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The Dollar Premium For Great Property Management

Feb 13, 2008
How much is Good Property Management Worth?

As an experienced Commercial Property Investor, you know that good property management is important, but the question remains....

Exactly how much difference can a quality Property Manager really make to your bottom line.

What is the dollar amount you can expect in return for taking really good care of your renters?

I think I have an answer for you...

Recent research offers a fascinating glimpse into exactly what premium you can expect when tenants believe you are a quality property manager.

The results are surprisingly lucrative.

Real Facts is a statistics company that focuses on Multifamily in several larger US markets. They published an opinion survey December of '07 from renters in four different U.S. cities.

The purpose of the study was to determine exactly what influenced the renters level of satisfaction with their landlord.

Turns out renter satisfaction comes from the presence of "a sense of community" within the apartment complex.

And a "sense of community" comes from a number of quality Property Management factors... good renter screening, good policies, fixing the apartment units when then need it in a timely manner, etc.

Good data ... no surprises and....

Then they did a fascinating thing...


They compared the Average Rent in each market with rents charged by the owner who ranked highest in renter satisfaction in that market. So we are comparing average rents to the rents of the winner of the renter satisfaction survey in four separate markets.

Here is what they found...

You can expect a monthly Rent Premium of between $40 and $100 a month in markets such as Las Vegas and Denver from excellent property management.

In San Jose there was a staggering $450 per month difference.

Let's look at the Bottom Line impact of that kind of a profit premium.

Let's say on the conservative side you get a $40 a month premium for your quality property management ...

In a 100 unit apartment building that is

- $4K per month
- $48K per year
- and at an 8 cap it equals $600K in additional property value when compared to the average quality manager. (assuming this income all rolls to the bottom line)

Now you know exactly what quality property management is worth to you.

Even on a smaller building - let's say a 20 unit apartment complex - the increase in cash flow can be very significant. And the "sense of community" you create will also lower turnover and a whole host of other expenses.

Next Steps:

You may want to survey your own renters in your own complexes about their opinion of property management quality and work to improve that.

Or you can go online to services like

- http://apartmentratings.com
- http://apartmentreviews.com

and see what your renters are saying about you right now.

BOTTOM LINE:

Happy renters happily pay higher rent - a LOT higher rent - for a well managed apartment.

There you go, mystery solved.

Now you know exactly what quality property management can be worth to you and your portfolio.
About the Author
Learn the Insider Secrets of Commercial Property Investment from Monte Lee-Wen who has personally purchased over $150M in Commercial Real Estate. CLICK THIS LINK NOW to start your Commercial Real Estate Investing Education with his 14 page FREE Report "35 Reasons You Should Invest in Commercial Real Estate". http://www.investortours.com
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