Limitations to Property Management Companies

April 5, 2019

When it comes to property management companies, not all are created equal. While some property owners swear by property management companies, others prefer to go a different route. This is understandable, as these companies have their fair share of limitations. While they’re great for certain owners, they also require you to give up control of the daily operations of your building or buildings.

Here at Blueground, we want owners and landlords to be fully informed about their choices. That’s why we put together this list of things you need to know about the limitations of conventional property management companies.


How property management companies handle tenant sourcing and screening

One of the biggest reasons owners typically hire property managers is that they handle sourcing and screening tenants, which can be a massive time-saver for owners. There’s also a fair amount of liability involved.

For example, property owners who don’t understand Fair Housing laws could easily ask illegal, even discriminatory questions on accident. This, in turn, would put them at risk of civil suits and fines. Inexperienced property owners may also lease to unsuitable tenants simply because their screening regimen is not up to par.

two men standing up shaking hands in front of a large glass window in a new property

Additionally, property management firms can help landlords save money on vendors. Since property managers typically have an independent list of vendors they use and partner with, they can come in and save landlords additional expenses.

These vendors, meanwhile, have an incentive to continue their business with property managers, which means they’re often willing to cut deals for landlords. This entire network of business provides some safety for property owners and reduces the likelihood that they’ll encounter unscrupulous business practices due to lacking industry connections.

When property managers come in to handle all tenant screening and vendor relationships, they remove potential roadblocks for owners and, in many cases, streamline the rental process. That, however, is where their functionality starts to taper.


What property management companies don’t do well

There are limits to how helpful property management companies can be for property owners. While they’re effective at securing vendor savings and streamlining tenant sourcing, they also have the potential to increase the total cost for owners.

To put this another way, property managers can save time, but that time savings may come at the cost of your investment income potential. Because traditional property management companies charge expensive base rates and fees, they can cut into an owner’s total gross rent.

While it’s true that property management businesses that follow good management practices charge higher prices (and, according to some, are worth those prices), hiring a property manager because they’re inexpensive is generally a recipe for disaster.

Beyond the increased cost, property managers can also reduce the amount of attention paid to a property. When a property owner manages his or her own property, they have an incentive to pay close attention to the said property. It’s their investment, after all, and they want to ensure it stays in good shape. Property management companies, meanwhile, don’t own the properties they manage. This means they’re unlikely to handle complications and issues the same way an owner would.

large white kitchen with a marble counter top and a large stainless steel double door refrigerator

Because of this, owners who are very specific about their properties or who want things done a certain way are best off not hiring property management companies. Instead, these owners can benefit from hiring a more flexible type of property manager or real estate agent.


Working with Blueground

Here at Blueground, our focus is on making things simple for our clients. We’re a real estate-tech company that aims to shift the way renters and landlords think about mid- to long-term housing. Our team rents apartments directly from owners, providing beautiful rentals filled with high-end furnishings. We lease these spaces to business professionals and individual renters who want a turnkey space to settle into.

Unlike traditional property management companies, we only lease carefully selected, hand-picked properties in the most popular and sought-after areas of New York, Boston, San Francisco, Los Angeles, D.C., and Chicago. Our design team will take your apartment and upgrade it to a high-class rental designed to fetch top dollar, without taking a huge commission cut.

Our focus is on client convenience and incredible outcomes. For example, we deliver on a full year of rental income, regardless of the occupancy rate from our sublessees. We do this by taking up units before they hit the market and keeping them for the long-term, which ensures full occupancy at all times. We also guarantee a 20% higher, consistent yield.

Our team will get proactive about maximizing your property’s annual revenue potential and earning you the most possible income. To keep your property safe, we screen and vet all guests and ensure that everyone stays for a minimum of one month. We also employ a full housekeeping staff, which will clean and maintain your apartment regularly, keeping it in pristine condition. Finally, our contract flexibility allows tenants to sign one to twelve month-plus leases, allowing you to meet your revenue goals.

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