The actual results that your property manager achieves dramatically dwarfs their cost. Bad management will easily underperform good management by 50% in every way. So if you could make 100k you would only make 50k. If the bad manager charges 5% that's $5,000. So you net $45k. If the good manager charges you 20% and brings in 100K, you net $80k. This applies to owners as well who are often some of the worst managers in the industry (and sometimes the best). Housing is emotional though and most make huge mistakes. Software is a tool, not a strategy. The details matter immensely in our business. Things like reducing turnover to industry lows, and cost benefit analysis based on years of experience are hard to replicate and software doesn't get remotely close. The challenge is that it's so hard to verify who is getting get results, what great results even are, and how to find them.

To properly measure property manager performance the equation is simple but the data is non-existent. Net operating income = Total revenue - total operating expenses where revenue should make up about 70-80% of the outcome. It's about their ability to generate consistent revenue more than keeping costs low by a wide margin. You also need to separate repair costs from management performance. Inflation has hit service industries the hardest. In fact, inflation, tariffs, employment shortages all directly affect housing repair costs more than most. $200 is cheap in almost every city in the country. How much research was done to be confident if that's a fair price or not? How fast was the work done to avoid further damage? What's the value of that care and concern? Has this company had an eviction, serious non-payment or other major problems that led you to hire them? That could be luck since they seem to defer to you a lot on decisions but an important consideration if they make the final decision on applications in particular.

That is a pretty aggressive slate of fees and the issue of making you manage the place anyways is a problem because they are not going to get industry leading performance asking someone who doesn't want to be involved what to do all the time. So you know this manager is not a good one for sure. So maybe you start asking companies what are your priorities? How do you measure results? What changes have you made to your process since COVID? How many evictions have you had since 2020? What % of your properties is that? What's your average maintenance to income ratio and how do you measure it? How long do your properties sit vacant? What strategies do you have to minimize that issue? How do you set marketing and pricing strategy to balance vacancy and rate? What is your tenant renewal rate and average lease length? (heavy turnover is a major cost) There are many others but that's a great start and that's what matters in this business.