Topic: New Breed of Investors Lowering Maintenance Standards?

With so many multi-family communities being sold to inexperienced multi-family investors who want to be their own asset managers, is there a growing trend to lower maintenance standards to save money?

I came from the old school of 24-hour emergency maintenance. Going out overnight for some emergencies and dropping everything if someone's heat is not working.

So, what's the harm if they wait until the next day during business hours to get their only toilet unclogged or even wait 2 or 3 days to get the heat fix. Especially if our state laws say "reasonable time." What is that?

What if you have a small, older property with lots of maintenance issues. How could you possibly afford a 40-hour, HVAC maintenance tech with a mortgage, manager and major deferred capitol improvements needed.

Are these new investors just looking at the financial reports and making decisions?

How do you tell a tenant it will be 2-3 days before we can come by and unclog their kitchen sink?

How do you get these "new owners" on board with our industry standards of service without being critical of their decision-making?

What do you think?

Having a leader who can educate the owner would be a big step toward improving this type of situation. I find on a lot of properties, company standards can vary greatly. It takes time and your ability to train the owner who may be very inexperienced in the business to change this mindset. Sometimes, if you cannot, the residents will start moving rather quickly, the property's reputation will plummet, and the owner will learn the hard way.

If you have a good line of communication, you might try asking them if they have other properties, too, who can share in the cost of an experienced maintenance company who might at least provide emergency service. You don't have to be critical of their decision-making, you just have to paint and honest picture of how their decision to downgrade maintenance will negatively impact the business - after all, we are a service industry.

After spending a good portion of my afternoon with a particular clerk trying to determine what bills were paid for a particular vendor, I just want to share that there are in fact inexperienced owners with their staff who just don't get it.

After several minutes of questioning, it came down to the clerk (maybe) called the vendor. But, she said, he didn't call her back. She'll try to reach him again but he just has to answer the phone. As it turns out, he has to answer the phone when she calls because she doesn't leave a message because it's her phone (she pays for her cell phone) and she won't leave the phone # of the office because they'll get mad if people call. And if the vendor were to see the number on his caller id and call back, no one will answer the phone if they don't recognize the number. And, (wait for it.......................) there is no answering system set up.

I know this does nothing to help your situation at all, but just thought I'd share that it's not just you in these weird situations where people don't get it. I agree with Mindy that educating the owner is paramount to getting them to understand and yes they may very likely have a costly learning curve when they realize they're faced with multiple notices and upcoming vacancies. I hope these people realize how lucky they are to have you.

There are also times when the owner just does not have the capital and are in over their heads. I have ran into properties which none of them were earners and were barely breaking even. They had bad credit and some vendors had bills that were over 90 days and more that had not been paid. So, first it has to be established are there funds anywhere and what their credit is like.
It maybe that the owner did not realize how much capital was needed to maintain and sustain the operations. In which case someone for sure with experience needs to sit them down and give them an accurate picture of what is going on.
Mindy for sure gave good pointers! I would like to add that there are companies out there that have systems set up specifically for multifamily properties, and are able to get things cheaper through combined purchasing power. Some have systems that are real strict and can give the owner real time what the spend is and what was being ordered. Invoices would be an easy task, and when a property was close to exceeding their budget, then before they exceeded they would have to ask for a budget increase.
Now, the maintenance issue there are many ways to handle it and in none of them do I except or ask for the customer to wait (just my personal thing). I treat them the way I would want to be treated and that is; get it done as soon as possible. Contracting a company and reimbursing them on a negotiated price may be one option. I would compare which was better doing that or having a maintenance person on call, or a combination.
Now, it maybe a hard one and that is to tell them they need to seek funds and if they cannot get them to look at getting investors, or sell the property. A non starter is to allow the tenants to suffer. I would have to let them go as you cannot help what they cannot afford and what they cannot afford means the tenants are going to end up in your office and they will not hear owner, they see you and you are who they see as fixing the problem. Now, that is just me and not saying I am correct, but it has served me well in my career!

Bottomline, you cannot always get around critical, you have to give them reality because they are dealing with peoples lives. In Maslow's chart shetler is one of the first basics!