Would you go for a pm company with their own manitenance department?

[Xenia]

We own a property management company in SA.
Recently we came up with the idea of adding our own maintenance and repairs department. We hire trades people who work just for us!

The rationale is that we can have access to trades people when we want instead of having to chase them around.

We know that the work will be done properly because they are the ones we use all the time.

Tenants can call our own maintenance department any time.

They can assist the property managers in doing routine inspections to look for things like salt damp or other damage that they managers may not be aware of.

Landlords will be charged the normal hourly rate which will be the same as getting an independant trades person (for jobs done not for routine inspections).

Can anyone see anything wrong with this model?
As a landlord, are there any issues or concerns you would have with an internal maintenance person vs an independant trades person being called in?

I'd like to get peoples opinions before going ahead and setting it up.
Thanks in advance

 

[handyandy]

Hi Xenia

I think it would be seen as removing objectivity about the quality of the job delivered and also whether the best prices are obtained for the repairs as no alternate quotes are obtained or conversely alternate quotes are suspect ie only shown the higher quotes.

One strata manager who I have a lot of dealings with is owned by a plumbing outfit. The sister owns the strata management company and the brother owns the plumbing company. I believe the brother help finance the sister. All up a very close relationship

Invariably the plumbing company is used for all the maintenance/repair issues arising in the various b/c's. Whenever alternate quotes are obtained they are more then the associated plumbing quotes. I get involved and actually get alternate quotes independently and as such keep them on their toes but I would imagine that other B/c's who don't get so involved would pay the price.

A recent example was a common gas water heater. A number of these have been replaced over the years and another one needed replacing. I was presented with one quote (associated) and the invariable 'OK to go ahead?' question.

I requested alternate quotes as it was high, with the manager obtaining one from a firm 30klm's away. I was still discussing this matter with the manager when I get one of those proceed yes/no letters for the said repair sent to all owners.

I did my block and phoned one of the hotwater specialists who quoted $500 less than the original quote then phoned the manager who started argueing (at this point he was new and was not familiar with my involved manner) about the toss. I hung up and phoned the owner. To cut a long story short I was assured that the associated plumbing co could now do it for the same price as the hotwater specialist. So much for independent pricing.

Saying all this in the end the associated co does the quickest job ( be it a bit cowboyish) and can be depended on and as long as you keep them honest its workable.

If this sort of thing happened with with my own directly held properties and involved the PM I would not hesitate in moving PM's immediately.

As it is I refuse to sign new strata agreements as they are for 2 years with the current ones all on 2 months notice. Keeps them on their toes.

Cheers

 

[Michael Yardney]

Xenia

A couple of large PM companies in Melbourne employ a full time handyman to do maintenance.

I think if you have qualified and insured tradespeople who provide promot service at industry standard prices, your landlords wouldn't mind.

We looked at going down this path, considering we already employ tradespeople for our building and renovation companies.

We chose not to go down this path for our Proeprty Management department for a number of reasons.

1. With the uncertainty of when new jobs come in, and the need for promt service, it's easier having afew outside trades people available to work for us - becuase inevitably you'll get 2 jobs that must be done now and nothing for them to do tommorrow

2. Using outside trades means that landlords will never question whether you are double dipping and making extra profit out of your services.

It's good to hear your PM dept is growing well.

 

[GoAnna!]

As a property owner I would prefer that you have a few reliable tradies that you have ongomg relationships with. Not however to employ them directly. One of my PMs has set up an excellent arrnagement in this way and over charging has not been an issue. It means the tradies need to keep on their toes performace and costing wise or othwrwise they lose the ongong business as the PM will replace them with anyother tradie.

If you had your own departmant that only attended to your landlords jobs that you might be forced to raise prices to ensure that sufficient income is coming in over time? If I were in your shoes I would not want to be under pressure to create sufficient work for the repair department. It could easily become a cnflcit of interest.

 

[stargazer]

Hi Xenia

The PM company i deal with doesn't have a department as such but reliable hanypersons or tradespersons that deliver good service at a better price. (because of volume of work i guess)

The question i am asked is do you want us to arrange the person required or do you want to use a person of your choice.

In the beginning i compared and there people always came in better both in price and reliability.

Only once i had arranged to meet with a painter of theirs that didn't turn up, i reported it and they now have another painter. They had similar complaints from other landlords.

This keeps everyone happy i guess
PM
Landlord
Tenant

Cheers
BC

 

[Burbs]

Hi Xenia.

I agree with your logic, it is a sound idea. I have implemented it in my agency. The potential problems re conflict of interest can be dealt with through appropriate disclosures, quoting procedures, etc. Landlords are generally accepting of the concept (say 75% agreement), as they can see the benefits.

I often find the biggest problems are the ones you dont expect - in this case the supply and quality of labour. Under the previous system, we employed contractors, and if they didnt do a good job, they didnt get paid, or we stopped using them for future jobs. Now that the maintenance people are your employees, it is up to you to fully specify jobs, provide materials, supervise staff, quality control, staff motivation etc. That is a huge time commitment.
The other big problem relates to staff motivation. Many good handypersons or tradespeople are self-employed, self-motivated, self-starters etc. Why would they work for someone else? The people looking for an employee position are (broad generalisation) less motivated, more likely to come to you for advice, or even to fluff around until you happen to stumble across their errors. The solution is to find highly-motivated skilfull self-starters who want to be your employee!?#$

Hope this is some help,
Burbs

 

[cgw]

Hi Xenia,

Unless you could guarantee it to the land lord, that your handyman was excellent and not over priced it would be OK. But then again, by using 2 or 3 gives you the option to not use them if they do not provide the service they should be.

 

[crest133]

Doesn't sound workable. I have a few questions.
Who pays the maintenance person ?
Out of what funds ?
How do you apportion the cost, and to which property owners, of having this person during a quiet week or month ?
Do you pay from your agency fees ?
Do your fees increase ?
How do you keep the costs at market level ?
Why would you bother with all this hassle when you can use an independant self employed tradesperson and only pay for the time required ?

In my experience, a busy rent roll provides enough regular income for an electrician, plumber and handyman to get priority when required.

cheers
crest133

 

[sailor]

Hi Xenia,

Unless you could guarantee it to the land lord, that your handyman was excellent and not over priced it would be OK. But then again, by using 2 or 3 gives you the option to not use them if they do not provide the service they should be.

These are my sentiments too. I also think the self-employed qualified tradies have a vested interest in being high quality and financially competitive.

 

[Xenia]

Thanks for all replies. The landlord would be under no obligation to use our trades people, we see this being similar to elders having elders insurance or some agencies having their own internal finance departments.

Just another service to be used if our landlords/vendors choose to.

Does that make a difference to people's opinions now? We are very seriously considering setting this up in the next couple of months

From our point of view as property managers, it is very difficult to continuously chase trades people, follow up and make sure all was done in a reasonable time.
It is also a concern when we send out property managers to do routine inspections and they miss some maintenance issues which should have been picked up and taken care of. Property managers are trained to manage tenancies not look for salt damp issues in properties.