As a long distance landlord there have been far too many days where I felt like the saying “You can’t live with them, but you can’t live without them” is appropriate to our relationships with our property managers. I have come along way in my property manager relationships because we’ve come to realize a few important lessons.
We’ve learned the hard way that there is no such thing as passive income.
Even when you’ve hired a good property manager. You still HAVE to be actively involved in managing your property manager.
So – how can you make sure you’re not missing out on rent money because of a crooked property manager you made the poor decision of hiring?
Speak with at Least One Property Manager Before You Buy
Even if you plan to manage the property yourself, chat with local property managers before you buy a property. Not every property manager will manage every type of property.
If you’ve ensured there are competent and reputable property managers willing to manage your property before you buy it, then you know you have a back up plan if you can’t continue on as manager.
we get and keep copies of every single lease. We ask for copies of the rent checks and rent receipts and when we’re in doubt we ask for before and after photos of any maintenance work that is done This one still bites us every once in awhile. It’s a story for another day but suffice to say that when we get lazy on this we’re leaving money on the table. That was proven to me once again on a property walk through we did just last month.
The bottom line is that we no longer take the property manager’s monthly statement as proof of what revenue our property is generating.
Tackle Tenant Turnover with a Vengence
Tenant turnover is the enemy of every real estate investor. The fewer turnovers you deal with on a property the more money you’ll make. If you find your tenants are turning over too much – try and figure out why. Perhaps you’re charging too much rent, your property manager isn’t responding to maintenance requests in a timely fashion or your property is no longer competitive with surrounding units. Whatever you can do to minimize turnover will help your returns in the long run. And when a tenant turns over and the unit doesn’t rent immediately – get on top of that place right away.
Ideally, schedule a walk through of the vacant unit. It’s a good idea to check out the inside of your property periodically anyway, but if it’s not renting out quickly then you want to find the issue that is preventing the unit from renting. Turns out the property looked tired and needed new kitchen countertops, flooring and paint. The yard was also a mess and needed some major landscaping work. It was easy to see why it hadn’t rented out – especially if it’s competing with brand new condo units.
Immediately after the walk through we got organized to do a small renovation. A week later, and only a few days into the renovation project we already had new tenants for the property.
Even if you’ve been working with an exceptional property manager check out each and every vacancy. Nobody cares about your money more than you do.
Watch for Small Leaks that Can Sink Your Big Cash Flow Ship
Benjamin Franklin is famously quoted as saying “Beware of little expenses. A small leak will sink a great ship” and this is so true with rental properties. $50 here and $75 dollars over there will quickly erode all your positive cash flow on a property.
For example, if you notice the water bill on one of your rental properties is double what it usually is, immediately contacted our property manager and asked that it be checked out. Turns out you had a water leak. The leak was quickly fixed and the next water bill was back around what it usually is. By paying the water bill and noticing the varience you could have saved hundreds of dollars at least.
We work with great property managers and most of the time there are very few things we need to get involved with. But we’ve learned that no matter how good the property manager is, nobody else loves and cares for our properties and money like we do. And now that we’re actively managing our property managers we’re making a whole lot more money than we did before.
Oh, and by the way, property managers have a tough job. If you have one that is doing a great job for you – be sure to thank them! Maybe they aren’t perfect but you’re not either. Do what you can to show your appreciation for the things they do well and act quickly on the things that need to be corrected!