WHY YOU NEED A PROPERTY MANAGER
…and why it is important to find the right property manager.
Most people who own a second property usually fall into one of two categories. Either they bought property to invest and keep as a rental property, or they had a circumstance that made them move to a new home or location. For whatever reason, you now have a decision regarding how you will rent out your property and what steps you will take to protect your investment. We will try to explain why you need a property manager, and why self managing the rental property can lead to significant costs and problems down the road.
Finding a Tenant
Finding a tenant can be easy. Just throw an ad up in Craigslist or post on Facebook that you need to find a renter and there will most likely be no shortage of renters looking to rent your home. But who are you renting to? Do you have a plan to “screen” that tenant, and do you know what to look for? A professional property manager has the tools and experience to know what flags to look for when reviewing a potential applicant. Reviewing a tenant correctly can mean the difference in a great tenant who pays rent on time and takes care of a home, and a prospective tenant with a criminal history, or someone who is currently in a Bankruptcy and amends their filing to include your rent. The first step to having a smooth and successful lease is making sure you have a great, qualified, and thoroughly researched tenant.
Leases can be found online easily these days, or even from places like Office Depot. Unfortunately, they only cover some basic information and terms, and rarely give specific terms for some of the most important facets of what needs to be protected during a lease term. Did you know that to sign a lease longer than 1 year requires more than just a signature, and if not executed correctly voids the lease agreement in the event of a dispute or issue? Does your lease agreement specify what the tenant is responsible for when they move out? Do they have to clean, clean the carpets, keep up with the lawn, change filters, and keep up with normal maintenance around the house? If the lease does not specify, you may find yourself in trouble when problems arise. Be careful altering the lease agreement as well. Unless you are an attorney, you may change terms that end up being unlawful, and if brought to court by a tenant, may be liable for their damages, and pay for their attorney.
You need a property manager that has the experience and the legal documents to protect your home and ensure that the “rules” are spelled out for the tenants. When a tenant takes a property manager to court that has done their job, the risks of losing that case drops tremendously, which means the potential costs and liabilities are significantly less as well.
When the tenants lose their AC on a weekend, or have an emergency in the middle of the night, are you prepared to find a contractor or run over to the house to fix it? Are you going to pay for a weekend or overnight surcharge? What even qualifies as an emergency? Are you going to oversee the repair people or arrange for them to enter a home when a tenant can’t be home to schedule an appointment? What happens when the contractor you call shows up to the house and the tenant’s minor son or daughter are home? Do you have a plan for that scenario? These questions are things that a professional property manager deals with everyday.
Hiring a property manager provides you with a database of qualified vendors that know the rules that the property manager has put in place to preserve your property and protect your interests. Emergencies are defined and disclosed to the tenants, and plans are in place to cover the multitude of scenarios and problems that can come up on a daily basis. Knowing who to call, and when to call them can mean the difference in replacing an expensive appliance and a minimal repair, and paying a reasonable rate every time, instead of inflated rates because a vendor thinks you are in a bind.
Are you inspecting the rental property regularly? Do you know how many pets the tenants have? How about the roof leak leak that the tenant never reported until it began to mold and mildew? How do you handle the repairs and the threats from the tenants because their children are sick? Do you keep renewing to a tenant because they always pay on time, but the house has been destroyed inside and you never saw it?
Property Managers should be inspecting your home to not only ensure that the tenants are in compliance with the lease agreement, but also to make sure that there are no maintenance issues that need to be addressed. Water leaks, broken windows, trash, pets, smoking, drugs, and many other issues can be the result of not checking on the home from time to time. Without proper inspections, years can go by resulting in tens of thousands of dollars in damages.
When the tenant moves out, are you prepared to make a list of repairs and ensure the tenants followed the lease agreement regarding what their responsibilities were? Did the tenant have any responsibilities? Did you remember to prorate the carpet repairs based on the life expectancy of the carpets? Security Deposit claims are one of the most contested issues in property management, and handling teh deposit and the claim wrong can result in losing the ability to keep any of the deposit, plus paying for the tenant’s court costs and attorney fees.
Making sure you have a professional property manager on your side means that you know the process is being handled correctly. Claims are made based on facts, and are supported by evidence. Disputes can be handled professionally and court can often be avoided by effective communication. Failure to handle this appropriately can again result in lost income, court, or legal expenses.
Finding the right Property Manager
It is not enough to just hire a property manager. Like in any business, there are good, great, and bad property managers. Make sure you ask questions, and research the policies and plans that each company follows to ensure your property is protected. Knowing how much they charge is important, but more importantly is what they do for their fee. If they charge a low monthly fee, but basically do little more than collect rent, then you need to decide how that helps preserve your property. Rent is only one aspect of property management, and choosing the wrong company can be just as bad or worse than managing the home yourself.
Here are a few questions you can ask:
- How often do you inspect?
- How do you handle maintenance, costs, and do you use licensed and insured contractors?
- Where did you get your lease? or Who prepared your lease? (The answer should be from an attorney for property management specifically)
- How do you screen tenants, and what would disqualify a tenant, specifically?
- How do you handle late payments from a tenant? Will you evict them for me if necessary?
- Do you handle deposit disputes and will you make claims on the deposit?
RE/MAX Infinity Property Management was established to help property owners get rid of the stress from having rental properties. Let us show you how we can help, and the systems and tools we use to make sure your home is protected, quality tenants are placed in your property, and your liability is minimized. We are always looking for ways to improve our services and find more ways to provide value to our clients. Check out our services and fees by clicking here.