Cost or Save?
It goes without saying, that good property management doesn't have
to cost you money...it can make you money. If an investor has purchased
property, either a single family home, a duplex, a 4-plex or a much
larger multi family unit, the ultimate goal is cash flow. Pending
upon the size of the cash down payment and the condition of the
property, cash flow may or may not become a reality.
Too often we see investors purchase property with
high leverage, usually properties that have a great deal of deferred
maintenance. These are properties that are picked-up in a foreclosure
or advertised by owners and agents for a small GRM (Gross Rent Multiplier).
They discover within a short period of time that expenses will get
out of control. No matter who is managing the property, there is
no way to avoid the necessary repairs that are inevitable. Roof
leaks, appliances that continually break down, carpet that needs
to be replaced, vacancies and evictions all become a real sore issue
with owners who had dreams of plenty.
Unfortunately for them, the "Dream of Plenty"
means plenty of cash out of their own pocket. Often, these new investors
are confronted with tenants who have been ignored since they took
occupancy and they have a list of problems stemming from floor to
ceiling. By the time the new owner signs the escrow papers, these
tenants have contacted city officials, code enforcement officers,
building inspectors, local and state housing departments. The new
owner is faced with the challenge of a lifetime and it will seem
like a lifetime before he will ever see any light at the end of
What is Good Management?
A good property management company can be very useful to the person
who doesn't have time to devote to his or her investment. A strong
manager can be a real gift to the investor faced with a multitude
of problems including but not limited to maintenance repairs and
a large percentage of vacancies.
A property management company could also be helpful
to the novice or the individual who is emotionally attached to their
investment. Because of the emotional involvement, owners often are
not effective in managing their own property. They have difficulty
making decisions, they delay in preparing a vacancy and they have
a real problem in screening new applicants. It is a nightmare if
their resident fails to pay their rent. With an experienced property
manager or company, these obstacles are quickly overcome. The manager
usually has a plan. He or she knows what steps to take to get the
vacancy ready to rent. Precise scheduling of contractors is a key
element. A successful manager, faced with a unit that has been completely
trashed, should have the ability to have it ready to rent within
three (3) days.
Any manager with some longevity in the business has
heard every excuse why a resident can't pay his rent. In addition,
the manager has probably experienced first hand every possible maintenance
deficiency that has occurred or is need of attention. Here again,
an owner can waste valuable time and money trying to get these type
of problems corrected. A successful property investor usually owns
or manages their own property management company or has already
taken steps to contract with a manager to oversee his investment.
In either case, they have delegated a great amount of the responsibility
to someone else so that they are free from the countless amounts
of detail and constant stress that often plaques a property manager.
When the successful investor is about ready to purchase
an apartment building, they will generally bring their property
manager along for one of the inspections prior to signing any agreement.
The purpose, of course, is to gain some insight from another perspective.
Often the investor will overlook certain aspects or characteristics
that the property manager may quickly recognize. The property manager
may see signs of serious maintenance problems that an owner might
overlook. The experienced manager can point out certain hazards
or potential problems that might go unnoticed. The job of the manager
is not to discourage an investor from making the purchase, but to
help the purchaser see the whole package.
Property Management is not just providing an apartment
for an individual or a family. The property manager essentially
manages all types of services for the owner. Shelter is the obvious
but along with that you have to include plumbing, heat, flooring,
tile showers and tubs, roofs, ceilings, walls, windows, kitchen
appliances, water heaters, carports, garage door openers, fans,
smoke detectors, cabinets, landscaping, walkways, stucco, siding,
fireplaces, brick and spark arresters. Not to mention fencing, sprinklers
and swimming pools. Aside from all of the equipment and materials
that is used for a housing unit, your property manager must be able
to manage people. Those people are your customers and they are the
individuals that will keep your building afloat. The good managers
know who should be renting your unit and who shouldn't. The manager
will do credit checks, verify income and previous residence. They
check with references and look to see if the tenant has ever been
evicted before or asked to move. After all the checks, once in awhile
a property manager is fooled. It is unfortunate but sometimes circumstances
change in an individuals life and the manager is forced to evict
an individual or a family.
One other item, a very important item, that the manager
will know...the law.
Owning a single family home or an apartment building
is a business. A business with many aspects to consider. An insightful
investor will recongnize the tremendous advantage to good property
here to find out what homes are listed for sale in the Palm Beach
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