Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia. There recently was a concern by a viewer, David, regarding property owner making own repairs.
As a property management company, it's important to understand that we restrict owners from interacting with tenants or handling repairs primarily to protect both the owner and our company. One of the biggest concerns is compliance with fair housing laws. These laws are very detailed and cover a wide range of issues, some of which aren’t immediately obvious. While I agree with the fair housing regulations - because they are designed to prevent discrimination and ensure equal access to housing, they are not always intuitive. An innocent comment from an owner during a tenant interaction, for example, could be interpreted as discriminatory, putting both the owner and our company at legal risk.
It's our job to know these laws inside and out. We train ourselves and our staff to ensure we never say or do anything that could create legal problems. Owners, understandably, may not have this same level of knowledge or training. Furthermore, an owner performing repairs on their own could inadvertently do something that harms the tenant or causes damage, leading to additional legal and financial risks.
Another issue is that owners could offer something to tenants during an interaction that they later regret or can’t uphold. For example, a casual remark might lead to a misunderstanding where the tenant believes they are entitled to a service or benefit that the owner never intended to offer. These kinds of situations can create headaches down the road, which is why we strongly advise against direct interaction between owners and tenants.
Most property management companies, including mine, restrict landlords from entering their properties while they are occupied by tenants. However, we do allow access to the property when it is vacant, and we’re sure other companies operate similarly. This is because, when the property is vacant, there is no immediate liability from tenant interactions. It's your property, and you should have the right to enter it when you wish, as long as it doesn't disrupt the process of getting the unit rent-ready.
That said, even though we allow owners to enter and make repairs while the property is vacant, we strongly dissuade them from doing so. In our experience, it rarely works out well. Owners often assume that they will save money by hiring contractors themselves or doing the work on their own. They think they’ll get a better price by meeting multiple contractors and comparing quotes. But in reality, the result is almost always negative.
The main issue is the delay in getting the property rent-ready. Every day the property is vacant is costly for the owner. As mentioned in previous discussions, vacancy is like a penalty fee. If your rent is $1,000 per month, you're losing about $33 per day when it's vacant. For higher rents, this daily cost can be even steeper, and the financial hit adds up quickly. Even if you save money by doing the repairs yourself or finding a cheaper contractor, the time lost while the property is vacant outweighs the savings.
Another misconception some owners have is that property management companies are getting kickbacks from contractors or marking up repair costs to make a profit. In reality, we don't receive compensation from contractors for the repairs and improvements we coordinate. The truth is, a good property management company should be saving you more money than it costs, and we achieve this in various ways, including handling repairs efficiently.
When we send a contractor to your property, we are recommending someone we trust. These contractors have often done hundreds of jobs for us, and we’ve built a relationship based on accountability and trust. They know they are working not just for one property, but for our entire portfolio of properties. Our company refers a significant amount of work to them, which creates an atmosphere of accountability. If something goes wrong, the contractor will come back and fix it. This level of reliability is something an owner might not get when hiring someone independently.
Additionally, because we regularly work with these contractors, we can negotiate better rates. These contractors are well-vetted, and their prices are kept competitive because we oversee their work and regulate costs. If something seems too expensive, we’ll question it and often get the price reduced or find a valid explanation. This is one of the many ways we ensure repairs are done at a fair price while maintaining a high standard of quality.
Owners who hire contractors on their own don’t have this same level of oversight and may not end up with the same quality of work. Not only is there a risk of overpaying, but it’s also less likely that the job will be done as quickly or efficiently. We have contractors who are essentially on standby for us, ready to jump in and get the work done fast, minimizing the time the property remains vacant.
For all these reasons, we strongly advise against owners handling their own repairs, even though some property management companies may allow it. Different companies have different policies, and there are firms out there that will permit owners to use their own contractors or even do the work themselves. In our case, if an owner insists on using their own contractor, we still prefer to be involved in the process to ensure everything is done correctly and efficiently.
Finally, managing expenses through the property management company is beneficial for tax purposes. By funneling all repair costs through us, we can properly account for them as expenses, which helps you when tax season comes around. It’s one more reason why it's better to let the property management company handle repairs and expenses.
In summary, while it’s understandable that owners want to be involved in maintaining their properties, allowing the property management company to take control of repairs and tenant interactions protects both the owner and the management company. It ensures compliance with laws, minimizes risks, and saves the owner money by reducing vacancy time and ensuring high-quality, fairly priced repairs. I hope this gives some clarity to David’s concerns and helps other property owners understand why we operate this way.
As always, happy rental property investing!
