Monday, January 28, 2013

The cost of not getting property management

A couple of things I’ve noticed about people who manage their own investment properties.  Firstly is they rarely get the rent they could.  They seem to take how much the rental appraisal says, then discounts off the property management fees to charge tenants lower than market rent.  What does this do?  Well it costs the same, without any of the benefits.  Personally, if I am paying for something, I like to get the return on my investment.

Secondly, self-managing landlords don’t inspect.  How do I know this?  We reference check every tenant we take on, and often ring two landlords per tenant, current and former, for a reference.  We always ask them how was the last inspection.  For most, the last inspection was the first inspection, when the tenant moved in, and just trusted them to tell them when something goes wrong.  

Unfortunately, most tenants don’t know what is a serious issue in need of attention before problems and costs escalate, and what is just a minor inconvenience to them.  Most landlords don’t know this either.  We’ve had a number of situations where a landlord is facing a serious repair bill because they just didn’t know how serious something was.

Having a systematic approach to inspecting properties top to bottom on a regular basis is the secret to lower maintenance costs, increased property values, and happier tenants.  Inspections should not simply be about whether the tenant has cleaned the oven lately – they should be a way of dealing with maintenance issues as they arise.  Most people don’t know this, and feel funny about invading the tenants personal space.  No wonder, if they are the cleaning police.

While checking cleanliness is important (and that’s a topic for another blog) doing inspections for maintenance and damage is vital.  Paying the rent is a fine attribute in a tenant, but if they have caused more damage than they paid in rent, you aren’t making money, are you?  Likewise, I am sure you want to know if they are doing something unlawful – better to move them out before trouble moves in.

If you think you might not be getting the rent you could, and you haven’t visited the property at least every 4 months (every 3 months is even better), pick up your game, or get someone suitable to do it for you.  You are paying for someone to neglect their duties if you continue as you are, and you’d fire that person, wouldn’t you.  Do yourself a favour, hire a good replacement, like, well, us!

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