Property management firms typically focus intensely on revenue generation, but this approach creates a critical blind spot that damages portfolio performance according to Frank Gervasio, Principal and Director of Finance at OneWall Communities. The financial impact is substantial: a single lost lease of $1,000 monthly can cost five times that amount to recover, yet many ownership groups continue negotiating minor payroll adjustments while ignoring larger systemic issues.
Gervasio explains that expense management should measure dollar efficacy rather than simply cutting costs. "Sometimes those expenses have a real impact if you’re not spending them," he states, noting this distinction sounds simple but proves surprisingly rare in practice. The problem compounds through individually small line items that accumulate across portfolios, including vendor contracts with automatic annual escalators, unflagged auto-renewals, and billing structures that appear reasonable at single properties but balloon across multi-asset portfolios.
"Many a mickle makes a muckle," Gervasio says, quoting George Washington to illustrate how small expenses accumulate into significant problems. When management companies lack systems to track contract terms with granularity, or when accounting teams aren't structured for such oversight, ownership often discovers the damage only after it has occurred. At OneWall, financial oversight begins during due diligence on distressed assets, with teams conducting complete unit inspections, cataloging equipment ages, and examining financial records immediately to address compounding deferred maintenance.
The oversight gap stems from incentive structures according to Gervasio. Fee-based management companies prioritize revenue collection, making expense oversight secondary. When these firms build back overhead costs, charges often disappear into broad categories like general administration or marketing where scrutiny becomes difficult. "I’ve seen companies send financials where they don’t write off bad debt, they just move it around on the balance sheet," Gervasio notes, describing chart-of-account structures that require reverse-engineering when assets change management.
OneWall structures its third party management services differently, itemizing every point solution without markup so owners can see technology costs clearly. This transparency builds trust for long-term management relationships rather than hiding margins in expense lines. When prospective clients question payroll expenses, Gervasio responds directly that property management remains a people-centered business providing essential housing services. Underpaid, overworked teams create vacancies, collection gaps, and maintenance backlogs that prove far more expensive than slightly higher payroll costs.
"It’s the penny-wise, pound-foolish conversation," Gervasio concludes. "Cut the payroll, lose the lease, spend five times as much to recover it." The industry's best solutions emerge from shared incentives that align management practices with long-term asset performance rather than short-term cost reduction.
