Skip to content

Expert in Property Management Darren Hunter – Recent Interview with Mike Mortlock
Darren Hunter:                 So firstly, right off-the-cuff Mike, my warning to property investor was if you have agencies that are willing to discount or who are already cheap, and are willing to go cheap, they have simply adjusted their fees to the level of services they provide. Low fees means low service. And your piece of mind will be destabilized, though you could save some money in the short-term it could cost you a packet of money, in the long-term with poor property management, bad tenants it could cost you thousands.
So from that point of view, I encourage property investors to value high charging agencies, because if they charge high it means they’re charging higher than their competitors in the area, which means they actually believe they’re worth it. People only charge in line with what they believe they are worth. If they’re charging more, it means they deliver more and you’re gonna get far better piece of mind. So that’s basically, where it’s at. If you’ve got an agency that charges more than their competitors, it means their boss actually values property management. You are going to save more money in the long-run by having a quality agency charging higher fees.

Mike Mortlock:                 And what typically is the difference between an agency that values property management, and one that’s just trying to sort of have that race at the bottom with fees? How would the service differ typically?

Darren Hunter:                 Okay. That’s a really good question. I’m gonna help you with that. So this is how cheap fees turns into poor service. Number one, is that the agency let’s say signs up a cheap property, or a property at cheap fees. And the property investor’s thinking “Wow, I’ve got a good property management agency here. And I’ve saved some dough too.” So they immediately get this sense of value, but it’s fake, it’s false because this is what happens, you see. The agency still has the same level of overheads as the quality agent down the road. They still have to pay property managers quality. They still have to pay the same amount for fuel, and cars, and insurance, and rents, and phones and all of those sorts of things. So therefor, their profit margin is a lot lower than the agency down the road, when they’re going cheaper. I mean that’s just simple business understanding. But this is what happens, the boss goes “Well I need to make some quality money here.” Then they load more properties onto that property manager, which means now the property manager’s not only working 40 hours a week, but nights and weekends too. They get brunt out.
Now in this day and age, quality property mangers will not put up with that anymore. And so not only do the quality property managers leave that type of business, but they will not come to that business as well. So the agency has an inability then to attract quality, experienced property managers, which means they either have to go and find inexperienced property managers. And train them up, but they’ve got no resources to train. So those people end up leaving quickly, and here is what happens. The agency ends up attracting the bad, incompetent, negligent property managers because that’s the agency that they know that they can get away with it, because the boss doesn’t care about property management. He doesn’t focus on it, then they can do what they like. And so therefor, the owner gets bitter and upset in the end, because it got these high turnover property managers.
They’re getting poor service, negligence is occurring which is costing a lot of money. And it just becomes a bitter pill in the end. That what cheap fess ends up turning into. And the agency in the end, the boss goes throws up his hands in the air and says “I don’t wanna do this anymore. This is doing my head in, there’s too many problems. I’m not earning enough money. It’s not worth it.” And they end up selling at a real discount rate, and that owner ends up going to another company and getting transitioned over. That’s what happens to cheap fees in the end.