The Involuntary Landlord

What is an Involuntary Landlord?

©2007-2009 Chris Compton

 

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Over the last decade, the real estate market in the US has ridden a rollercoaster of epic proportions. Climbing to unprecedented heights, the market called out to speculators like the sirens called to Odysseus. Unfortunately, the speculators heeded the call and smashed on the rocks to the tune of trillions of dollars. Many of the speculators have sunk to the bottom. But what about the regular folks that just happened to be in the normal home purchasing window during the run up? Some have sunk as well. Some are treading water. Many need to move and can’t afford to sell their homes at a huge loss. It’s this last group we’re interested in here.

What is an Involuntary Landlord?

An involuntary landlord is a homeowner who has decided to rent their home out as a “lesser of evils” rather than as an investment opportunity. Generally these homeowners would like to sell their home. They need to move for work, or they want to be closer to family, or maybe they have a health care need or an opportunity for their children. Whatever the situation, they have a strong motivation to move. Unfortunately, unless they want to price their home as if it were in foreclosure, selling the house is not really an option. On top of that, an enormous number of homeowners owe more to their mortgage lender than the home is worth in today’s market.

After going through the typical cycle of disbelief, frustration, anger and dismay, they begin to consider their real world options. Stay put? Sell at a big loss (possibly requiring a short sale)? Send the keys to the bank (called a deed in lieu of foreclosure)? All distasteful choices.

“Maybe we could rent it…“ “What?! Rent our home to a stranger? Suppose they tear it apart? Suppose they don’t pay the rent? Who will pay the utilities? Who will pay the Homeowners Association? Who will pay the insurance? Suppose something breaks? What if there is a fire? Will there pets ruin the carpet?”

Slowly, but surely, an involuntary landlord is born.

Being a landlord is a lot like being a barber. It looks pretty simple, but there is a tremendous amount of knowledge and skill involved when it is done right. There are probably way more involuntary landlords out there operating without the necessary knowledge than there are untrained barbers cutting their own hair. I would rather see you try to cut your own hair. Mess up your hair and you can just shave your head and three weeks later, voila! Mess up as a landlord and the consequences can be dire.

Fortunately, you have come to the right place! Among these pages you will find articles on every aspect of the landlord experience. Learn how to prepare your home for rental, market it, set the rent correctly, select the right tenants, handle the security deposit, handle maintenance requests, perform evictions, renew the lease, raise the rent, lower the rent, handle the move out, and everything in between.

Welcome to the wonderful world of owning investment property! Even if you didn’t plan to be a landlord, this may be the first step you take towards an enormous fortune built on the backs of rental houses. Throughout history, rental houses have been a great source for building wealth. Enjoy your visit, make sure to sign up for the free newsletter and come back soon.  Until then, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

 

Holiday Tasks for Landlords

The holiday season is upon us. This is a great opportunity for Involuntary Landlords, investor landlords and property managers to take a look at your property and build on your relationship with your tenant at the same time.

As you can see from this earlier post, It is very important for you to have occasional access to the inside of your rental home. While most tenants will take good care of your property, it is a big deal to find out earlier than later that you have one of the "bad seeds." The only way to get this information is to go inside.

Your lease probably contains a provision that says you can go inside and inspect in certain situations. Maybe you have to provide 24 hours notice and do it during office hours on a weekday. You should definitely be using that provision. I recommend a minimum of two visits each year and lean towards three in the first year. Not only do you get the peace of mind that putting your eyeballs on a well maintained home provides, you let the tenant know that you care about the manner in which they maintain the home. This knowledge will make a difference to most tenants and the property will be in better shape for it.

It is also very important to have a good relationship with your tenants. Every time you have to find a new tenant you are going to spend money, usually more than a thousand dollars. If you are an Involuntary Landlord, you are probably not in position to throw away that kind of money. A much better strategy is to invest fifteen dollars. Let me tell you how.

At the beginning of December, I emailed all of my tenants and let them know that I intended to visit them during the second week of December to "take a look around the house and bring you your holiday gift." I asked them to let me know when they were available and I offered them a choice of gifts. You can find dozens of nice gifts for twelve dollars. I bring turkeys, red wine or white wine. If they don't want any of the above, I bring a gift card. This visit gets a great response. Everyone likes a gift. Just like women appreciate a man bringing flowers, our tenants appreciate a gift as well.

My visits last just a few minutes. I take a quick walk around the house, deliver the gift and a card, and take some time to ask my tenants if they are happy with their home. I don't ask these questions to appease the tenants, I ask because I want them to LOVE their homes. I write down their comments and discuss them with the homeowner. If we can improve things in a cost effective way, we generally do.

These visits are enjoyable for all of us. It is always fun to give to others and the holidays are a time where most conversations are light and happy.

If you aren't making holiday visits as a landlord, I strongly urge you to try it out this month. We will continue to add new information for landlords here. Come back often and make sure to sign up for the free newsletter.  Until then, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

How Can I Evict Thee, Let Me Count the Ways

Involuntary Landlords are as a rule a little bit impatient when it comes to tenant shenanigans. Unauthorized pet? Time to evict. Late rent? Eviction. Bounced Check? Call the Sheriff. Grass getting high? Eviction Notice on the way! How many legal reasons are there for eviction anyway?

How Can I Evict Thee, Let Me Count the Ways

In reality, there are TWO reasons for eviction. Surprised? No need to be. Once you read this article you will be in full agreement with my answer. Stop rolling your eyes!

The first reason is almost indefensable. When you go to court for non-payment of rent, you have a pretty strong case. If the tenant appears in court and cries poverty, job loss, death in the family, sick child, dog ate the money, and so on and so on... The judge will rule in your favor. The tenant is obligated to pay the rent.

Of course every rule has its exceptions, but in nearly all cases, failure to pay rent as required will result in a judgment fo rthe plaintiff.

So what's the second reason? Eviction for wrongful possession. In other words the tenant has no legal right to be in the house because their lease has expired or has been legally terminated. That's the proper procedure for all of the other problems.

When you find out your tenant, who has signed a lease clearly stating that no pets will be authorized decides to take in a couple of canine room mates, you should not proceed directly to court. Make a pit stop at the post office and send him notice that he is in default of the lease. Give him time to cure the default and if he doesn't, send him a letter informing him that you are terminating the lease due to his default and demand that he return possession of the property to you immediately. Then proceed to the courthouse and file for eviction.

Whether you should demand possession for an unauthorized pet in the current rental market is a business decision you will have to tackle on your own. Our position is to always consider the cost of your actions prior to taking them, but that's the subject of a different article.

Be sure to sign up for our free newsletter, which features valuable information on topics like this one, and remember, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

Should I Invest in a Home Warranty for my Rental Home?

One of the most frequently asked questions by my new property management clients concerns home warranties. A home warranty is an insurance policy purchased to cover repairs to various systems and appliances throughout the home. Costs and coverage vary, but for the purposes of this discussion, we will assume an average sized home with a warranty cost of $400 annually.

Should I Invest in a Home Warranty for my Rental Home?

Purchasing a home warranty is a financial decision. The homeowner needs to weigh the costs and benefits in order to determine whether or no to make the purchase. In this case, the cost side is easy. The cost of the policy in our example is $400 per year.

The benefit side is another story, and this is where the problem can become tricky. If I were a warranty salesman, I would tell you that a new furnace or air conditioning unit could easily cost you $4000 dollars - TEN TIMES the cost of the warranty. I would tell you that if your water heater breaks it will almost certainly need to be replaced and that replacing a water heater is a thousand dollar job. I would ask you if you have shopped refrigerators or dishwashers lately and caution you against gambling that a tenant will take care of your appliances. And then, when I had you thinking about all the horrible things that could happen in your home, I would pull out my sales contract and say "sign here."

Since I am not really a warranty salesman, let's take an honest look at the benfits of owning a home warranty. We will start by answering some questions. In the last five years, how many times have you had an appliance serviced? Think back to what the problem was and how much it cost to repair. I can tell you that in my own homes, I have only had two problems. The first was with the auto igniters on a gas range. They would not ignite the gas. The second was last year when my oven stopped working. The computer chip that ran the oven failed. The igniter problem was solved by disassembling the igniters, cleaning and adjusting them, and putting them back together. The total cost for the visit and service was $150. The oven control problem was more expensive. The part was $350 and the labor was $100. So using me as an example, my benefit over the last 5 years would have been $600 or $120 per year. When you add the trip charge that most warranties require (usually about $50 per repair), my benefit would have been $500 and my cost would have been $2000 (5 years @ $400 per year).

Right now I am managing 16 rental homes. They all have problems from time to time. This year I have replaced 2 dishwashers, an oven, and a water heater. If all 16 homes had a warranty, the total cost of the warranties would be $6400. The 2 dishwashers cost $700 total. The oven was $500 and the water heater was $1000 (all including labor). The total benefit to the owners would have been $2000 with a $6400 cost.

Most systems and appliances in your home are built to last. The oven we replaced was twenty years old. Dishwashers last ten or more years in most cases. Water heaters average eight years or more. Furnaces and air conditioners can last thirty years if properly maintained. Take care of your appliances and when the time comes to replace them, you will know you got your money's worth.

I suppose it is conceivable that an owner could have thousands of dollars in covered repairs in a year, but I think it would be like hitting the lottery. Most of the time, insurance should only be purchased in situations where not having insurance could be ruinous. If you drive a car without insurance and total another person's Rolls Royce, you could be liable for hundreds of thousands of dollars. If you don't have health insurance and get hit by a bus, you could quickly be bankrupted by medical bills. If your water heater blows you will be inconvenienced and annoyed, but probably not ruined.

My advice is don't purchase a home warranty. Instead, have your furnace and air conditioning units professionally serviced once a year ($79), replace your filters 4 times a year ($12), and put aside the other $309 for repairs that will certainly come up from time to time. In the long run, I think you will be pleased with the decision.

On the other hand, if you are the sort of person who is more comfortable with a fixed annual cost and a more limited risk, I would be happy to put you in contact with a reliable warranty company.

Its not always easy to find an honest answer to questions like this one. Most of the folks with the answers are too busy trying to sell you the product to help you decide if it is right for you. Remember, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

Top Ten Factors in Finding a Tenant

©2007-2009 Chris Compton

When your property is vacant, you don't want to wait to find a tenant. Every day that the property is vacant costs you money in the form of debt service, taxes, HOA dues, insurance, utilities, lawn maintenance and lost revenue. There are lots of steps you can take in order to find a qualified tenant. Here are the most important areas to focus on.

 

Top Ten Factors in Finding a Tenant

 

Number 10: Willingness to sell the home at some point in the future.

 

Well over half of all tenant applicants ask me if the home can be purchased somewhere down the line. They aren't asking for a lease-purchase arrangement, they just want to feel like they have options. None of us can know the future. Circumstances change, plans change, people change. But for right now, the right answer to this question is, "We will definitely consider your offer when the time comes." You haven't made any promises, but you have made them feel hopeful. They will treat the home as if they might own it someday, and that's a good thing. If, on the other hand, you shut the door by saying, "No. We plan to move back in a few years," your property is going to plummet on their list. Even if you think you will definitely move back to the property, keep in mind that you don't really know and leave that door open.

 

Number 9: Having a Fenced yard

 

Most renters have families and a high percentage have pets. A fenced in yard is the feature that the most tenant applicants ask for by name when describing what they are looking for. It is more often a want and not a deal breaker, but fenced in yards rent faster than open yards.

 

Number 8: Appliances

 

I recently had a client tell me that the tenants would need to provide a stove. That was a first, and he was joking, but appliances are no laughing matter. Tenants don't have appliances. They assume that what they need will be in the house. The better your appliances, the more attractive the home will be. Just assume that your tenants expect a stove/oven, dishwasher, microwave and refrigerator. If you want to stand out, throw in a washer and dryer. As the housing goes up in price, the appliance needs change. In a more expensive rental, tenants may be looking for higher end appliances and double ovens, but they will often have their own refrigerator and will almost always have a washer and dryer. Be flexible. If you have a refrigerator in the house and your applicants already have one, offer to put yours in the garage or remove it entirely. If they have a washer and dryer, take yours away.

 

 

Number 7: School District

 

A large number of renters have children attending school. The school district and its reputation plays a big part in the decision of where to live. You can't change this factor, but you can learn to sell it. Find out about the schools and be ready to explain why the schools are great. No matter how bad they are, each individual school has some outstanding teachers and programs and has probably won some awards and been involved in the community's development. Have that information handy for your prospects.

 

Number 6: Maintenance

 

When a prospective tenant looks at your home, they are subconsciously imagining themselves living there. It is of major importance that the home is in good repair. No broken bannisters, no rusted railings, no plumbing leaks or running toilets, no holes in the walls or stained carpet. What they see on that first visit is what they are going to believe as truth about how you will maintain the property. This is your one chance to sell them on your home. Take advantage of it.

 

Number 5: Cleanliness

 

Does your house smell clean? Good tenants are not going to move into a dirty, smelly house. If you are showing the home to prospective tenants and it's not clean, you are begging for tenants who don't care how they live. Tenants like that will not maintain the home and they won't be particularly concerned about paying rent, either. Set the example at the very beginning of the relationship. Give them a sparkling clean home and let them know you expect it to remain that way.

 

Number 4: Vacant and Available

 

Renters are not the same as buyers. One big difference is time frame. Buyers are expecting to take 45-60 days to obtain a loan, perform inspections, negotiate, etc before moving into a home. It is better when selling a home to have it nicely furnished and looking like a model. Renters, on the other hand, are usually looking for a place to live in the very near future, sometimes they need to move in the very next day. If they visit a home which is occupied, it is hard for them to imagine that you will really be able to move all of that stuff and get the place clean in time to meet their needs. If your house is competing with a similar, but empty house, the empty one is going to win. In addition, if a prospect wants to see the house, you need to show it to them right away. Renters are working on a short time table and if you miss the first opportunity to show them the house, they will probably choose another home.

 

Number 3: Pet Policy

 

If you are not going to accept pets, you are cutting down the pool of renters dramatically. If you are unreasonable as to your required pet deposit and whether or not it is refundable, you will lose some of the better prospects. While pets are a concern for homeowners, the majority of pets in rental units will not cause any damage and the enormous majority will not cause damage that cannot be repaired with the standard security deposit. A reasonable pet deposit depends on your area, but think $150-$200 per pet. This deposit should be refundable if there is no damage. Having a portion of it be nonrefundable as a carpet cleaning fee is acceptable to most renters.

 

Number 2: Price

 

As in most things, the price plays a major part. If you price yourself out of the market, no amount of marketing can get the house rented. Don't believe me? Think of it this way: If market rent is $1000 per month, what can you do to get a renter to pay $5000 per month? That seems ridiculous, so how about $4000 per month? No chance, right? And you can keep going down until you get pretty close to market rent. Maybe you could get an additional 20%, so $1200 per month if you provided some extra services such as lawn maintenance, allowed pets, made improvements requested by the tenants, provided exceptional appliances and were willing to take a chance on some iffy applicants. What would I do? I would price it at $995 and rent it in a few days instead of a few months.

 

Number 1: Exposure

 

If prospective tenants don't know your home is available, they cannot rent it. The internet is the number one source of tenants. Almost all tenants looking for a new rental start online. The key to internet marketing is getting the home listed with a Multiple Listing Service. this is the same service realtors use to market homes for sale. The reason this is so important is that the MLS systems automatically export their listings to all of the major real estate portals. If your home is listed with a MLS, it is immediately on www.Realtor.com, www.ReMax.com, newspaper sites like www.AJC.com and all of the other big sites. Even individual realtors' sites, like mine at www.HomeTeamCoach.com pick up lisitngs automatically from the MLS database. Another advantage of being in the MLS is that a surprisingly high number of renters have agents helping them find their next rental. These agents are trained to look in the MLS as their sole resource and will bring renters to you. There is some cost associated with being listed on the MLS. Call a realtor or property manager for details and realize that different companies may offer you different arrangements. In Atlanta, be sure to call me! In addition to the MLS, you need to post and frequently update an ad on www.CraigsList.com. CraigsList is an internet classified site used nationwide and is often the first place a renter will look. Advertising rental property on CraigsList is free. Other sites like www.Rentals.com and www.Rentclick.com (sister sites) charge a monthly fee for listings and are probably not good investments for individual advertisers. Ads in newspapers worked well back when people read newspapers. Don't spend your resources there.

 

This top 10 list is critical to finding a new tenant. Make these ten things happen and the applicants will come. What do you do with the applicants? That's a topic for another day. If  you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

 

It's Not a War

©2007-2009 Chris Compton

One of the biggest issues I deal with as a property manager is the “us vs. them” mentality of my landlord clients. This is a normal state of mind for new landlords. If you are a landlord and you find yourself feeling this way, take a deep breath and repeat after me:

It’s Not a War

It’s not a war. Your relationship with your tenant is going to go a long way towards determining the profitability of your rental property. You need to always try to put yourself in the tenant’s shoes before you make a decision. You should make every decision not just thinking about the short term financial implications of your action or inaction, but also the effect on your relationship with your tenant and how that effect might affect his tendencies to pay the rent on time, maintain the home in the way you hope he will, and renew his lease.

Am I suggesting that you bend over and take it whenever the tenant asks for a concession? Absolutely not. What I am recommending is that you take a hard look at your decisions with an eye on the horizon.

Remember when you were learning to drive and you naturally looked at the road just over the hood of the car? You were useless at responding to curves, squirrels and any other pathetic creature or object that got in the way. Hopefully you have learned to drive looking off into the distance, seeing anything that might impede your path and reacting well in advance to make sure you reach your destination safely.

Landlords need to have a similar mindset. Look down the road. If your tenants want to paint the living room, it is perfectly natural for you to have concerns. They probably aren’t painters. They may well get paint on the floor and the trim. They will certainly pick a color that you would not have picked. But so what? The right answer is, “Yes Ms. Tenant. Feel free to paint the living room. You are paying to live there and I want you to feel like the home belongs to you. Just remember that I expect the home to be returned in the same condition I gave it to you. If you don’t think you can do a professional job, you may want to hire someone. If you pick colors that will make it hard to rent to another tenant, I may insist you return it to its original color. Does that sound reasonable?”

Handling it this way empowers your tenant. They have the situation in their hands. They feel like owners. Owners take care of their property. If you are concerned that they will not remember the agreement, put it in writing. Detail the conversation on paper and ask them to sign a copy for their protection. Tell them you know they will feel more comfortable with written permission.

Other situations have more immediate financial impact on you. Maybe the dishwasher won’t drain. Every time they run the dishwasher it fills up with water until water and soap spills out onto the floor. A new dishwasher is going to run you between $300 and $700 dollars installed. That seems like an awful lot of money and it’s tempting to ask your tenants to wash the dishes in the sink, but think down the road. If the tenants are paying $1000 monthly and the dishwasher costs $500, you can see what a two week vacancy would do. Go ahead and get the dishwasher taken care of. The sooner the better.

No matter how good your tenants are, occasionally they will do something to upset you. Sometimes they will do several things in short order and you will begin to think you are in a war. Take a deep breath, count to ten and think about what is fair. Then do just a little bit more. If  you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

 

Five Great Reasons to Become a Landlord

©2007-2009 Chris Compton

I’m often asked by potential clients questions like’ “Don’t I have to worry about renters destroying my home?” What they are really looking for is reasons to become a landlord despite the horror stories they have heard. In this article I am going to give you five great reasons to become a landlord.

Until recently, if when you heard the word “landlord” you thought of a cigar chomping inner city slumlord tough guy, or a corporate bigwig sitting high in an office tower counting his money, I couldn’t find tremendous fault with your imaginings. The real estate roller coaster ride our country has been on for the last decade has changed everything in the rental arena, though, and today’s landlord is far more likely to be an involuntary participant, at least at first.

She needed or really wanted to move and was unwilling to sell her home at the price dictated by today’s market. She sees the landlord option as a slightly unpleasant means to an end. For the most part, she has been pleasantly surprised.

Five Great Reasons to Become a Landlord

The biggest reason to rent your home out to a perfect stranger is the primary factor in most business decisions you make. Renting your home provides a source of income. While it is true that rent does not always exceed expenses, the expenses exist whether the rent is coming in or not. The rent is definitely an income source. For owners fortunate enough to own their home without the encumbrance of a mortgage, this rental income drops to the bottom line quickly and with only minor resistance. (In fact, buying a home for cash and renting it out can bring returns far higher than putting the same money in a bank, credit union, or other financial instrument, but that’s a subject for another day.) Even owners unable to collect enough rent to totally offset expenses from mortgage payments, taxes, insurance, homeowner’s association dues and maintenance can probably get close enough to be able to afford housing in a more desirable location.

An often overlooked benefit of being a landlord is the security provided by the tenant. The vast majority of homes victimized by vandals are vacant. Insurance companies charge much higher premiums and limit coverage for vacant homes. Many insurers will not cover a vacant home at all, citing loss rates that are unacceptable. When I was a high school junior, my family moved from northeastern North Carolina to Hopewell, Virginia. For the first two years there we lived in a home we called “the Mansion on the River.”  Our rent was reasonable (zero), and the home was enormous and beautiful and right on the Appomattox River. The house was for sale and the owner was concerned with vandalism. Having a responsible family in place was a tremendous benefit from his perspective.

Most families cannot afford the luxury of owning multiple homes without the offsetting income a tenant provides. When we find ourselves in the position of owning a home one place and needing to live somewhere else, something has to give. A good tenant is often the key factor in allowing a family to take the next step in life’s journey, a step that just could not be taken otherwise without serious ramifications.

Owning rental property can be advantageous at tax time. Rental income must be reported, of course, but owners may deduct mortgage interest, repair costs and depreciation for starters. Have property in another state? The annual trip to check on it could be a tax deduction. Please don’t take my word for it, however! The IRS is a serious group and you should consult an expert about what they will and won’t allow.

Probably the least talked about advantage to becoming a landlord is one you would never suspect existed and may not believe. Trust me on this, though. I am an expert. Good tenants frequently improve your property during their tenancy! Really. Good tenants, especially long term tenants are a pleasure. They paint, they landscape, they put up storage buildings and fences, they maintain systems and make repairs, all while paying the rent. Good long term tenants rent your home, take care of it, pay for it and increase its value!

I know I promised 5 reasons, but I always try to under promise and over deliver. Here is a bonus reason that you may not have considered. Many landlords get to know their tenant families and often they make an impact in one another’s lives. This may sound hokey, but when you open your home to another family, even for money, you are exhibiting a trust in them. That trust, properly nurtured, often grows into respect, friendship and sometimes love. Being a benefactor can deliver a peace unobtainable in any other manner. Connecting with our fellow human beings is a tremendous experience and one we can’t possibly get often enough.

So with all of these benefits, what about the horror stories? We’ll talk about them in a future article, my friends. Until then, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

 

Four Questions to Ask Yourself Before Managing Your Own Property

©2007-2009 Chris Compton

“Do I need a property manager?”

This question causes a natural conflict for me, and it’s a question I get asked a lot. As a professional property manager, I have a strong urge to scream out, “OF COURSE YOU DO!!!” As someone who prides himself on giving fair, honest advice in the best interests of my client, I know that the fairest answer to this question is, “it depends.”

Four Questions to Ask Yourself Before Managing Your Own Property

“It depends” on who you are, what sort of skill set you have, and how well you handle people, conflict, pressure and stress. “It depends” on where you live in relation to the property. “It depends” on how highly you value your time. Ask yourself these four questions and then judge for yourself.

“Where do you live?” Where you live is a pretty key factor. If you can’t stop by twice a year, you may have problems. If you can’t respond promptly to maintenance requests, you are begging for trouble. If your only recourse when the rent is late is long distance communications such as phone calls, letters and emails, you might find yourself in a hole. One of my very first management clients is a wonderful couple who lives in Virginia and has rental property here in Atlanta. The first time I heard from them they had just gotten a writ of eviction against their tenant. The tenant was out of the property after a difficult two year battle fraught with late payments and threats of eviction. They asked me to check out the home. I could sensationalize the condition, but let’s just call it “abused.” The landlords had been dealing with problem tenants from 500 miles away for two years. They had never visited their renters. If they had stopped by a few times, they probably would have saved several thousands of dollars in repair costs. We fixed the property up and I found a tenant. Over the next year the property was well maintained and the rent was on time each and every month. At the end of the year, my clients decided to go back to self managing and save the $88 monthly fee. The next time I heard from them was four months later. The tenant was two months behind on the rent and they couldn’t get in touch with her. Long distance management is a tough assignment.

“How are your people skills?” Another key issue to consider is your people skills. Good property managers are very responsive. The single most important job of any property manager, whether a paid professional or a self managing owner, is to keep the tenant happy. Happy tenants renew their leases. Happy tenants take care of the property. Happy tenants pay rent on time. Happy tenants don’t call about small repairs they can handle on their own. Replacing tenants is the largest long term expense associated with the ownership of rental property. Keeping a tenant for an additional lease term is like finding an extra 1.5 months rent (or more) in the street. If organization, attention to detail, a positive attitude and a true desire to serve are not part of your makeup, this task is probably not for you.

“What sort of tools are you working with?” The rest of the skills in your toolbox (or lack thereof) will also go a long way towards determining your success. Are you knowledgeable in areas like marketing, accounting, home repair, law, and collections? You should be if you want to succeed. How’s your rolodex? At a minimum you must know who to call to handle repairs involving plumbing, electrical systems, appliances, heating and air, roof leaks, drywall… The list goes on. Remember that job One is retaining your tenant. Tenants with backed up plumbing expect, even demand, immediate attention. Can you provide that? If the answer is “no,” you should probably just call me.

“What is your time worth?” If all of this sounds like a pain in the rear, it can be. Managing one property requires the same tools and systems companies like mine spend years developing in order to serve many properties. Rental homes seem to go through cycles of attention. Everything goes great for months on end and then all of a sudden they need lots of attention for a while. When that happens the manager must devote whatever resources are required to handle the load. Sometimes that translates into many man hours. Only you can put a fair price on your time. In April my family purchased a home in Buford, GA. We loved everything about it except for the purple master bedroom. I don’t mean pastel purple, either. It was like a room full of bruise! I have a painter who does great work for me on my clients’ homes. He offered me a great “friend” price – only $200 including paint and cutting in the trim. I got it in my head that my wife and I could just do it ourselves. The painting supplies and paint came to $110. We spent thirty hours trying to get the trim right and then my mom came down from Virginia and finished it for us. (Thanks, Mom!) You do the math.

At the end of the day, you have to decide for yourself if you need a professional manager for your home. Take a look at the big picture, put a value on your time and decide if you will be better off in the long run with my team or on your own. For the vast majority of homeowners, professional management is a solid value.

After answering these questions, if you have decided to self manage, answer three more. What is your strategy for finding a tenant? How will you screen your applicants? What will you do if you choose a bad tenant?  Remember, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.