By Ozzie Jurock
This article appeared in The Vancouver Sun on October 20, 2001
You now are an owner of a fine investment. Life is easy from here on in, right? Wrong! I have owned my share of rental properties and have both good stories and absolute horror stories to tell. The good news is that you can avoid the horror but you need to be good. Good at being a manager that is. Often we mix up our objectives when we try to manage our rental property ourselves. We want to increase the value of our property, we want a tenant to pay our mortgage, we want to be loved by the tenant and we want him or her to pay on time every time and we want him/her to take care of the property better than if it was their own. Yeah, well I have news for you. You'll get some of these some of the time, but not all of these all of the time. The worst one here is wanting to be loved by your tenants. You can't be, you are at odds. He wants to pay as little as possible with you shouldering all of the upkeep of repairs, including window washing, you want him to pay as much as possible and cut the grass too. End of Love.
Property management can make or break you. This is where lots of people fall down, more than anything; it will test your ability. Unless you actually live within easy reach of all of those far-flung revenue properties, you're going to be relying upon someone else to manage things. If you've got trusted tenants, be thankful ... but don't be complacent. If you're buying a unit in a multi-unit revenue property, be darn sure the prospectus and related documents ring true. Sometimes a combination of hidden deferred maintenance and a matter-of-fact management company which would "rent to anyone" can end up cracking many an investment egg. Property management is a business. If you can't treat your property management like a business get a professional who can. Think about it. The average investor owns his property 6 years. The average single family home rental value in Vancouver is $1,500 per month, $18,000 per year or a cool $108,000 income. This is serious money. To be managed seriously.
Property Management means: writing ads, handling inquiries, showing property at night, collecting rent, unfriendly tenants ... it all spells personal involvement and free time encroachment. So, unless you know what you are doing, hire someone qualified who will also give you solid reliable service. If you manage only one property, go to the library, there are plenty of good books on the subject. Do some research, become certain. If you own more than one, or if you own it 'long distance' get a professional manager. YOUR BIGGEST JOB IS TO GET THAT PROFESSIONAL. Get references, CHECK OUT those references for tenant and manager! (great website ... TenantVerification.com ... allows you to check out tenants. For tenant rights see Jurock.com's Renting Tips and for getting specific property management questions answered FREE go to Jurock.com's Ask an Expert).
WHAT? YOU WANT NOT JUST TO RENT THE PLACE, BUT A GOOD TENANT TOO?
A good property manager doesn't take the first yokel that wants to rent the place. He/she has a plan of action to get tenants, he has a clearly itemized - who is responsible for what - contract with his owners and one with his tenants. He must have a reviewable business plan. Ask your manager for his.
What does a 'quality service oriented property manager do anyway?
He has a written budget outline - income projection - timely collection of rent - expense control - establishing rental value - clean simple accounting - maintenance.
He also has to show you the operating procedure he employs for maintenance (ongoing or re-action to problems as they occur only), repairs (ditto), safety and security issues (spelled out, how when who?) and insurance (enough, all eventualities covered, etc.)
You should also inspect the property with your manager together and meet the staff he employs (you may like him but shudder at the employees). What's his regular (weekly, daily, monthly) inspection routine? Understand the scope of his authority. Does he hire contractors to do the work? Does he advance funds? Does he use rental income to place ads, make repairs etc. What is the track record? Who can you call to verify?
Do this all up front. Have a written understanding of your relationship - small building or large - and you have a basis to measure actual performance against promised performance.
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