PRESERVING YOUR INVESTMENT IS IMPORTANT TO YOU: What to expect of your property manager.
Good cash flow and healthy appreciation are why you bought rental properties in Las Vegas. You worked hard to make the right choices and position yourself to maximize your profits. Don’t let it all crumble and drain your bank account because of bad choices in property management. The difference in price is small, but the effect of good management vs. bad management can be the difference between a good retirement and appearing in bankruptcy court.
The best definition of the role of your property manager is that he/she is responsible for the administration of an income producing property in such a manner as to protect the owner’s investment and maximize profits. A qualified and effective manager will do this by establishing and following a program of marketing, supervision, inspections and maintenance, all designed to best achieve the owner’s goal of “protecting the investment and maximizing profits”.
HEARD ANY GOOD RENTAL HORROR STORIES LATELY?
I hear them with great regularity. Here are a few I pulled from a landlord based web site (cited below):
POSSESSION IS 9/10ths OF THE LAW
"I leased my home to a tenant who promptly defaulted on her lease. When I went to the property to see her, I discovered she was stealing my appliances. I called the police to come and stop her from taking my washing machine. When the police arrived the tenant said I was trespassing on her property and she did not know who I was. I insisted that I owned the property, but the police did not believe me. They told me if I did not leave the premises they would arrest me. So, I sat in my car in disbelief while I watched my tenant steal my appliances from MY HOUSE!" ....Frustrated landlord
Ownership of real property is defined with a grouping of rights, often called the “Bundle of Rights”. Among these rights is the right to possession. When you sign a lease with a tenant, you are signing a contract which transfers your right of possession to the tenant. While your lease contract may (and should) include some limited rights to inspect and preserve the property from damage, while the lease is in effect, you have no possession of the property and can even be arrested for “breaking and entering” if you enter the premises in violation of the terms of your lease.
In this particular situation, the “Frustrated Landlord” should have had evidence of ownership and a copy of the tenant’s lease available to show the police officer that this was, in fact a robbery in progress. As a property manager, I have encountered similar situations to this on more than a few occasions. I must clarify though, most of the time it was from tenants I “inherited” with a property, not my screened tenants. In one particular situation, I was able to recover a stolen refrigerator because a nosy neighbor told me where it went. I called the manager of the new home, asked them to do a proper inspection to locate my client’s fridge and with confirmation from that manager, brought in the police to arrest my former tenant for theft. Of course, my colleague’s tenant was evicted for being an accomplice to the crime and other lease violations.
Understanding the rights of all parties involved is a very important tool in an effective manager’s toolbelt. Without a real estate license /management permit and the training that goes into earning them, you’re basically showing up to a gunfight with a knife.
THE PROFESSIONAL TENANT
My husband left me and my two children. I was left with a large mortgage payment, so I rented out my home, and moved to a cheaper apartment. The tenant seemed so nice! However, she did not pay any rent for the first couple of months and I had to start a second job just to pay the rent on my home and my apartment. She appealed eviction and the judge upheld it. She has now been in my home for 3 months. I lost my apartment and had to move back in with my ex-husband and his girlfriend. I am working two jobs to pay a mortgage payment and extensive legal fees. I recently found out she has done this twice before. She is a professional tenant"....
Did you even know there were “professional tenants” out there? Well, as they say, “knowledge is power” and this "professional tenant", was armed with quite a bit of knowledge about property rights and the eviction process, which she used to ruin this poor single mom. Of course, we don’t know the story details, but what is clear is that this landlord didn’t know what to do and the tenant did. It is also clear that this landlord didn’t do a good job of screening her tenant. Our screening criteria include verifying good rental history, review of court records for previous evictions or relevant criminal history and verification of adequate income. There are services out there that claim to do this for you, but we do our own just to make sure we get the right knowledge about a person we’re gonna put into your investment property.
Do you know how to follow thru with an eviction and what to say to the judge? Most property owners don’t, and those that do obviously spend a lot of their time managing their own properties. Though not very often, we’ve been to court for evictions, have the legal knowledge to properly and quickly evict a bad tenant and have resources at the ready for those difficult cases. It’s amazing to think of the money this landlord had to pay out, not to mention the humiliation of having to move in with an ex-and his new girfriend! If she’d only had a good property manager!
REALTOR ≠ PROPERTY MANAGER
"A nice dressed man came to rent my property. He drove a very nice car and said he had a good job. When I asked him if I could run a background check on him, he said his wife had recently died and he wanted to rent now! He flashed a lot of cash and I agreed. He never paid rent again, after the first month. When I started to evict him, I found out he filed bankruptcy. By law he did not have to pay me rent while he was in bankruptcy court. I was considered a creditor. He lived in my home for seven months without paying a dime. I still had to pay my mortgage. I found out later, he had done this repeatedly"......Realtor
This is the story of another “professional tenant” and how knowledge and a little BS can ruin a good investment. What sticks out to me is that the landlord was a Realtor, a real estate licensee, which leads to the following important statement; All property managers are real estate licensees, but not all real estate licensees know how to properly manage your investment property. In fact, an argument can be made that the skill set for each is quite different.
The part of this story I find most upsetting is the line, “I found out later…”. FOUND OUT LATER??? Really?!? It’s our job to find these things out BEFORE signing a lease, giving possession of this huge investment to a tenant. You want someone to take care of your investment that is going to find out now, not later! You want a qualified property manager.
PAYING ATTENTION, OR JUST PAYING
"I had a bad tenant who lived in my rental home. When I evicted him, he destroyed my property. He stole the air conditioner and the copper line that went with it, and the aluminum from the windows. He had stored garbage in the attic, because he did not pay his garbage fees. The garbage rotted and maggots formed. It was hideous. He also kicked in all of the doorknob holes with a sledge hammer. This required replacement of all of the doors and windows. But, the clincher was how he literally walked thru my walls, leaving an outline of a body throughout my sheetrock. He did a total of $5,000 damages.......This stinks!"
Ronald Reagan was famous for this line in his negotiations for the end of the Soviet Union, “Trust, but verify”. This landlord apparently didn’t verify much at all. The kind of damage described here does not happen in a short period of time and the landlord was surprised by the damage the tenant did. In business, SURPRISE means “write a check”. In other words, there should be no surprises!
It seems reasonable to assume this landlord never exercised the right (standard in most leases) to periodically inspect his property to ensure the tenant was maintaining the property as required by the lease. Good property management includes reasonable, periodic inspections of the premises. Unfortunately, I have found that many of my colleagues in the property management business do not perform periodic inspections. I know this from the very common, surprised reaction from new tenants of mine when we come thru approximately every 90 days, to do a full inspection of the property.
I have found that our periodic inspections are the most important key to preserving my client’s properties. Even though the tenant is responsible to quickly report needed maintenance, often times and for various reasons, they don’t. This leads to what is called Deferred Maintenance, which is almost always more expansive and more expensive than fixing a problem soon after it occurs. This horror story is a perfect example of the cost of deferred maintenance. Had the landlord periodically inspected the property, seen the garbage start to pile up and the initial stages of the tenant’s neglect/abuse, the tenant could have been eithe brought into line, or evicted. Properly managed, that owner's $5000 bill for damages would have (and should have) been much smaller, or even nothing.
WHAT IT TAKES TO BE GOOD
Property management is not rocket science... but it’s not child’s play either. It’s also not a part time job.
A good property manager needs to be:
- consistent, yet flexible
- persistent, yet likeable
- and most of all, organized.
Tenants need to be adequately screened and their tenancy properly supervised with regular maintenance and inspections. A good property manager quickly recognizes “red flags” and takes proper action to verify and remediate a tenant’s bad behavior, before it escalates into a serious problem which can jeopardize the owner’s equity and cash flow.
Good property management includes having a rapport and open line of communication with tenants, so that small problems are not left to fester into big ones. While there is never a guarantee a tenant won’t skip out on a lease, or do serious damage to your property and profits, good screening, good communications, periodic inspections and a good knowledge of rights and legal remedies, is essential.
Most importantly though, what it takes to be a good property manager is vigilance: Vigilance in the goal of every property manager of maintaining the value and cash flow of the owner’s investments.
This article is not intended to be an advertisement for Since 1917 Realty’s property management services, rather an expose of the nature of good property management and why it is imperative to have a good property manager, if your goal in owning real estate is to make money! On the other hand, if you need better property management, you should definitely speak to me about how my family takes care of your investment.
Since 1917 Realty is a family business serving your real estate needs in the Las Vegas metro area.
Source of stories [http://www.nail-usa.com]
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