April 30, 2012
Unless You Really Know What You’re Doing, Hire A Pro
Qualified property managers will take over the responsibility of handling repairs and dealing with tenants
You now are an owner of a fine investment. Life is easy from here on in, right? Wrong!
I have owned my share of rental properties and have both good and absolute horror stories to tell. The good news is that you can avoid the horror, but you need to be good. Good at being a manager, that is. Often we mix up our objectives when we try to manage our rental property ourselves. We want to increase the value of our property, we want a tenant to pay our mortgage, we want to be loved by the tenant and we want him or her to pay on time every time — and we want him/her to take care of the property better than if it was their own.
Well, I have news for you. You’ll get some of these some of the time, but not all of these all of the time. The worst one here is wanting to be loved by your tenants. You can’t be; you are at odds. He wants to pay as little as possible with you shouldering all of the upkeep, you want him to pay as much as possible and cut the grass, too.
Property management involves writing ads, handling inquiries, showing property at night, collecting rent, unfriendly tenants … it all spells personal involvement and free time encroachment. So, unless you know what you are doing, hire someone qualified who will also give you solid reliable service. If you manage only one property, go to the library, there are plenty of good books on the subject.
Do some research, become certain. If you own more than one, or if you own it “long distance,” get a professional manager. Get references, and check those references for tenant and manager! (TenantVerification.com allows you to check out tenants). A good property manager doesn’t take the first yokel that wants to rent the place.
He/she has a plan of action to get tenants, he has a clearly itemized contract with his owners, and one with his tenants. He must have a reviewable business plan. Ask your manager for his. The manager has a written budget outline covering income projection, timely collection of rent, expense control, established rental value, simple accounting and maintenance.
The manager also has to show you the operating procedure he employs for maintenance (ongoing or reaction to problems as they occur), repairs (ditto), safety and security issues and insurance. You should also inspect the property with your manager together and meet the staff he employs. What’s his regular inspection routine? Does he hire contractors to do the work? Does he advance funds? Does he use rental income to place ads, make repairs, etc.? What is the track record? Who can you call to verify?
Limit the amount he/she can spend without approval. Do this all up front. Have a written understanding of your relationship — small building or large — and you have a basis to measure actual performance against promised performance. Ozzie Jurock is a senior real estate adviser and the publisher of Jurock’s Real Estate Insider. He can be reached at oz.@ jurock.com or www.jurock.com