Property Management conundrum

[shanagarry]

I have inadvertently got myself involved in Property Management (only two properties involved that belong to friends) and have had my eyes opened to some of the practices that industry gets up to.. I came across the following when I started to put together a supply chain. It is not a business - we are doing some friends a favour as they want to keep their costs in check.

Before I start - please understand that I know there are many reputable companies who perform their duties in an honest and ethical manner - then there are the others. They are the ones I am targeting.

We have our own 'army' of poolmen, gardeners and general tradesmen but I started to look for an electrician to help with with a particular issue. When I located one he asked me how much I wanted the factura's loaded by when he submitted them. He went on to tell me that the standard is 20%. Within a few days I started to get calls from every poolman, gardener, maid agency in the area offering me their services. I spoke to them on the telephone as I have no need to meet them - but got the same story from them all - invoices/facturas marked up by 20% is the norm.

There was naive me thinking that the management fee we paid each and every month was securing us services (when I used to avail myself of property management services) at the cost the supplier charged. I still have all the invoices I paid during the 12 years we rented our property and over the last 4 years I did carry out spot-checks on certain charges and am delighted to report I never had occasion to challenge a solitary transaction. I know the cynics will say that the company were paid some form of rebate - but in our case I am confident that never happened.

There was a post on here recently by Pato I believe where he was bemoaning the IVA increase allied to the general cost of owning property here in Portugal and looking for a solution. I know its difficult when you are 1,200 miles away to keep people 'honest' - but instead of tolerating an increase attributed to the IVA increase it might just be worthwhile spending time analysing the suppliers invoices and doing a spot of audit trailing - with your management company. If you are paying them a monthly management fee - there is no way you should tolerate your invoices being inflated.

If you get an all inclusive statement at the end of each month - with headings - no detail. Stop it and ask for all the original receipts - the good honest providers will have them to hand - the others will struggle to find them.

If you take the line that you are too busy to find the time to trawl through invoices - don't be surprised at your escalating costs.

We have been here permanently since June last year - 7 months and I have been astounded at the cost of living here. Energy costs compared to the UK (although the UK is now starting to see sizeable increases) is off the scale - food costs are sensible but general consumer products are considerably more expensive. All that means is that if you are paying a Property Management company a paltry amount each month to look after your investment - and they have to eek a living out of it - there is every chance that somewhere along that food-chain you are paying more than you believe you are.

The old adage - if it looks too good to be true - it probably is

[pickwick]

Shanagarry

A lot depends on the contract owners have with the Managers. If the Managers are paying the bills on behalf of the owner (outlays) then of course the owners should have sight of the bills as proof of the amounts paid etc. However if the Managers are simply sub-contracting the services then the Managers can charge what they like until challenged.

In either case the owner is still left open to overcharging and the Manager potentially reaping the benefit through sharing in the spoils. The problem here is that the Managers are on the other side of the table from the owners sitting with the suppliers and the owners are all on their own. The only way I can see the owners getting costs down and retaining service levels is the following:-

Get enough owners together to form a group. Enough would be defined by a function of annual spend, by service by number of Managers but I suspect it would have to be around 100 to be big enough to stand the costs involved and still save some money. But if there were that sort of number all sorts of discounts could be put in place. Logs, security, restaurants, bars, taxis, golf, supermarkets, vehicle fuel, car hire etc, etc, etc
Have a binding service contract to deal with the services provided by the Managers drawn up to primarily protect the owners interests NOT the Managers
Then take the owners service and supply requirements to full competitive tender (price fixing is still possible but for the moment forget that) for fixed periods of time
Have the process above professionally managed (at a cost) as owners are not best placed to do it themselves and Managers must not be involved. i.e. Have someone sit on their side of the table looking after their money!!!

As you know I know a little about getting "more bang for your buck" and a think serious savings could be made here if enough people are serious about cutting their costs.

Pickwick

[shanagarry]

Property Management has such a low barrier to entry that every thieving halfwit with an 'eye' for an opportunity sees this as 'manna' from heaven - especially when naive and unsuspecting property owners don't expect their own nationals to take advantage of them. Taking a few of your points:

A lot depends on the contract owners have with the Managers

To begin they should tear them up and start again. Times have significantly changed since they were written.

if the Managers are simply sub-contracting the services then the Managers can charge what they like until challenged.

Similarly - every penny/cent of a client's money should be accounted for and a clear audit trail visible - down to receipts.

Get enough owners together to form a group

Stumbling block - a recent groundswell of opinion on here regarding burglaries in the Monte Servo/AdM/VdM areas suggested this - it died a death. Nobody interested in following through.

Regrettably many believe that by posting something on here they will get 'somebody' else to take action - as long as it doesn't have to be them. You will then find many months later a similar topic looking for a solution and off we go again - but nothing will be done

[pickwick]

Sad! Never mind we can enjoy watching Wales hammer England tonight!!!

Pickwick

[shanagarry]

Ate logo

[pato]

There could be an oportunity for someone like "shanagarry" to start up a service whereby owners can get all details of monthly payments organised and paid by standing orders, assist with opening bank accounts and keeping owners up to date on local and national legislation, I still get utility bills with the original owner of the villa's name on them and I've been there for 30 years, they need changing, sort of sort things out so that I can get my head around the situation, to me it's just a magical mystery tour, I'd willingly pay for that to be cleared. I've many more ideas that could form the basis of a much needed enterprise, just to lazy at present to type them up.

[SAM SPARKLE]

Sad! Never mind we can enjoy watching Wales hammer England tonight!!!

Pickwick

BAD CALL

[e-richard]

In response to Shanagarry's first post, I'l like to pose an interesting moral question. You may disagree with some of my assumptions, but try to concentrate on the main issue:

You live 1,200 miles away, and only visit occasionally, so you appoint a local manager.
Assumption: The manager is honest and supplies you with bona fide invoices for everything, and pays with your money.

You need some building work done, and you ask your manager to get 3 quotes.
You receive three quotes for €900, €1200 and €1500. (all quotes exclude IVA).
You choose to go with the cheapest and agree to the quote for €900 + IVA

Your manager arranges for the work to be done, supervises the builder and when you next visit, the works are all completed to your satisfaction, and €900+IVA has been deducted from your account.

Now for the moral question:

Is it wrong that the builder has boosted the quote by €150 which is passed back to the the manager ?
Remember, you had the opportunity to accept or reject the quote, and you did not have the time, energy, skills, language, contacts to get a quote yourself nor manage the project.

Discuss...

[shanagarry]

In response to Pato's suggestion:

I would ask the question - what is your existing property Management company doing to address the points you raised. Waiting all that time to get your name changed on a utility bill is ridiculous - but believable.

There is merit in his suggestion that the formation of an owner's consortium with one reliable person being responsible and accountable to the members for the coordination of the bought in services (maids, gardeners, poolmen, tradesmen and bill payments). If enough members formed the consortium - the combined buying power could result in considerable buying power and control.

Regretfully, I don't have the time to devote to such a responsible task as I still work full time - but would be prepared to combine what time I have to work with one other to achieve the desired result. Anymore than two people would make it unwieldily and time consuming. If enough people are genuinely interested in this concept I would suggest an offline forum (as this public platform might give the dishonest brokers food for thought) initially and then take it to a stage where all the participants meet to constitute a legal entity.

Does that make sense

[shanagarry]

In response to e-richard's comment:

Can I take you back to the point I made initially

If you are paying them a monthly management fee - there is no way you should tolerate your invoices being inflated.

Whatever price you are being asked to pay and assuming it is based on a like-for-like specification, your property manager has a moral obligation to tell you that s/he is being paid a commission/introductory fee by the successful bidder. If you baulk at that practice - get on a plane and organise it yourself - otherwise accept it and move on. Given that you have been provided with three 'bone-fide' prices and you are working with an organisation you trust - there shouldn't be a problem. The crux of the matter is the like-for-like comparison and are you getting value for your money.

In our case in previous years - we went through the process e-richard described for bathrooms to be refurbished. The only difference was that when the management company had a shortlist of three, I came out and held a 'beauty parade' - and I didn't choose the cheapest and was delighted with the outcome. As it happened my choice was the one preferred by my management company - something I didn't know prior to making my decision. I have probably been spoiled because I worked with the same company for 12 years and by applying all the principles I have outlined here - developed a trust and friendship that endured.

Unfortunately for many - the cowboys have come to town and finding the 'gold-nugget' has become that bit more difficult

[pato]

If enough people are genuinely interested in this concept I would suggest an offline forum (as this public platform might give the dishonest brokers food for thought) initially and then take it to a stage where all the participants meet to constitute a legal entity.

Does that make sense

Yes it does, and I agree that it should be an offline forum, I, and I suppose many people are reluctant to join any organisation that requires time and commitment, so I would suggest we keep it very low key to start, exchanging information and experiences we've encountered over the years, and if that's successful, take it on from there. Thanks for your input.

[porky]

Hi Guys,
I am looking for a villa manager, does anyone have any recommendations.

Cheers.

[shanagarry]

I am looking for a villa manager, does anyone have any recommendations.

Yes - be very, very careful but first read the sticky post regarding Mazza Property Services before you do anything

[Mexican Pete]

Porky,
I've just sent you a PM with details of our agents.

[Bruce Wallis]

You need to have a property manager you trust.......

But having said that, get a detailed monthly account, and do audit you accounts, both monthly and yearly.

Question everything that concerns you...and get a satisfactory answer, and detailed invoices if necessary.

There is a natural temptation for a management company to go for the easy, therefore expensive, option, especially in the high season when things get hectic.
Challenge things that you are unhappy about!

You and your management company are a close relationship.

You need to be able to trust them.