The old property management company started taking owners for granted by charging ridiculous extra fees to upkeep our property. For example, they wanted owners to spend $25,000 on new furniture and art, even though everything was fine. I wasn't down to spend $500 for one king size pillow. It felt like the government charging big bucks for a stapler.
With no ridiculous $25,000 on furniture to spend, no more huge commission to pay, and a guaranteed minimum income, there wasn't anything to lose my first year with the new management company. But the important focus was on the future beyond year one.
Based on previous efforts to market my property online to the public and to friends, I know that I can boost rental income by 20%-25% a year. But it was important to let the new property management company work things out on their own so they could focus on at least replicating what I earned with the old property company.
Imagine if I worked hard marketing my property and grew revenue by 25% higher than the guarantee level. I'd be screwed in the second year and beyond because the property management company wouldn't hustle any harder since they surpassed the minimum by so much. They might have confused my efforts with theirs.
By letting the new property management company try and grow the business on their own the first year, they had to give my property more exposure on their home page, promote The Resort At Squaw Creek and Lake Tahoe more, experiment more with rental rates, and pay more attention to my unit. I've personally been able to e-mail or talk to eight of the property management employees on the West Coast to help focus their attention on marketing my property due to the guarantee over the past 12 months.
Now that there is no more guarantee, I can rest assured knowing they did everything possible to make the unit as much money as possible. I won't tell them that I'm helping them help me in the second year or beyond because I want to keep their hunger alive for as long as possible. But it's inevitable they will no longer feel the same sense of urgency marketing my unit, even if they do make more in commissions if I make more money.
