6 Insights About Rental Property Owners And Property Managers

What are the keys to the relationship between rental property owners and property managers? These insights could help rental property owners better set their expectations and help property managers better understand the owners.

The rental property owners’ survey from Buildium.com revealed 6 insights about rental property owners and the relationship with property managers.


Photo credit istockphoto.com


6 insights about rental property owners and property managers



    1. Rental owners fall into two distinct categories but share many of the same concerns


    1. Maintenance and tenant management are the biggest areas of owner pain


    1. Communication is the #1 reason owners love a property manager. Poor service is why they leave.


    1. Most rental owners find their property managers by searching online


    1. Cost is the #1 reason self-managing rental owners don’t use a property manager


    1. There is an inertia effect in property ownership.



No. 1 – Intentional and accidental owner-investors



    • Intentional investors: “These owners typically set out to acquire a real-estate portfolio as a way to invest their incomes for retirement. They might begin with their own starter home, but typically they currently own between 2 and 40 units. They focus more on growth and on cash flow, and are either expanding or seeking to expand their portfolio. They are more often male, and a bit older than accidental investors. They are more likely to say they always enjoy property ownership,” Buildium.com writes in the report.


    •  Accidental investors: These owners tend to fall into property management, either through inheritance or more commonly due to moving away from a property they own and being unable or unwilling to sell. They have a slight bias toward being female and younger than intentional investors. Though they see their property as a solid investment, they commonly own just one rental unit— usually a single family home—and are not as likely to grow their portfolio. Accidental investors are less likely to say they always enjoy property ownership.


    • Note: There was a 12% crossover between the two, where owners indicated they had a portfolio that was inclusive of a former residence and property purchased as an investment.



6 Insights About Rental Property Owners And Property Managers


Charts courtesy of Buildium.com survey.


No. 2 – Maintenance and tenant management are top headaches


Maintenance emerged as the biggest stressor overall, with 62% of respondents reporting it as stressful.


However, finding and keeping tenants was a very close second, at 58%, and indeed more painful for many owners.


“When we delved into the numbers, we discovered that finding and dealing with tenants was actually the No. 1 biggest stressor for property owners who are seeking property management in 2016,” Buildium.com said in the report. “62% of owners were concerned about keeping good tenants, and 56% worried about dealing with problem tenants.


Tenant issues was, in aggregate, a major stressor, occupying the No. 2 and No. 3 spots for owners, overall. This suggests that particular pain around tenant management is driving property owners to seek third party management.


No. 3 – Good communication needed between property managers and owners


Though a majority of owners say they are happy with property management, there does seem to be room for improvement, in particular around the areas of communication and customer service.


Those who love their property manager say:



    • “Very pro-active and engaged in the overall process.”


    • “They are very transparent, efficient and sensible.”


    • “They are brilliant and save me time and money.”



However those who are unhappy with their property manager say:



    • “Their goal is to make money for themselves, not for me.”


    •  “Poor communication and no value add.”


    • “They make decisions without consulting me which cost me money.”



No. 4 – Rental owners find their property managers online


While a majority of owners already have a property manager, about 25 percent are looking for a property manager.


Many owners lean on local associations or personal referrals to find property managers—with investors tending to do this in higher numbers than accidental owners.


In fact, referrals emerged as the second most popular technique both for those who intend to look and those who have already secured a property manager. However, most owners seem to be doing their own research online. We found that owners of all kinds overwhelmingly rely on the web to find property management, using either search engines—or a proven online resource such as All Property Management.com—that can connect them to high quality property owners.


In addition to property websites, owners who acquire property as investors are slightly more likely to get information from professional associations, publications or real estate investment websites, versus investors whose property was a former home, who have a moderate bias toward getting information from family or friends.


property managers and owners survey


Where survey participants live.


No. 5 – Cost is the reason owners do not hire property managers


As you might expect, reluctance to spend money is the top reason self-managing rental owners decide not to use a property manager, with 50% saying they simply don’t want to pay for one.


As one owner suggested: “If a property management team wants to get a piece of my investment, then they need to bear a part of the burden of loss as well. Hire a team that doesn’t charge for removing tenants, viewing work done on property etc. I get that the property owner bears the cost of repairs and reasonable legal fees, but the property management team needs to beat the costs of having to directly deal with the tenants, going to court, reviewing repairs etc.”


What are the costs that these owners seem sensitive to?


“We asked our survey respondents how they like to pay—and what they expect to pay—property management firms. Owners were split on whether or not to be charged via flat fee or % of rent.


A slight majority (53% vs 47%) prefer to be charged a percent of rent. Interestingly in our 2015 State of the Property Management Industry report we found that 72% of property management companies also choose to charge a % of rent rather than a flat fee. In this sense, property managers and owners seem to have come to a sort of agreement


No. 6 – Owners who are expanding their portfolios are likely to continue


“We found that there is a momentum (or inertia) effect in property ownership,” Buildium.com writes in the report and “75% of owners who have grown in the past are likely to say they will grow significantly in the future. Likewise, 58% of those who predict a stagnant portfolio have also not grown in the past 5 years.


And finally, of those who expect their portfolio to shrink, 51% have already been experiencing a retracting portfolio over the past 5 years.


“We also found, perhaps unsurprisingly, that growth, profitability and love of property ownership go hand in hand. Those whose portfolios have expanded are most likely to report that property ownership has been extremely profitable for them.”


Summary on 6 insights about rental property owners and property managers


What do property owners of all kinds offer as best advice they had gotten on property ownership? Find a strong property management partner.



    • “Get a property management company that you trust.”


    • “Do get references and speak to them before choosing a property manager”


    • “Property management is the key to success”


    • “Don’t deal with tenants directly. Let your management company handle all issues.”


    •  “Good property management doesn’t cost—it pays!”



Get the full report from Buildium.com here.


About Buildium:


Buildium and All Property Management are the chosen solution of more than 12,000 property managers and HOAs.

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