By: KeyCrew Media

A property generating $1.5 million in annual revenue can quietly lose $75,000 to poor expense management, and most investors never notice. Ron Kutas, founding partner and CEO of OneWall Communities, says that’s because they’re asking property managers the wrong questions.

“The first thing I would ask is: What’s your training like?” says Kutas, who runs OneWall Communities, a property management firm operating across the Northeast and Sun Belt. “That tells you everything about how they actually operate.”

The question matters because most third-party property managers optimize for revenue, the metric their fees are based on, while systematically overlooking expense management. For investors, this creates a silent wealth drain that compounds over years.

Where Property Managers Fail on Expenses

Kutas identifies three expense categories where property managers routinely fail: maintenance and repair, general administrative costs, and marketing spend. The maintenance category is particularly revealing. Many firms rely heavily on outside contractors for repairs because it’s easier than training staff or holding them accountable.

“It’s much easier to just call a plumber for every issue rather than have your maintenance team actually fix the problem,” Kutas explains. The cost difference is substantial; a contractor might charge $200 for a repair that an in-house team could handle for $40 in labor and parts.

The administrative category hides another problem: buildbacks. Property management companies often bury corporate overhead costs in per-unit charges across their portfolio. One company Kutas, knows would bill properties for every office chair purchased at headquarters.

“If somebody needed a new chair, they would bill that back across their entire portfolio per unit,” he notes.

Marketing expenses suffer from a similar lack of scrutiny. Property managers pay for listing services and lead generation platforms without tracking which sources actually convert to signed leases. For a 200-unit property, paying $300 monthly for an ineffective listing site costs $3,600 annually with zero return.

These aren’t small numbers. On a property generating $1.5 million in annual revenue, reducing expenses by just 5% adds $75,000 to net operating income, money that flows directly to investors.

The Questions Most Investors Don’t Ask

But most investors never see this analysis because they don’t ask for it. The questions Kutas recommends reveal whether a management company thinks like an owner or like a vendor:

What support does your home office provide to on-site teams? This exposes whether the company invests in training and systems or leaves properties to operate independently.

Where do you draw the line between property-level work and home office responsibilities? This reveals organizational structure and whether redundancies exist.

Can you provide market research on the specific sub-market? A company that can benchmark occupancy, expense ratios, and collections against local competitors demonstrates operational sophistication.

That last question is particularly telling. Kutas describes owners who complain their property sits at 89% occupancy when the sub-market average is 85%. “Your management company is actually doing a great job for you,” he tells them. Without that context, investors make poor decisions.

Why This Matters Now

The stakes have risen as lender patience expires. For years, banks extended struggling properties through “extend and pretend” arrangements. That’s the end. Lenders are now forcing sales and management changes, creating opportunities for investors who can identify operators with genuine ownership mentality.

The regulatory environment adds another layer of complexity. Kutas recently invested in a county where the local government unexpectedly froze multifamily transactions, forcing a complete exit strategy overhaul. He now researches emerging politicians and their housing policy positions before entering markets.

The Bottom Line for Investors

For individual investors, the implications are clear: property management fees appear similar across firms, typically 4-8% of collected rent, but operational differences create enormous performance gaps. A well-run property might generate 15-20% higher net operating income than an identical building with mediocre management.

The challenge is that these differences aren’t visible in marketing materials or initial presentations. They emerge in how companies train staff, structure oversight, and most importantly, whether they view expense management as core to their value proposition.

“We consistently tell our community managers they are the owner of the property,” Kutas says. “They have to run the property as if they own it from start to finish.”

That mindset, treating investor capital as your own, is what separates property managers who build wealth from those who simply collect fees. For investors, learning to identify the difference might be the most valuable due diligence skill they develop.

Ron Kutas is the founding partner and CEO of OneWall Communities, a vertically integrated property management and investment firm specializing in workforce housing across the Northeast and Sun Belt. With 15 years of owner-operator experience, OneWall has evolved to offer institutional-level 3rd party management services, combining operational excellence with a community-first approach

Disclaimer: The information provided in this article is for informational purposes only and does not guarantee any specific investment results. Past performance is not indicative of future outcomes. Investment decisions should be made based on individual research, risk tolerance, and consultation with qualified professionals.