Property management firms typically prioritize revenue collection, but Frank Gervasio, Principal and Director of Finance at OneWall Communities, argues this approach creates a dangerous blind spot toward expenses that quietly erode property performance. Gervasio notes that a single lost lease of $1,000 monthly can cost five times that amount to recover, yet ownership groups often fixate on negotiating whether a payroll budget is $10,000 too high.
"Expense management isn't about just cutting expenses to save dollars on the bottom line," Gervasio explains. "Sometimes those expenses have a real impact if you're not spending them. What you want to measure is the efficacy of the dollars." This distinction, while simple in theory, proves rare in practice across the industry.
The problem compounds through individually small line items that accumulate over time. Gervasio identifies vendor contracts with automatic annual escalators, unflagged auto-renewals, and billing structures that appear reasonable at a single property but balloon across a 20-asset portfolio. "Many a mickle makes a muckle," he says, quoting George Washington. "The small things add up into bigger things." When management companies lack granular contract tracking or accounting systems capable of such oversight, ownership often discovers the damage only after it has occurred.
At OneWall, financial oversight begins before management contracts are signed. During due diligence on distressed assets, Gervasio's team conducts 100% unit walks, catalogs the age of HVAC systems, appliances, and roofing, and quickly accesses financial records. "Every day that deferred maintenance goes unaddressed, it's compounding," he states. "You need a plan from day one."
Gervasio attributes the industry-wide gap to incentive structures. Fee-based management companies are paid on collections, making revenue a natural priority and expense oversight secondary. When these firms build back overhead costs, charges often disappear into broad categories like general and administrative expenses 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 observes. "I've seen chart-of-account structures that were essentially made up. When you take over one of those assets, you're not just cleaning up operations. You're reverse-engineering someone else's financial story."
OneWall's third-party management services operate differently. Property management agreements itemize every point solution used without markup, allowing owners to see exact technology costs and choose adoption. The goal is building trust through transparency rather than hiding margin in expense lines.
One common pushback OneWall receives concerns payroll being too high. Gervasio responds directly: "This is a people-centered business. We're providing housing to families; that's one of the most important things you can do. The people taking care of those residents are our on-site teams. And if we don't take care of our teams, they can't take care of the people we're housing." The mathematics supports this view: overworked, underpaid property teams create morale issues, vacancies, collection gaps, and maintenance backlogs, all far more expensive to rectify than a slightly higher payroll line. "It's the penny-wise, pound-foolish conversation," Gervasio concludes. "Cut the payroll, lose the lease, spend five times as much to recover it."
