In previous blogs, we’ve discussed how residential Property Management is consolidating and is, generally, getting more professional.
While there remain lots and lots of the classic Ma and Pops out there managing homes, Corporate America has taken a definite interest in our industry.
And, more importantly, Corporate America has entered markets offering a national presence.
It’s hard to tell, exactly, how things will progress from here, but the corporate trend has started.
And if you are an investor who uses a 3rd party property management company, you need to understand what this means to you and your investment.
Because, clearly, you now have a lot of choices when it comes to Property Management in Indianapolis.
INDIANAPOLIS PROPERTY MANAGEMENT: SOME BACKGROUND
For many years now, Indianapolis has been viewed as a hotbed for rental real estate investment.
We’ve seen very large companies come to our City and invest many millions of dollars on single family homes. America Homes for Rent, which reportedly bought more than 3,000 homes in Central Indiana, is probably the biggest example.
In the case of AH4R, they self-manage all their properties… at least in Indianapolis.
And we’ve also seen a large number of smaller investors enter our market as well – most of which are in need of a Property Manager.
All of this, as you might guess, has lead to an explosion of new Property Management Companies in Central Indiana… most of which are local, but some of which are not.
So today, we thought we would discuss three reasons why choosing a local property management company makes the most sense for you as an investor.
1. IT’S CRITICAL TO HIRE LOCAL, PROPERTY MANAGEMENT EXPERTS
Real estate is hyper-local.
Every area is different from a marketing and seasonality standpoint.
Landlord-Tenant laws are different among states and even counties (and in Indiana, Townships within the counties) within the state.
That’s why it’s so important that the Company you hire is familiar with all the nuances of your area.
Clearly, even a National property manager can hire local people. I get that. We’ve certainly hired people who haven’t lived their entire lives in Central Indiana.
However, in most cases, all staff members, including the Ownership more importantly, live and work in the area where your property is located.
Critical decisions about how your property is marketed, about how your Tenants are managed, about how your maintenance is handled, are all made by people who live and work in your market.
Those decisions aren’t made by people who live in a different state.
Remember: Your Real Estate investment is often the largest investment you have. It’s one thing to trust a national company to provide a mortgage to you… it’s an entirely different thing to have a national company manage the home for you.
Property management is a tough business. There are hundreds – thousands – of moving parts. You want your PM focused on MANAGING your home EFFICIENTLY… not constantly stumbling because of bad decisions made because they don’t understand your market.
2. LOCAL OWNERSHIP CAN MAKE A DIFFERENCE.
While I discussed this a little in Reason #1, having local ownership can create a lot of efficiencies for you as a Landlord. Because in most cases, you’ll have direct access to the owners of local shops.
So, for example, if you have an issue that needs addressed, and you don’t feel like it’s being addressed properly by office staff, you can go right to the top.
Not only do owners of local PM companies actually own the business, most of them actually work inside the business.
A national company, on the other hand, may have several layers of management and, most likely, the actual owners of the management company are far, far removed from the day-to-day operations.
And in almost every case, those Owners don’t live anywhere near your property.
In our case, my business partner and I have deep roots in Central Indiana. We’ve made significant real estate investments in our City and we are extremely involved in the day-to-day operations of our business.
In short, we have a lot of mental and emotional investment in our property management business. We have a very large stake in making sure our Clients are treated fairly and our staff is always Client focused… which is one of our Five Core Values.
And, really, the same is true for many management companies in Indianapolis like ours. We know several owner-operators, like us, who built their business from the ground up who have many motivations to see their Clients succeed.
3. BENEFITS THE ECONOMY OF YOUR INVESTMENT
Buying local always benefits the location of the product. When an entire organization of your Property Management company resides in the same area as your investment, there’s a definite benefit to the local economy.
For example, the majority of payroll dollars paid by our company are spent in our area.
There has to be some comfort knowing that the money you pay to your management company stays in the market where your home is located.
AN ANONYMOUS CASE STUDY
I don’t say all these things without some evidence. There’s a classic example of local vs. national in our City today.
For many reasons, I’m not naming names. I don’t think it would do anyone any good.
But, here goes…
A few years ago, a Property Management company emerged in our market that was having an impact.
It was founded by two local individuals and they were building, from all accounts, a very solid Property Management company.
They had a nice website, a good online presence and a good online reputation.
I don’t know any individuals that worked there, but it was obvious they were doing well.
We even heard good things from our Owner prospects who were considering us for management.
A year or two ago, a national Property Management company bought them.
And over the past several months, we get calls – multiple calls, in fact – each week from their Clients… most of them fuming about the lack of service they are receiving.
Granted, I know nothing about the inner-workings of their Company. There could be multiple reasons why there are struggling.
But, the correlation between the time they were purchased by a national company and the time their service levels started to fall is undeniable.
Technology has changed things. There’s no doubt about that.
And, with it, so has our industry.
But, at the end of the day, real estate is a relationship business.
Technology is great, but to REALLY effectively manage your home in a way that will make a tangible and financial difference, people, with vested interest in the area and the company, are the ones that make the difference.