Oh, the decisions! Oh, the phone calls! Oh, the aggravation! You have rental property, but managing may not be what you expected. It sounded like such a good idea, buying rental property, fixing it up and renting it out to a bunch of nice people who would eagerly pay the rent on time.
Well, not everyone can keep his or her innocence forever. As Wallace Gibson, past-president of the National Association of Residential Property Managers (NARPM) and head of Gibson Management Group in Charlottesville, Va. put it, “While you think you may have the five to 10 hours a week to devote to being a landlord, the hours required are never the hours a novice landlord actually has available… toilets back up on weekends during soccer games; ovens always break the week before Thanksgiving; tenants never vacate as scheduled and repair work never gets done on time.”
It turned out to be a job, not an investment. No question, being a landlord is a hands-on investment. If the unexpected aggravations or rental ownership have jumped up and bit you, you probably need a property manager.
More than 50 miles away? Some state laws require that rental property owners who live more than 50, 100 or 150 miles from their properties hire a professional manager to take care of their units. Some bureaucrat or other conluded that too many rental property problems were the result of “absentee” landlords and persuaded a legislature that the fate of the free world lay in requiring property managers for properties “too distant” to be managed properly. Whether or not that is true is a subject for debate. The question and answer that follow do provide a little insight into the problems faced by a landlord who lives a good distance away from his or her rental property.
Question: “My name is TJ. My husband and I are trying to decide whether or not to hire a rental property management company for our home. We have some friends who do it themselves and some who swear by the rental management company. We live in Hampton, Virginia in an upscale neighborhood (rent will most likely be about $1000-1200 per month for our home) and are not sure about being in control of landlord issues. I purchased a book that led me to your website (Managing Rental Properties for Maximum Profit) and the author feels that doing it yourself is the best way. However, we have a number of friends who disagree.”
Answer: I’m afraid I have to side with your friends who disagree. I lived in Portland, Oregon; and while it was no problem managing the property there, I also owned property in Chandler, Arizona, where it would be a problem managing.
It is difficult and fraught with frustration trying to deal with a problem from 1500 miles away. You don’t know whom you’re hiring to work on the property, what kind of work he or she did, or if what was charged was fair. If the tenant doesn’t pay the rent, it is a major chore to deal with that. Just getting the property rented is a major hassle if you’re not in town.
So suppose you do go back to Hampton from Jacksonville to take care of renting the house. How much will that cost you? Count the plane fare, the hotel rental, the rental car, the time off work, and incidental expenses. You can make all kinds of deals with property managers to do the jobs that require someone to be near the property and keep other jobs for yourself, such as having final approval on whom you rent to.
Ms. Gibson goes even farther, she suggests, “If you live more than one hour’s drive or in another Area Code (tenants don’t call if they have to pay for a long distance call),” you need a property manager.
Too many bad tenants
Probably the most important part of being a landlord is tenant selection. Yet too many landlords find themselves ill equipped to do that effectively. Despite the best of intentions, they are plagued by tenants who would have to be generously described as less than desirable. Frustrations mount and landlords vow to “be more businesslike,” yet bad tenants keep ending up living in their properties—not renting from them, they don’t pay any rent, just living there.
A good, experienced property manager won’t get sucked into the “bad tenant cycle.” In fact many bad tenants don’t even bother to apply to live in properties managed by professional managers, since bad tenants know their lies and sleaziness will be ferreted out by the pro. Rather they sniff out landlords whom they know they can snooker with a sob story or empty promise.
Out of town a lot
As Ms. Gibson pointed out above, managing property can require five to 10 hours a week and calls come at the most inopportune times. If your job requires you to be out of town a lot or if you simply travel extensively, it is almost impossible to do a decent job of taking care of rental property yourself. You definitely need a professional manager.
Whom to use?
Never, never, never under any circumstances talk about, whisper or even think about using a friend or relative to manage your rental property unless that friend or relative is a trained professional.
First, it is illegal in many states for an unlicensed person to manage rental property for another person, so you would be exposing your friend or relative to civil sanctions by the government.
Second, whatever a friend or relative does in property management not only reflects on that person but on you, because he or she is your agent. You are responsible for the acts of your agents. So if your nonprofessional manager illegally discriminates against a tenant, it’s your neck as well as his or hers. If repair work is done improperly and results in an accident, you will be writing a huge check.
Third, your insurance company could well frown upon (and refuse to pay) a claim that was the result of some action by your non-licensed manager. Do you want to do that to a friend or relative?
To find a professional property manager, you can do a search by state or zip code on the NARPM website at www.narpm.org. These are people who are dedicated to their profession and who continually keep up on the changes and new ideas in property management. You can also find a list of property management companies on the Rental Property Reporter website at www.rentalprop.com.
