Owning rental property and managing it yourself is best treated as a hobby.
It is a business with tremendous liability if not done by law and code. It is a business where a thorough understanding of landlord/tenant laws (which change every two years) is required. It is a business with new required forms being churned out by the state and federal governments all the time. As a hobby it is a casual investment that often stays “status quo” if lucky. As a business a single rental can be structured and designed to build solid and increasingly profitable relationships between landlord and tenant.
Taking better care of your tenant and your rental will not yield you higher returns.
A home is often the most valuable asset in a person’s net worth. The debt is also one’s largest liability. Most owners never realize that nothing costs them more than a vacancy. A vacant property loses the most money. Professional management companies spend every minute of every day taking care of their properties in order to increase rents and decrease vacancy. The saddest example that defines our industry is how much hatred tenants have for their owners because they never show up to make repairs, or they can never get in touch with them. Having a good manager decreases the risks of damage to your home because maintenance is performed quickly and efficiently. It’s also often done at a fraction of the cost because of the volume-discount relationships they maintain with their vendors. Fixing covered repairs quickly and taking care of tenants’ needs should earn you higher and higher rents, especially now when the market is so tight.
It’s not very complicated to manage property. Any one of my stupid relatives could do it for me.
This concept is the most costly since anyone not thoroughly versed in local property code will undoubtedly pay for repairs that are not legally required of the landlord. How often does the plumber charge you $100 to fish out items of a personal nature from the drain lines? A professional manager is versed in not only property code compliance, but common resident charge-back issues. Every month we charge back hundreds of dollars of uncovered maintenance back to our residents while at the same time carefully explaining to them what the law says. Most owners, because they do not know better, are constantly paying for repairs that do not fall under the required guidelines of the landlord tenant laws of this state. What a waste of your money!
If I raise the rent my tenant will move.
Clearly, if you never raise the rent the market moves and your rental return only decreases. Taxes, insurance, and repairs always go up so should rents as well. As Northwind Property Management reaches towards a 95% retention rate, an industry record based on taking care of customers, it’s amazing how easy it becomes to raise rents ahead of the market. Why wouldn’t a resident pay more rent to get guaranteed good service? We thoroughly document move-in and move-out, escrow security deposits on behalf of owners, and make repairs covered under the property code quickly and at great prices. Residents appreciate our prompt service and pay us more for rentals comparable to those being self-managed by individual owners. Tenants won’t ever move from a well managed rental. It costs too much to move, and most residents only move out to move up to better service.
Tenants really have trouble paying the rent on time.
In this country today, consumers have their debt stacked up to the max. Yet when rent is due there is always an excuse. There should never be an excuse in the delivery of timely repairs, and there should never be an excuse without penalty in the failure of a rent payment to arrive by the first. At Northwind Property Management we pride ourselves on guaranteeing our owners that they will have their checks by the first of the month or a late charge will be added. If our residents make decisions to not make timely rent a priority, than why shouldn’t there be consequences? NWP generates significant additional rental revenue through late charges every year.
I can’t afford a property manager.
Annual amount lost on a $1,000 rental by not using a professional management company:
- Vacancy . . . $1,000. We can typically rent property one month faster than an individual owner can.
- Repair savings (20%) . . . $720. We negotiate a volume discount with vendors.
- Low rent . . . $1,200. We could probably charge $1,100/month for the same property an individual could rent for $1000/month.
- Unauthorized repairs . . . $100. We know which repairs the tenant should take responsibility for.
- Uncollected late charges . . . $100. We charge penalties on all late rental payments.
- Damage upon move out . . . $250. NWP has a 60 point checklist for our residents to perform.
