guy said $1200 so you home would rent without too much work (after all, if you don’t make much money on one deal, you need to make up for that by doing LOTS of deals and not spending too much time on one...like yours). But what if the higher quality company can get you $1300 per month and charges you $120 a month? You net $1180, which is $40 more per month in your pocket with the higher quality property management company! It could be that the low cost option COSTS you money. Sleep with one eye open!
You may find that the property manager who loved you so much BEFORE the agreement was signed is too busy now to return your calls. Your renters get ticked off because they are not being helped, want to move out. Or your home was quickly leased to tenants without careful screening and the “nice renters” are trashing your home. When rental management companies cut their prices, they cut their service.
Sure, they won’t SAY they will cut their service, but what do you expect them to say? If they said “Hey, sign with us today and pay us this bargain rate...and after we sign the paperwork I’m going to ignore your house because you are paying me $25 a month”...would you sign up with them in the first place? I don't think so! Pretty much all the time, you get what you pay for. Your Mom told you the truth: there is no such thing as a free lunch. How To Avoid This Mistake
1. Check online reviews for Phoenix area property management companies that seem too cheap to be true. I rarely see the lowest priced option have reviews that are worth a darn.
2. Throw out the lowest price option if its a lot lower than others. There is no secret formula; property management in Phoenix is a mature industry and there are no secrets. So if someone is way below the price of others, its not because they are smarter, its because they intend to deliver much less service. Don't trust a quote that is too low.
3. Ask Yourself: "Are They Lowballing My Rents?" How much will you really save with the lower priced option? A higher quality property leading agency will take the time to property price and market your home, so they may make you more money than the discount company. After all, if the discount guy tells you to rent your home for $1200 a month and charges you $60 for it a month, you get $1140. But maybe the low price guy said $1200 so you home would rent without too much work (after all, if you don’t make much money on one deal, you need to make up for that by doing LOTS of deals and not spending too much time on one...like yours). But what if the higher quality company can get you $1300 per month and charges you $120 a month? You net $1180, which is $40 more per month in your pocket with the higher quality property management company! It could be that the low cost option COSTS you money. Sleep with one eye open!
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