The Reality of US Property Management...Part 4

Again, I want to thank those that have contacted me with questions and comments, it is very much appreciated.

This part will cover what I consider to be the 2nd killer to all income property, and that is Maintenance. This topic in my opinion ranks 2nd on my list of killers, not so much the repetitive need for maintenance (though that can do it as well, if the renovation was sub-par), but more so, the costs and markups involved.

I will be the 1st to admit, I was unable to create a data sampling from those companies I interviewed for Parts 1-3.

Those companies or any other company for that matter, will just not be as open in disclosing these items. I understand that, so I based this information on those clients that have transferred their properties over to me, and doing a careful examination of their financial records, as it pertained to those properties.

I will disclose actual costs involved in all 3 mechanical fields, and then show you what they were charged for this particular service. I will be fair and say these costs are only in Kansas City, I am not claiming that these costs are nationwide or anything like that.

As we all probably know the 3 mechanical fields are Heating and Cooling, Electrical and Plumbing.

  1. HVAC - The cost of the average 70-80K furnace in Kansas City is $400-500. This is for a NEW furnace in box, with full manufactures warranty. This is for an average construction grade furnace, and not the top of the line furnace, which can run as high as $700. A seasoned licensed HVAC tech can easily install a new furnace inside of 2 hours, under normal installation practices. If the furnace is in the attic (there are some that are) or other odd location, you can figure an additional $200-300 labor cost for this. The typical labor costs for this should be no more than $250, so this brings a reasonable price of $700-900 for a furnace replacement. I better clarify this is for a gas furnace installation, not electric. Typically this size furnace would cover 1200 sq. ft home or smaller, with the right conditions. There are tons of factors that go into sizing a furnace for any one home, but if the renovation was professionally done, this is a very accurate estimate.

What my clients have actually been charged by previous companies…$1700-2200 for this furnace.

The cost of an average 2 ton Central Air unit in KC is around $600-800, again NEW in box and manufacture’s warranty. These units come packaged without freon for safety reasons, nor will they include line sets, power cords or disconnect boxes. There could be additional charges based on those factors, depending on that specific items condition. The other item needed will be a A-coil, and again these are not included, but almost always need to be replaced to match the new system. The average licensed HVAC tech, can install Central Air and A-Coil in 2-4 hours, these installations typically take longer as there are more steps required. You will have to pay for the freon, the cost to the HVAC tech is around $20-30 per lb, and they resell for $40-60 per lb. Total costs involved in a standard C/A unit should be in the range of $1300-1500.

What my clients have actually been charged by previous companies…$1800-2500 for Central Air.

This brings the total system charges to $2000-2400, as this is the amount I typically pay to have them installed in my renovated homes.

The total charges that were billed to my clients $3500-4700! In my eyes there is no excuse for this, other than pure 100% greed. I have no issue with companies making money, as you have to earn a profit to stay in business, but there is a line that has been crossed here.

Anyone, and yes anyone, can call my supplier of furnaces and central air and they will in fact confirm these prices. I am NOT a licensed HVAC technician, but I can buy a furnace or central air unit without being licensed. I don’t get the best price quoted, simply because I do not buy the volume as HVAC companies would, but in all honestly that cost difference is usually no more than 10%. Because I am not licensed, I cannot buy freon as this is a regulated fuel, but my HVAC tech has showed me his invoice to confirm these prices.

  1. Electrical – This one is straight forward. In all cases the property manager should be using only licensed electricians and those companies that are in good standing with not only the state, but probably more importantly the city. This item can be a can of worms if it is not addressed during the renovation. Most licensed electricians will charge $75-125 per hour, they deserve every penny of this.

Typical costs involved in some more popular services involved in electricity.
Service upgrades - going from 60A to 100A, is fairly common, as alot of our homes in KC, are very old and are in fact on 60A services. I can quote what it costs my company to upgrade to 200A, as this is what I do on all my renovations. My costs including permits, inspections is exactly $1450. I honestly do not have a more recent cost for 100A service, as I have not done this paticular service in over 3 years. But I know it should be cheaper than I am paying for 200A service. The panel needed for 200A is much larger, as well as the entrance cable needed.

What my clients have been charged for 100A service upgrade, $1800-2600. Again, crossing a major line here. The issue here is they should of never been charged anything, as these homes were supposedly renovated within the last year or 2. How do you renovate a home and NOT upgrade the wiring? Just not right!

  1. Plumbing - This expense is again straight forward and should be completed by only licensed professionals. This item is almost personal for me, as I am a master plumber with over 16 years experience. I was forced out of plumbing due to medical reasons. I still maintain my plumbing license, so I am very familiar with these costs. In this topic, I will address the most common items a plumber would be called for on a rental property.

Water heater replacement – This one is easy, cost of a 40 Gallon Gas Water Heater is around $275, labor no more than 1 hour! Licensed plumbers typically charge the same rate as an electrician, so total costs should be in the $400-450 range.

What I have seen charged $450-750 dollars!

Faucet replacements (other than tub/shower faucet) - Basic Lifetime warranty faucet, $40-60, labor no more than 1 hour. Total costs should be in the $125-150 range. Most plumbers will reduce their hourly rate for this item, as it is such a simple change out. I did when I ran my company, and the plumbers I use today, do as well. Tub/Shower faucets can add an additional 1 hour labor to the charge, as the installation can be little more complicated, if there is no access or they have to make the access.

What I have seen charged $175-225.

Toilet replacements - Costs involved $80 for new toilet and ALL the supplies you need to install it! Labor should be no more than 1 hour! Total costs usually under $200. Again, these are so simple to change out, plumbers will reduce their labor costs.

What I have seen charged $250-446! Yes, that is an exact amount of $446, for a toilet.

Drain Cleaning - What I pay for any drain to be cleaned, $95! Any drain up to 100’!

What I have seen charged, $100-175. This one was not so outrageous as the other items, other than the $175 charge. I honestly feel if your paying under $125 for this service, it’s acceptable.

Sewer replacements - This one can hurt bad! I have one client that had to do this, but to be fair it was 2 years after he bought the home, and was more bad luck than anything else. There are alot of factors involved in replacing sewer lines in the yard. I will discuss the 1 instance I have knowledge of. This replacement is what I would consider basic replacement, less than 50’, no more than 12’ deep and not having to cut the street. If I was bidding this exact replacement, it would be in the range of $2800-3300, to dig and replace and install cleanouts in the yard.

What he was charged $4175!

What I am showing here is other than not getting your property rented in the 1st place, this task can destroy the cash flow numbers of any property. When a property manager takes marking up a maintenance call by 20%, and insists on marking it up by at least 50%, this is where the problem is. There is no justification for this high of a markup, they are NOT doing the work themselves, they are simply making the phone call, this hardly justifies this markup.

Due some fact checking in your market for what the going rate is. I routinely call other contractors, just to make sure my contractor’s are not getting comfortable with me.

I have been asked why I am “spilling the secret” when I am a PM myself. The straight forward answer is because it’s the right thing to do. When a PM takes advantage of situations, and allows greed to dictate their business model, it leaves message boards full of the very complaints you see on here. The fact is they don’t realize if they were just charging a fair price for their services, they would have more clients, and those clients would more than likely refer them. In other words, their business would be considerably better. What usually happens, is they start losing clients, so they have to “adjust” their markups to offset the loss of income, it’s a never ending spiral.
Again, I hope all of this will help each and everyone of you make the choices necessary to have a profitable experience in any market. The US has it’s problems, but not all of us think like that, nor do we operate our business’ like that. Take what you feel is important and use it as you see necessary.

altered due to rules violation

It’s vitally important to find someone who is good at these repairs for a reasonable price and then keep them. I’m in the South where labor costs are pretty cheap. I’ll share a couple prices I’ve paid for things here.
HVAC - I can get gas wall heaters installed in a house for about $400. This is for a 3-5 brick gas heater. For central HVAC, you have to take into consideration the work involved. We had central installed in a house that didn’t previously have it so my guy had to run all of the ducts. It was for around 1050 sq ft house and it cost just over 3k.
Electrical - I’ve had to have serveral houses switched over from fuse boxes to breakers. For a small house, this usually runs about $700-800. If houses are on HUD and don’t have properly grounded 3-wire outlets, we put in GFI breakers which can run as much as $50 per breaker so that’s a pretty significant expense.
Plumbing - I’ve had several main sewer lines run. For our houses where we don’t have to cut the street, we can get a sewer pipe run for about $800.
My repair guy is a licensed plumber and electrician. He usually charges around $75/hr for plumbing repairs.
I have another guy who does drain clean out. He usually charges $75-80 per house.

I basically treat my repair guy as a general contractor. I tell him what I want him to do and he gets whatever guys he needs for the job. He’s done roofing, carpentry, welding, electrical, and plumbing for us.
Out of all of these repair items, I still think it’s most important to have a good affordable plumber available. I’ve had way more plumbing issues than anything else as far as ongoing repairs needed.


I appreciate the feedback.

I agree with you 100%, a qualified and reliable contractor is priceless. I know from my personal experience, I have probably gone through at least a dozen of each trade, looking for the one!

In KC, we have alot of homes that their sewer lines go into the street to connect to the city main. That is a real expensive replacement, and fortunately none of my clients have had to face that.

Our sewer lines here are more expensive to replace, as they are usually buried no less than 4’ and more commonly around 6’, which requires the plumber to shore the walls of the ditch, so that it does not collapse on him.

FYI to everyone.

John / GreaterKCHomes is posting these same messages on MANY random message boards around the Internet.

Could these be posted - like advertising - so that he can get people to contact him so he can sell investors houses in Kansas City? Just view his profile which has his website link. The “contact me” reference in his previous message (above) was deleted by a fellow moderator.

I appreciate ORIGINAL and UNIQUE content posted on this message board - not stuff that might be a hidden way of advertising a product or service. <<

ALL of these postings are just “repostings” … Google “The Reality of US Property Management” … he is cross posting the same JUNK on other real estate message boards.

Please see the same or similar random posts at:



…unless John deletes those now that I have revealed his secret. :wink:

I guess I am taken back a bit. Of course I am on many websites around the world of real estate. Who’s not?

I would definitely say this information is original, as I created it and am not quoting the same information from the guru books, that I see on most of the boards.

The information that was asked to be removed was a one line comment on asking those that wanted more information to contact me. Not to contact me about buying a house.

In your searches, how many properties did you see for sale by me? That would be none! I do not advertise properties for sale, as I have none for sale. All of my products are pre-purchased by my clients, therefore I need not advertise anything.

I would appreciate your view on why this is JUNK, as you quoted? What makes it junk? I can assure you the 20 or so clients that I have turned their portfolio around would strongly disagree with you. But I will listen to all opinion’s on why this information is useless.

I guess I never understand those that want to attack people who are simply are trying to help others, get out of bad situations, if this is not the purpose of this board, then I apologize and would be happy to remove my profile.

My website is listed in my profile, because it asked for it. Is that a problem? The moderator never said anything about it.

If I could ask you directly, what do you have against helping others? You seem to think I have some “secret” agenda here, when that could not be further from the truth. I post on multiple boards, because there are many investors all across the boards, that are in trouble with their portfolio’s, I simply give them free information on steps they can do to turn their portfolio’s around. The difference with me, is I mentor investors for FREE, would you?

We’ve seen several people come on here posting with the ultimate goal of trying to drive people to their websites to sell something. Some people even copy and paste things from other websites as a “how to” for REI. I do think you have some useful info in your posts and I’m sure it’s good reading for a lot of people. The moderators are just careful not to let this board degrade into a feeding frenzy for people selling stuff (which I personally appreciate). At least that’s how I see it.

And I completely agree with you. I get annoyed by those that post what a great deal they have and offer nothing of substance.

However I never did that, and made one error on leaving “contact me” in a line that clearly stated “if you need more information”. The reality of the situation is, I could make this series on PM, about 20 parts long, if I wanted to keep hammering the point home, but I broke it up into 4 parts, as it covers most of the primary issues with PM in the US.

Out of that one line, motivatedceo, seemed to draw to conclusions that I was trying to become the next MLS or something.

I use the forums I am on, for a avenue to provide sound information and showcase what exit polling can do for PM, I never attempt to sell anything, I never attempt to extract member information for mass emailing.

Not to boast, but my business is very sound and it’s all I can do to keep enough crews in place to handle the requests for properties, that I currently have.

I just take offense to someone blasting someone with “unfounded” information, just because there is nothing better to do.


Trying to help others by giving specific advice to people on a message board is one thing. That is awesome - and I hope you become a regular contributing member to this board & others with unique content … by posting and responding to questions.

But reposting the same thing pre-written 5 or 10 paragraph document on many random message boards across the Internet…that reeks of a cheap form of advertising or mass marketing and I would encourage you to refrain from doing that because it makes you look bad.

It’s kind of like sending a spam email to thousands or millions of people, and including in the tag line at the bottom of the email - “thank you for subscribing to our email list, and oh yeah, you can click here to unsubscribe if you change your mind”. Yeah, you can click unsubscribe and never get any more emails from the spammer, BUT it still does not get around the fact the person never truly signed up for the junk email list in the first place…it was a creative, but misleading and dishonest form of advertising on the behalf of the spammer. Don’t be that guy.


I guess I will just agree to disagree with you.

Again this is totally unique information, as it was created by MY exit polling, how is that NOT ? Because it’s posted on more than one forum? Is this the only forum, in your view, that others should offer advice?

To say this is some “cheap” advertising attempt, has absolutely no basis. To compare those that use sophisticated scraping software to extract emails, and then send out 1000s of unwanted emails, to someone like me who is doing nothing but offering advice, how do you get to that conclusion?

If this was some cheap advertising attempt, trust me there are way better ways to be creative in that department. I could use 100s of different dump pages, so that it would be more difficult to track my primary website. Then I would use advanced html techniques to get that message out, none of that is present.
Additionally, I would just simply follow up these posts, with posts of “great deals” available in the appropriate sections of the forums, but what do you know, none of that is present.

I still would like your view on why you referred to this information as “JUNK”, I guess you missed that question on my 1st reply to your post.

I fill that I need to offer you some advice as well. Don’t be that guy who offers no logical opposition to a post, and only knows how to bash someone’s post. It’s widely viewed as being unprofessional and to be 100% honest, somewhat childish. There is nothing wrong with not sharing the same opinion with others, this is why it’s referred to as an “opinion”, but voice your opposition intelligently, not simply bashing the author. In this industry it’s referred to as “trolling”.