Beyond The Deal: Working with a Client’s Property Management Company
November 27, 2018
Owner | Designated Broker, GPCI Multifamily & Land Development
If there’s one crucial lesson you should learn early as a broker in multifamily brokerage, it’s the importance of maintaining a good, close relationship with clients and with property management companies even after a deal is done. Suffice to say that a transaction is only a piece of a relationship.
Making it a priority to regularly monitor your client’s property management company and the new investment to make sure it is running efficiently and profitably is something that can benefit you greatly in the long run. Building relationships even after a deal is done helps build trust. When your out-of-town clients know they can call and rely on you to be their trusted, in-town contact if they need anything specific done with a property, that’s a win for everyone. And when property management companies know they can call you if they ever need any help with the owner, that’s a win-win, too.
One of the most important actions you provide in support of your client owners is to regularly drive by and see for yourself how their property appears with regard to curb appeal, cleanliness and condition. Examine how tenants are treating the property and look at any obvious deferred maintenance items that have yet to be completed. It’s a good idea to take a couple of exterior pictures so the owner and property management company can see for themselves how the investment is doing.
Per permission by the owner you can receive and review a copy of the current rent roll. Request it for the 10th of the month along with a year-to-date operating statement and check to see if the tenants are current or have any balances, as well as when the leases are expiring. Review the operating statement for income and expenses to see how the property is performing. It is critical to verify that the income and expenses are in line with how you believed the property should perform and what was agreed upon with the property management company.
Monitoring and inspecting any capital improvements, rehab, or turn activity is another key area where you can provide value. It’s also important to make sure that normal monthly maintenance is being done, such as pest control, smoke alarm checks, and the buildings are secure. Property management companies will have many clients, and you want to make sure that your owner’s property gets the attention it needs.
Being proactive helps you, the owner, and the property management company avoid unpleasant surprises in the form of big issues that can, and despite your best efforts, do occur. It also keeps your relationships functioning at a high level. Remember that property management companies can also give you referrals and be a big help to you on your next due diligence.
You’re probably asking yourself, “Why do I want to do this much work when the deal has closed and I’ve already been paid a commission?”
Always remember that a happy owner now is a future buyer and seller, as well as a great source of referrals. By keeping the relationship close, your client will continue to come back to you when he or she feels ready to buy more investments, or when he or she is ready to sell.
The amount of time involved is different with each investment, but to keep a loyal, happy client, the process never truly ends with the purchase. One of the most exciting things about working in commercial real estate is the fact that the closing of one deal could always be the first step towards the next one.