Hi, Todd Ortscheid here with GTL Real Estate talking this week about online reviews and how you can best use those to help find a property management company to manage your rental property.
Online reviews, obviously, have gotten pretty popular. Google and Yelp are probably the biggest providers of those but there's also Yellow Pages, Better Business Bureau, and Facebook. There's just a lot of places where you can leave and find online reviews. It's probably something you've become pretty familiar with as you search Google or Bing, just seeing those ratings there by default, because they're on your search listings.
Obviously, these play some part at least in your selection of a management company. So there's a few key things to keep in mind about property management companies that are a bit different than other businesses when you're looking at those ratings. If you're looking for a restaurant or a hotel or some place like that, it's pretty clear that everybody who's rating that restaurant is probably an actual customer of that restaurant, for example. There's not any sort of conflicting interest there.
With a property management company though, it's a lot different because there's two parties for every property that we manage. There's the owner of that property who's our client, that's the person that we actually represent and whose interest we are most concerned with. And then there's the tenant, and the problem with that is that in some cases, the interest of the tenant are directly opposed to the interest of the landlord.
For example, if that tenant doesn't pay their rent on time and they have to be evicted, well, what is that tenant going to do? They're probably going to log on to Google, post a really nasty review of us saying how horrible we are because we dared to tell them that they had to pay their rent or leave if they didn't so they'll leave this horrible one star review and that obviously is gonna weigh down our average.
Any management company that's doing their job is going to have those sorts of reviews. And that's a bit different than a restaurant where everybody who's leaving reviews is their actual customers, it's the people that they're supposed to be working to make happy. That's not always the case with a property management company because we have those competing interests in some cases. Because of that, you have to weigh the reviews a little bit differently. What you're looking for is kind of a sweet spot in those reviews. You wanna make sure you don't have either really low ratings or really high ratings because those could indicate two different problems.
Obviously on the really low side, if somebody's got 2.2, two stars, one star, obviously that's probably indicative of a company that's not making either their tenants or their owner clients happy. Now, that's not necessarily true. There could be circumstances where a property management company is just not asking any of their clients to leave reviews and if that's the case, they're probably not getting very many reviews even if they have a bunch of very happy clients, most people don't go on and leave reviews unless you ask them to do so. They could just have a situation where that's the case.
That's pretty rare nowadays. Most companies are actively asking their clients for reviews so you don't see too much of that. That used to be more common but not so much anymore. So if you see those really low ratings, that's probably an indication of a management company you don't wanna do business with.
On the other hand, there's another red flag raised if there's unrealistically high ratings. So if you see a management company that has 4.5, 4.8, 5.0 stars, and it's not a new management company with just a couple of reviews, then that might be an indication that that company is trying to play both sides. In other words, they're trying to keep the tenant happy even if that's not necessarily in the landlord's best interest and a lot of their clients don't realize that that's what they're doing and they're missing out because of it.
For example, something I see a whole lot on this is management companies waving late fees just because they don't want tenants to post bad reviews of them online for charging those tenants late fees. Now, we share the late fees with our clients so when we charge a tenant a late fee, you're getting half of that money. That's an important thing because if the tenant's paying late and you're missing out paying your mortgage on time, you need that late fee to help you pay the late for your mortgage. It's also just compensation because you deserve your rent on time. If the tenant's not going to pay it on time, you should get something for that.
If a a management company is waving that just so they don't get bad reviews from tenants, that's hurting you and that's just one example. A far more serious example would be a management company who doesn't charge a tenant for damage when they move out of the property. And that can cost you thousands of dollars. But I do hear management company owners sometimes saying, "Well, I'm gonna consider that normal wear and tear because we don't really want that tenant to get too angry, they were threatening to leave bad reviews or go to the Better Business Bureau. We don't really want to do that so we'll go a little bit easy on them" That's a bad thing and it's not only just a bad business decision, it's really a violation of that management company's fiduciary responsibility to you, which is a legal obligation. They represent you, the property owner. They should be taking care of your interest.
If there's a management company you see that has those unrealistically high ratings, that's, I would say, a warning sign. And not always, there could be some management companies who are just managing only very high end properties. And in that case, it's rare to run into a tenant in that range of property who's paying rent late, damaging property. If someone's renting a $4,000 a month unit, they're probably a pretty responsible person who's not going to be doing damage or paying their rent late. So those management companies who appeal to that niche market, they're dealing with a bit of a different situation. But for other companies who are managing standard three bedroom, two bath, typical rental properties, if they're not getting some bad review from tenants here and there, in my opinion, they're not doing their job. They're not representing their clients. So that's something to keep in mind.
You see a management company has three and half, four, 4.2 stars, that's probably the sweet spot you want to look for. That's a management company who's getting those bad tenant reviews when they're doing their job but they're also getting good reviews from their clients. And that's the important thing. So that's the last thing you can do is actually look at those reviews and see who is leaving the bad reviews on a management company's profile. Is it tenants or is it owners? And you can look through and actually read those. If you see a bunch of owners leaving bad reviews, that's a big warning sign. You don't want to see that. But if you see a bunch of tenants saying, "This management company evicted me," or "They charged me a late fee," or "They wouldn't let me have my application fee back when I had a 500 credit score." That's a good indication, that's something that you do want to see a management company doing. If you see those kind of bad reviews, then that lets you know that management company is doing their job and representing your interest.
Keep that in mind when looking for a management company. Obviously, if you're one of our happy clients, please go on to Google or Yelp and leave us a positive review. If there's any reason you can't leave us a positive review, then please let me know and we'll try to work out whatever that issue is. But if you have any questions about how any of this works, what you should look for on reviews, or anything else, you can send me an email at firstname.lastname@example.org. Have a good weekend.