Service Guarantees That Reduce Rental Property Investment Risk
Service Guarantees That Reduce Rental Property Investment Risk
Published by Brian Bean, Dream Big Property Management
Rental property investments come with a lot of risks, and they scare away many potential investors. But all of these risks are manageable if you have the right person running the show. Today we’re diving into service guarantees and how they can reduce your risk as an investor.
If you’ve ever talked to anyone about being a landlord or having a rental property, you’ve probably heard a horror story or two… or three. All the negative stuff. The “3 Ts” – tenants, toilets and trash. It’s enough to keep a lot of people on the sidelines, out of the game.
There’s no doubt that being a rental property owner has its challenges. And this is not where I tell you that everyone’s wrong and owning rental properties is easy. Like everything in life, the biggest payoffs typically require either hard work, patience, or risk tolerance. And sometimes all three.
What I will tell you is that there are ways to mitigate the risks, to prepare for and therefore, turn drama into inconvenience.
Common Rental Property Complaints and Concerns
Here are some common complaints and concerns about owning rental properties:
- Choosing the wrong tenants
- Taking too long to find a tenant
- Tenant damage to the home
- Pet damage to a home
- Property managers who won’t return calls
- Being charged hidden fees by property managers
- Not being able to get out of the contract with a bad property manager
- Evictions
This list could go a lot longer, because managing a rental property covers a ton of important tasks. But these concerns are what make owning rental property unnecessarily more difficult.
The basic tenets of property management include communicating with residents, collecting rent, overseeing maintenance and repairs, and conducting inspections. These other complaints are byproducts of the core duties. If the standard duties are handled well, it dampens a lot of these other concerns.
The problem is, rental owners still worry about those problems. Maybe they’ve heard the horror stories one too many times. Or maybe they’ve been scarred by something that happened in the past. If I’m describing you, that’s OK. You’re not alone. You just have to find someone who can guarantee that they will take some of those risks off your shoulders.
Service Guarantees That Address Your Biggest Concerns
Here are some service guarantees you might look for to help ease your concerns when you hire a property management company for your portfolio:
The Communication Guarantee
We get calls all the time from rental owners who are unhappy with their current manager because they won’t return their calls. You should expect to get a call-back within one business day from your property manager. Sooner if it’s an emergency. A communication guarantee shows that your manager is sensitive to the concern and has already addressed it to make sure you don’t have that complaint.
The Performance Guarantee
This service standard helps align your property manager’s interest with yours. The performance guarantee says that if the rent doesn’t come in, the property manager doesn’t get paid either. This keeps your manager focused on three things: putting the right people in your home, responding quickly if rent is late, and solving for both if they become problems.
The Lease Guarantee
If your property manager charges a fee to fill a vacancy, do they stand behind their work? A lease guarantee essentially waives the charge to re-fill the vacancy if that tenant broke their lease and moved out before the first lease was completed. This is designed to prevent excessive repeat ancillary service charges because of poor tenant placement.
No-Eviction Guarantee
Have you ever been through an eviction? In California, it’s a long process, but it’s also expensive to get started. As much as $1,200 just for the initial filing and service to the tenant. If your property manager placed that tenant, are they willing to stand behind their work? Are they willing to pay that initial filing and service fee instead of charging you for it? If they have a no-eviction guarantee, the answer is “yes.”
The No-Hidden-Fees Guarantee
You would be surprised what some property management companies charge. The monthly management fee is just one of many potential charges. There are a lot of different tasks, some that fall outside of the typical day-to-day management of your home. But there should be no surprises. You need transparency. And it should be in writing, up front.
The No-Upfront-Charges Guarantee
Should you be paying in advance, before any services have been rendered? We’re not talking about paying for repairs to get a property ready for a resident, or filling up your reserve account – that’s your money just held in trust in case of a future expense. Before you even get started, what should you be paying for?
The Satisfaction Guarantee
This one may sound like it comes from marketing, but when it comes to dealing with large assets such as real estate, this one is crucial. Essentially, if you’re not satisfied with your property manager, you can cancel the contract for any reason. It prevents someone from handcuffing you and making you endure bad service.
Why Some Property Managers Can Offer These Guarantees
Rental property ownership can be stressful. It’s risk vs. reward. But risk isn’t a constant threat. The same risk might be a major concern for one person, but minor for another, because of how they have prepared for that concern.
For us, it’s not about being risk-tolerant. It’s about having systems and processes and great people in place so that potential problems rarely become actual problems.
When you leave your house, if you’re confident that you turned off the stove, you’re not worried about the house burning down, right? You can essentially guarantee to your spouse that fire is unlikely.
Likewise, we’re able to offer these types of service guarantees for two reasons:
- We have the people, processes and expertise in place to prevent and deal with those problems.
- Guaranteeing that we’re responsible financially puts our feet to the fire to be as diligent as possible to make sure that we prevent or deal with those problems.
If you’re keeping score, that’s a win-win for you and us.
The Bottom Line on Rental Property Investment Risk
Yes, owning rental properties isn’t easy. But it’s worth it. And a lot of the horror stories are just that – stories. A retelling of worst-case scenarios involving people who made mistakes or were unprepared for the fallout.
You now have the foresight to know better, to be prepared, and to find someone who is confident enough to guarantee their service.
Service guarantees aren’t just marketing gimmicks – they’re accountability measures that align your property manager’s interests with yours. When a company guarantees their work, they’re putting their money where their mouth is.
The key is finding a property management partner who has the systems, experience, and confidence to back up their promises with real guarantees. Because when it comes to building wealth through real estate, you shouldn’t have to lose sleep over preventable problems.
Have questions about service guarantees or want to discuss how they might apply to your rental property investment? Call Brian Bean directly at 951-314-5402 or visit dreambigpm.com for more information about property management services in the Inland Empire.
About the Author: Brian Bean is President of Dream Big Property Management, serving rental property investors throughout the Inland Empire of Southern California. With years of experience helping “accidental landlords” become “intentional investors,” Brian specializes in using proven systems and service guarantees to reduce investment risk and maximize returns.
Tags: rental property investment, property management guarantees, Inland Empire real estate, tenant screening, eviction protection, rental property risks, property investment strategy