When owners evaluate a 3rd party manager, most fixate on the management fee percentage. According to Ron Kutas, CEO of OneWall Communities, that instinct quietly costs them. “If you’re comparing management companies on fee percentage, you’re already missing the point. You’re negotiating one of the smallest numbers on the page.”
The math makes it plain. “A 25 basis point drop on a $2 million rent roll is $5,000 a year,” Kutas says. “But 200 basis points on bad debt at that property is $40,000. You’re spending your time negotiating something that isn’t moving the mark, versus really understanding how quickly they turn units over and what their bad debt policy is.”
A fee that looks too good should raise alarms, not excitement. “If you’re saying to yourself, how can they make any profit, you’re getting billed back a lot more than you realize.”
That is why Kutas points owners toward the expense side and the people running the asset. The questions management companies hope you never ask are simple: “Who is the regional manager overseeing my property? What’s their resume like?”
He also flags bench strength. “If a community manager goes on leave, who’s plugging the gap? Do you have a bench that can step in, or are you always relying on temporary labor?”
Reporting reveals just as much. A red flag Kutas watches for is “very generic parent accounts on the chart of accounts, just repairs and maintenance instead of paint, electric, plumbing. The less detail, the more concerned I’d be.” And when performance disappoints, owners should separate a bad manager from a bad market with data. His blunt heuristic: “If you’re on your third manager in four years, it’s probably not the management company.”
The tell of a true owner-operator? Transparency on bill-backs. “An owner-operator has a schedule ready to go and can walk you through exactly what they bill back and why.” That is the standard OneWall Communities holds for institutional-grade multifamily property management.
Property management is complex, and the best solutions come from shared incentives. Whether you’re exploring new approaches or facing specific challenges, we’re here to talk. Visit us at onewallcommunities.com or call us at (646) 596-7068.