Punishing Property Management

How did you get started in the business?
Duke Dodson: My father and I got involved in investment property in 2003, starting with seven or eight properties. We couldn’t find anyone who wanted to manage a portfolio that small that I felt comfortable with, so I saw an opportunity and I started [Dodson Property Management] officially in 2007. Now we manage 485 units, only a handful of which I own myself.

What is the makeup of your portfolio?
DD: Ninety-five percent of it is residential, and of that, 60 percent is single-family homes. Most of the remaining 40 percent is apartments in small buildings ranging from 2 to 22 units. Some of these are investors who own several properties, and some are reluctant landlords—people who had to move but couldn’t sell their property.

How is the market fairing right now?
DD: The rental market is still relatively difficult. The supply of rental properties still exceeds the demand for rental properties. Rent rates are still below the 2005–2006 levels. Still, our occupancy rate averages 90–92 percent.

What is your biggest challenge?
DD: Managing the owner’s expectation of what the rent should be. The golden rule of property management is to get the property in rentable condition first and then price it right for the market. Some owners don’t have money to make the repairs and improvements that are needed, and they want to charge more rent than the property can get because their mortgage is so high. It’s a bad situation.

With 485 units, how do you stay on top of maintenance?
DD: We have an in-house maintenance company—Riverbend Property Services—that handles unskilled labor such as painting, drywall repair, cleaning, and landscaping. They also serve as a general contractor for our third-party vendors. One of our leading vendors is Traditional Plumbing & Heat, which takes care of HVAC and plumbing repairs. They and some of the others have been with us long enough to know how we want them to work with the tenants, and they also know our billing methods.

Sounds like a lot of work.
DD: Property management has a high headache-to-dollar-earned ratio. You have to be a glutton for punishment. It’s a hard business. It’s not for the faint of heart. Margins are low, so you need a high volume of business. On the other hand, income from property management is more regular and less volatile than sales, development, or investment.

With so many headaches, what’s the attraction for you?
DD: Actually, I do enjoy it. I thrive where I have a lot to do. I literally have 100 things on my daily to-do list, and when I finish those, I have 100 more. Property management also is the backbone of the real estate-investment business, and I have aspirations to go into development in the future. Property management is the first rung on that ladder.

What are your plans for the future in terms of property management?
DD: Right now we work in the greater Richmond area—35 miles in every direction—but Williamsburg is a new market for us. We are growing organically, and we are looking into growing by acquisition. In our business, we pick up new properties every month as owners vacate them.

Do you get any pressure from competitors?
DD: We don’t really bang heads with the big guys, but there are now three to five smaller companies in the market similar to ours—where there were almost none when I started in 2007.

What advice do you have for landlords?
DD: Do major repairs such as HVAC and roof replacement right away when you purchase a property and, if possible, while you have your renovation financing. The funds are seldom there down the road. Cheap is not always the best proposition. Some vendors are cheap, but they aren’t licensed, skilled, or qualified. You have to be proactive and get it done right the first time. Really, property owners should get a good management company. People think they can do it all themselves, but they usually shouldn’t. People forget that their time has a value, and a good property manager can save you lots of time. ABQ