For people interested in owning rental property, the name of the game is making money. Despite this, some expenses are worth every penny, such as hiring a property manager.
Most property managers charge 10% for their services, which include:
- Listing
- Collecting rent
- Eviction
Some property owners feel that the idea of paying someone to take a check and put an ad on the Internet is not worth the cost, but I can tell you it is.
Tenant Horror Story
When I first moved to Louisiana I knew that my rental property in North Carolina was in good hands. And I was especially relieved after meeting “Laticia.”
“Laticia” lives near where I live and has a rental property two hours away, but she manages it herself because she “didn’t want to waste 10% on a real estate office” when she could keep all the money.
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She got a tenant, and after two months they stopped paying the rent. She was two hours away and kept calling them. They kept giving her excuses. After six months, she was able to evict them, but only after they’d taken a sledge hammer to the water heater and poured motor oil on the carpets.
She found out that they’d done something similar before, but I guess she didn’t want to waste $30 pulling up their credit reports, or $1 calling previous landlords.
The Value of a Good Property Manager
I make my property managers earn every penny. I call them for advice, ask their opinions and, when the house needs work, they get three quotes and then run them by me if it costs more than $200. If I don’t like the quotes, they get another.
I have a storm drain in front of the house. Recently, every home in the sub-division with a storm drain in front of it began to have holes in the backyards due to eroding pipes.
The assessment of the situation was that it was not an immediate problem because it was away from the home. The first quote came in at $17,000 to replace the pipes and my fence. Had my realtor told me this was urgent, I’d be $10,000 in debt right now rather than getting quotes on having the master toilet closet turned into a real master bathroom.
My property manager went to the court house to see if this was really my problem or if it was something the entire street had to chip in for. It turns out that I was supposedly filled in on this detail of my home at closing (and maybe I was), but I don’t recall.
We’re still looking for the right quote, which would be $50/hr for someone to come out with a backhoe, plus the cost of materials. Until then, the situation is not dire, and that’s been conveyed to me by the pictures I was sent from my very experienced property managers who are always solving problems and putting out fires.
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You are very lucky with your property manager. Mine had similar instructions (contact me before anything that wasn’t an Emergency and cost more than $100 was done). They did neither. I would routinely receive my rent from them and it would be missing several hundred dollars from repairs that did not need to be done nor were they authorized by me.
In addition, while under the watchful eye of the Property Manager tenants did almost 10K in damages to the property. Damages that were not realized until I came to visit and completed a walk-through. Then, when I called the property manager to come and assist with the situation – had to wait over an hour for someone to arrive.
So, picking a good property manager is almost as hard as screening tenants. This particular company is the largest in the city where my rental is located. I have never heard anything positive said about them, yet people continue to list properties with them.
I have successfully managed a property from about 3K miles away, but I have family/friends close-by who can completed inspections and show the show in my absence. Without them, it would be difficult.