Eleven Property Types You SHOULD NOT Manage (Part One)

Too many property managers it would seem, would sign up any new property as long as it had a ‘roof and a front door’. Sure, they might say it also needs to be in reasonable condition, but that’s about it!

When 20% of rental properties cause 80% of the stress and grief, we need to adopt criteria to be used when signing up new business.

The facts are staggering and cannot be ignored!

Property managers are not lasting more than 2 years (on average) in the job, and most cite stress and burnout as the reason when they resign. With this knowledge, surely having criteria of what you simply will NOT manage makes good business sense. That said, it’s up to business owners and managers to realise what’s good for business and what damages it, and then create the criteria and train property managers to it. Without leadership intervention, none of this will happen!

Here are eleven property types that should be avoided:

#1- Low-Rent Property

How low do rental values go in your marketplace before you start getting into that ‘low-end’ type property that attracts a low-grade tenant and is likely to give you grief and headaches?

When rent is a third less than a better type of property, your total fee income for that property will be likely to be a third less too and often represents more work than a quality property.

More work and less income!

It doesn’t make good business sense!

#2- Low-Fee Property

When you’ve discounted your management fee by 1-2% and/or the leasing fee, you may have actually thrown away your profit margin for that property too.

If the average profit margin is around 20% it doesn’t take too much discounting to eliminate the main incentive for managing it in the first place!

#3- Low-Grade Property

Taking on property that is not in a reasonable or better condition simply shouldn’t be an option in modern property management.

Tenants are far more aware of their rights than ever before and they know if they pay 100% rent they expect a property to comply 100% and be in a good state or repair – not to mention the risk and liability issues that poor quality housing represents!

Low-grade properties also say something about the type of owner/investor.

If they won’t renovate or repair it, avoid it!