An Unfortunate Santa Ana Property Management Story

Posted: January 4th, 2011  

A story I heard recently about a certain Santa Ana property management company made for an excellent cautionary tale.

I sat down to lunch with a client of theirs and asked about his experiences. He was frustrated that his property manager was difficult to get an hold of, didn’t return phone calls quickly, and had not updated him on the status of his duplex that had one unit vacant for over two months. He went on to share that this company charges him 8% of the rent they collect each month, plus an additional $1000 as a leasing fee each time a unit requires a new tenant.

I felt it odd that his 2 bedroom unit, originally priced at $1700/mo, sat vacant for so long. His property manager bemoaned the lack of traffic around the holidays and convinced him to lower his asking rent $100/mo and include $500 off the first month as an incentive. I knew the area well and this was well below market rent.

After doing a little computer work back at the office, I found that the property manager never listed this unit on the MLS. Where was this $1000 leasing fee going if no Orange County real estate agents, to whom a commission is usually paid from the leasing fee, have no idea this home is available? In fact, other than a single, two week old Craigslist ad wand a yard sign, I found no evidence this home was marketed anywhere! So it looks like $1000 will buy you an ad on a FREE classifieds website – something that the owner could have done on his own.

As if that’s not upsetting enough, let’s see what this really cost their client:
$4250 (2.5 months of vacancy loss)
$1200 (12 months of rent discounted $100 below market)
$500 (Unnecessary move in incentive)
$1000 (Leasing fee)

Added all up, that’s nearly $7000 this Santa Ana property management company cost their client…and why? So they could pocket the entire $1000 leasing fee rather than market the home effectively and offer a commission to other Orange County agents who represent tenants.

While companies like that are terrible for our industry, they also are a big reason why we are so successful and have never lost a client to dissatisfaction. We understand that the best property management companies owe a fiduciary duty to their clients. We always act with your best interests in mind. We do this while keeping our fees extremely competitive We charge 5% of rent collected for management and 50% of one full month for leasing. And you can rest assured that half of that leasing fee is always set aside as commission for cooperating Orange County agents.

-Brian Donlyuk
-Director of Property Management


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