Halifax Real Estate Blog : Avoid The Hidden Costs of Property Management

Owning rental property is widely regarded as an excellent strategy for building wealth. However, without diligent management, expenses can swiftly erode profits. Consider Susan, a busy professional who discovered this the hard way. Her property manager began incurring unnecessarily high maintenance and repair costs, significantly impacting her returns.

Susan’s Costly Experience

Susan, juggling a demanding career, invested in a rental property in Halifax, Canada. She wanted to avoid the stress of dealing with tenants and maintenance issues, so she hired a well-known property management company to handle everything for her. At first, it seemed like a great decision—the company found tenants quickly, collected rent, and took care of minor repairs without needing her involvement.

However, after a few months, Susan noticed something troubling—her profit margins were far lower than she had expected. Curious, she decided to take a closer look at her financial statements. What she found was shocking: a simple leaky faucet had cost her $450, a minor drywall patch had been billed at $600, and even basic landscaping was running at twice the price she used to pay when she handled it herself.

Determined to get to the bottom of this, Susan started asking questions. She quickly discovered that her property manager was hiring the most expensive contractors without even attempting to get competitive bids. Worse still, the management company had no real incentive to keep costs low—because they often took a percentage cut from contractor invoices or had preferred agreements with high-priced service providers.

How Property Owners Can Avoid This Pitfall

Susan’s experience is far from unique. Many property owners unknowingly allow their profits to dwindle because they trust property managers to act in their best financial interest—when, in reality, some don’t. If you own rental property, here’s how you can protect yourself from excessive maintenance costs:

1. Read the Fine Print in Your Management Agreement

Before signing a contract, carefully review the section related to maintenance and repairs. Many agreements allow property managers to approve expenses up to a certain amount without consulting you. If that threshold is too high, negotiate it down. A good rule of thumb is to require multiple quotes and your approval for any repair exceeding $200.

2. Demand Transparency in Vendor Selection

Some property managers have deals with certain contractors—who may not be the most cost-effective. Ask for a list of vendors they use and whether they receive commissions or markups on repairs. If possible, provide your own list of trusted vendors or request the right to approve contractors before any work begins.

3. Set a Maintenance Budget

Create an annual maintenance budget and require your property manager to stick to it unless an emergency arises. This helps prevent unnecessary spending. Request a breakdown of past maintenance expenses to identify any areas of overspending.

4. Require Competitive Bidding for Repairs

For non-emergency repairs, insist on at least two or three quotes from different contractors. This ensures you’re not overpaying for routine jobs.

5. Monitor Expenses Regularly

Don’t wait until year-end to check your financials. Request monthly or quarterly expense reports to catch any excessive spending early. If a charge seems too high, challenge it and ask for a breakdown of the costs.

6. Consider a Pay-Per-Service Model Instead of Full Management

If you have some property management experience, you might save money by hiring service providers directly instead of using a full-service management company. Alternatively, you can use a hybrid model where the manager only handles tenant placement and rent collection while you oversee repairs yourself.

7. Be Willing to Switch Property Managers

If your property manager is unwilling to be transparent or refuses to implement cost-saving strategies, don’t hesitate to find a new one. Many reputable managers are committed to keeping costs reasonable while still maintaining the property’s condition. Always read reviews and ask for recommendations before hiring a new manager.

Final Words

Ultimately, Susan decided to switch to a more cost-conscious property manager—one who allowed her to approve major repairs and sought competitive bids. By taking control of her expenses, she was able to restore profitability to her rental property.

If you own rental property, don’t let excessive maintenance costs drain your profits. Be proactive, set clear guidelines, and ensure your property manager is working with your best interests in mind. With a strategic approach, you can maximize your rental income while keeping unnecessary expenses at bay.

Goodluck is a highly regarded real estate expert in Halifax, Nova Scotia, known for his deep understanding of the local property market. His expertise has earned the trust of both landlords and tenants, making him a go-to professional in the industry. Whether you're looking for a reliable property manager in halifax or need assistance finding the perfect rental, Goodluck is here to make the process seamless and stress-free.