talking business
Meridian Management: Reputation Is the Investment
with the Biggest Return
by Emily Landes
Things have changed since Bernard Joseph Dowd started managing properties in San Francisco at the turn of the last century. At the time, Chinese immigrants were not allowed to own property, so Dowd would put the buildings in his own name, then collect rent, pay the bills and turn the profits over to the real owners, who trusted the Irish immigrant with their largest investments. Rent was collected mostly in cash, and Dowd’s family would bring it in sacks to deposit. Units were often leased with merely a handshake, resident managers were paid off the books and getting a tenant to agree to a rental increase did not require anything more than the owner’s request.
Today, property management is a much more regulated business and property managers must be well-versed in an ever growing range of fields, like law, insurance, accounting and politics. But one thing remains the same: property managers must have the trust of owners and tenants in order to be successful. Perhaps it’s no surprise, then, that in 2005 Gil Dowd merged the business that his great-grandfather began 100 years earlier with Meridian Management, a 25-year veteran in the property management industry with a stellar reputation for managing larger properties.
Before the merger, explains Meridian President Randy Chapman, the company was only really set up to manage buildings that had resident managers (buildings with at least 16 units). If owners had a portfolio that included smaller buildings, Chapman would say that he simply couldn’t manage them. He was afraid that if the smaller buildings received less attention than they needed, the whole company’s reputation would suffer. “You’re only as good as someone’s opinion of you at that point in time,” he reasons.
So, for many years, the company had to turn down business, rather than risk the possibility of tarnishing its name. Luckily, Chapman had gotten to know Dowd over the years, and knew that his family’s company had the same reputation for high-quality management in small buildings that Meridian had with large buildings. When Chapman’s partner retired, Dowd bought him out (becoming vice president in the process) and brought his longstanding expertise with smaller buildings to the Meridian team.
He also brought in many Chinatown owners whose grandparents and great-grandparents had entrusted their buildings to his family so many years before. “Once you get that trust and build that relationship, you’ve got a friend for life,” he says of the Chinese community. Dowd was a little concerned about how those long-time clients would react to the merger, but says that because his staff has stayed so involved in Chinatown (including a Chinese staffer who goes to the neighborhood at the beginning of each month to collect rent personally and answer questions), the transition has been smooth.
With the new team in place, Meridian has been able to bring in a wider range of owners. “Now we have clients who can come to us with their 50-unit building and their three smaller buildings, and one call can handle their questions,” crows Dowd. That call might come at any time, so Meridian employs an answering service and has a chain of command telling the service who to call in the event of an emergency. Clients don’t want to hear that a pipe burst at 2 a.m. on a Sunday morning and their tenant couldn’t get through to a live person, Chapman explains: “That’s why they hire us, so they don’t have to think about that stuff.”
There are many other things owners don’t need to think about after they hire Meridian, including rent increases, utility and maintenance passthroughs and the many other hurdles involved in owning property in San Francisco. In fact, Chapman believes that the more laws passed by the Board of Supervisors and other legislators, the more owners are forced into hiring a property manager.
“Clients in the city who might have managed their own properties [in the past] have had to go to management because they’ve gotten into a lawsuit,” he expresses. “They’ve gotten into a situation where someone almost has taken over their building. They realize that it’s not just collecting a check and doing a little painting. It’s going through all the steps, and there’s a tremendous amount of equity in some of the buildings that they’ve had for years and they’re not willing to risk it.” The documentation alone requires so much time and manpower that owners with a day job “realize in short order that this is something they can’t do at home on the weekends in a couple of hours,” he says.
For all these reasons, it’s come as a breath of fresh air to expand into the North Bay, says Dowd. “There’s a whole other level of legislation here that we don’t really have to deal with up there,” he says. Dowd adds that many of the company’s San Francisco clients began buying up properties in Marin and Sonoma in the last few years because they were largely shut out of the market in the city. Today, of Meridian’s 4,500 units around the Bay Area, about 900 are between San Rafael and Windsor.
Dowd and Chapman both believe that the market has changed substantially and that owners who once gave up on buying more properties in San Francisco are back in the game. They also say that rents are still going up, but that more inventory might soon be coming on the market and the increased supply could stop the upward trend. The company isn’t taking any chances, and renovates many units with granite countertops and hardwood floors in the hopes of getting the highest possible rents.
Those tenants paying the highest rents can be some of the peskiest, they report. They often receive calls from Pacific Heights tenants asking them to send someone out just to change a light bulb or because their refrigerator is noisy. “There’s a level of expectation as you start paying $3,000 a month in rent. You want a certain response,” says Chapman. Still, he would rather have tenants who call too much than tenants who don’t let them know when maintenance or repairs are needed, which can lead to major headaches down the road.
But, even with uncooperative tenants, piles of documentation or even a recent fire that took eight units out of commission, Dowd and Chapman both say they wouldn’t want to do anything else. For Chapman, the best thing about the job is that every day is different. “Boredom is not a part of property management,” he laughs. Dowd goes a step further: management isn’t just about the excitement of dealing with new requests and demands; it’s really about helping people—tenants and owners. “Every day this whole series of events occurs and every single one of them is an opportunity to really feel good about what you do,” he states.
Every day is also another opportunity to either raise or ruin Meridian’s reputation, which is why Dowd and Chapman want the company to grow, but not at a rate that sacrifices service in the name of expansion. “You can do great work for 25 years and what people remember is if you screw up in the last year. We don’t want to put ourselves in a position where we can’t do a good job, because that’s what everybody remembers,” Chapman confides. “We’re both in this business for the long haul. We’d like to see Meridian around 50 years from now.”
That sense of legacy is especially important to Dowd, given that his family name and history is now tied into the company. But he’s not worried. The key to unending trust from owners and tenants is really quite simple, he says: “We want to make sure we’re serving our clients as well as we possibly can.”
The opinions expressed in this article are those of the author, and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. Emily Landes is the managing editor of SF Apartment Magazine. Copyright © 2008 by Black Point Press. All rights reserved.