Should you Hire a Real Estate Property Management Company?
Posted on March 31, 2009
Filed Under real estate short sale investing |
To start off, I donât own a real estate property management company, nor am I trying to send business to any real estate property management company. The purpose of this article is to make sure that you think things out (Look before you Leap) when you purchase your first rental property!
If you currently own rental property, or are planning on purchasing rental property then read on! It takes an effort to find good tenants. Everyone hopes to find someone who will appreciate your property and maintain the standard of living that was offered to them when they became your tenants. A possible solution is to find a competent real estate property management company.
Ideally, a company that specializes in the type of property you currently own, or are looking to purchase? Be it, a home, condo, apartment building, commercial, etc.
Who will be responsible for property maintenance?
In every state the law mandates that landlords perform certain repairs to maintain the property and keep it habitable. When searching for a real estate property management company, ask for referrals from current clients who use their maintenance service? Find out if they have a good reputation?
If you have no experience and/or no desire to manage your rental property, then I would suggest you hire a professional real estate property management company to over see your investment. It can take you years learning everything you need to know about managing your properties.
If you really have your heart on managing your properties there is one simple thing to do right from the start! That is setting up a DBA (Doing Business As). Create a name for your real estate property management company, and then file with your Local County Clerkâs office. Rent a P.O. Box where your tenants can send their rent payments. You donât want to let your tenants know where you live! This could become a disaster! Also, donât for get to open a checking account with your bank.
You might even want to use a professional business name instead of your real name when dealing with your tenants, and/or repair vendors? This really comes in handy especially when your tenants are asking for the carpet to be replaced? When you just spent $4,500.00 replacing for the last tenants, just before your current tenants moved in? You could inspect the carpet, then tell your tenants that you would have to talk with the owner to see if he/she would approve replacement of their carpet?
Side Bar: The only time I replace carpet is when the unit is vacant, to prepare for the next tenants to move in. If the carpet has a tear, then I just send out a carpet repairperson to fix it! This is a lot less expensive then installing brand new carpet!
This way they canât confront you, because you donât own the property, you just work for the real estate property management company? This places an invisible wall between you and your tenants, so you wonât be nickel and dime to death! Because right after you replace their carpet, the next thing they will ask for is getting their apartment painted, but not before replacing their kitchen & bathroom cabinets!
I hope by now you are starting to see how some tenants will take advantage of your good nature? Now Iâm not trying to scare you out of having your very own real estate property management company? What Iâm trying to do is warn you… itâs a lot of work! You must have the time and patients to deal with all types of people?
In the long run you can save a ton of money being your own real estate property management company and performing most of the repairs yourself. Of course you will need some maintenance experience when it comes to replacing toilets, sinks, faucets, etc. Plumbing will be your biggest repair expense with rental properties.
So knowing something about plumbing can really save you some serious money! Stop by your nearest hardware store or home Depot and check out their books on home repairs. You can also go to the library and check out one or two books on plumbing repairs?
In conclusion, if you manage only one or two buildings, then I would say… give it a try? If you plan on buying more then two, you probably will want to hire a professional real estate property management company. So you can spend most of youâre time searching and buying more properties.
Well, I hope that this gives you a little insight on real estate property management?
One last thing, when buying your rental properties try to purchase them fairly close together so you wonât have to do too much driving getting from one property to the next? Youâll need all the time you have focusing on more important things!
Good luck to your success!
Clifton Waldrep
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5 Responses to “Should you Hire a Real Estate Property Management Company?”
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Real Estate Investments - should I hire a property management company or ask one of the tenants?
to help with maintenance issues for a fee say $100 a month instead of hiring a property management company? (I will take care of rent collection in both scenarios) it’s a 4-plex in a city 4 hours north of Toronto where I live. What makes more sense? THANKS.
I’m in america but I would guess legally that for yourself & the properties sake it would best to get a real management company involved even at the extra cost because if you ask someone to do it for you there seems there could be liability issues not to mention short cutting against you or other tenants which wouldnt look good for you. Where as a management company would have insurance & be bonded not to mention have a reputation plus connections & discounts you might not get and thus in the end work might end up being cheaper even though you would pay more in a fee. Any work done though might save more and thus make up for that extra money paid in the monthly fees and again if something happens its on them & their insurance / reputation not so much you. Also there are usually laws and codes that would have to be followed especially when work is done & most people wouldnt know any or all of them where as a management company would have to have people who did or else they wouldnt keep business.
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Just a guess
Well, if you do not have much maintenance in the place, like pool, yard etc. You can get the tenant to do it as long you put it very clear in the rental agreement.
Some tenants are just looking for a gap to take advantage of, it happened to me. Put penalties and bleach of contract too, so you will not get screwed!
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You’re better off hiring a management company - it’s worth the extra money for peace of mind. There are just too many potential issues I can think of with having one of the tenants do it - so many pitfalls and so many things can go wrong in that scenario.
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that depends on the fees of a management company and then getting a tenant to do the job you hire him to do. Most mng fees are rent based so now you have to do the math yourself
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