FORBES: Eight Reasons You Shouldn’t Manage Your Own Investment Properties

1Purchasing an investment property is an exciting business venture. If your building is in good shape and you find the right tenants, you stand to earn a lot of money from your rental units.

At first it may seem like a good idea to manage your own property and retain full control over costs, tenants and income. However, self-management can often be a headache: When something breaks down or your tenants are late with rent, you bear the sole responsibility to address it.

Hiring a third-party property management company can be worth every penny, especially if you’re looking to grow your investment business over time. Members of Forbes Real Estate Council shared eight common scenarios in which it makes more sense to outsource your property management tasks.

1. If Real Estate Investing Is Your Side Hustle

If an investor has a full-time job and they are investing as a side hustle, I would suggest hiring a property manager from day one. If the investor is fully focused on real estate investing, it makes sense to bring in a third party once they reach 10 units. At that point, their time is better used looking at more deals versus collecting rents or dealing with tenant maintenance issues. – Ali Jamal, Stablegold Hospitality

2. If You Lack Housing Expertise

Investors should not manage their own properties in situations where they are not familiar with the type of housing being managed. For example, with affordable housing, there is much compliance involved and making a mistake can result in fines. In that scenario, property management is best left to third-party companies that specialize in affordable housing. – Nathaniel Kunes, AppFolio Inc.

3. If You Want To Maximize Your Time As A Passive Investor

Your time is valuable, and technology is opening up many outsourcing options by connecting investors with qualified professionals in property management and skilled labor. Take advantage of every opportunity to maximize yourtime. In fact, investment platforms are allowing people to diversify across several properties without ever picking up a hammer. – Nav Athwal, RealtyShares

4. If You Need To Fill In Skill Or Resource Gaps

Each investor’s access to resources and prior skills and knowledge needs to be reviewed before providing this type of recommendation. It needs to be personalized. An investor who is a handyman likely doesn’t need to pay someone to make repairs. Finding the right tenant can make or break success, so evaluating candidates may be the best area to have help, particularly at first. – Michelle Ames, HorsePower Team Texas/Independent Realty

5. If You Don’t Have Time To Learn The Laws And Run It As A Business

Outsourcing will avoid legal liabilities from Fair Housing and Fair Credit Reporting Acts, state landlord-tenant laws and local regulations. Property managers will have resources that can perform services for less. You’ll also be less likely to lose income from tenants who don’t pay their rent or rents that end up being below market. – Alex Hemani, ALNA Companies

6. If Your Properties Are Located In Different Markets

Using third-party management is usually advisable when properties are located in different markets, as well as when owners don’t have the time or skills required to manage the property effectively. While it is tempting to save the 7-8% management fee typically paid to property managers, there are a host of tasks they take care of to keep the property occupied, cash-flowing and maintained. – Gary Beasley, Roofstock

7. If You’re New To Being A Landlord

You should hire a third-party manager if you’re new to being a landlord and don’t completely understand local ordinances and leasing practices, or don’t have all the contacts needed for repairs and maintenance items. A good third-party manager will know all of the above and you will learn them over time. – Lee Kiser, Kiser Group

8. If You Want To Scale Your Investment Business

If you want a large income property portfolio, don’t self-manage beyond one to two years. After that time, you will be better able to understand “a manager’s perspective.” Your highest and best use isn’t faucet repair or replacing bathrooms. It’s researching geographic markets and establishing competent teams. If you self-manage, ask yourself better questions like, “How scalable is this?” – Keith Weinhold, Get Rich Education

Source: forbes.com

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9 Sneaky Fees to Watch for When Hiring a Property Manager

security-deposit-piggy-bank-moneyTo many landlords, property management services are superfluous, cutting their profit margins to a minimum in exchange for basic services. But the reality is that property managers can make your life extraordinarily easier—and most charge a reasonable enough rate that you can draw a monthly profit from your properties (headache-free).

However, when you’re searching for a property manager to handle your landlord responsibilities, it’s important to note that not all fee structures are the same. If you don’t understand how a manager’s fees work, you won’t be able to compare apples to apples, and you might end up shaving your profit more than necessary if you aren’t prepared for those fees when they come up.

9 Fees to Watch For

These are some of the most common “hidden” fees, extra fees, and differences in fee structure to watch for when comparing providers or finalizing a contract:

1. Rent Due and Rent Collected

Many property managers will charge fees as a percentage of rent, but watch how this is worded—there’s a difference between charging as a percentage of rent due and a percentage of rent collected. A percentage of rent due means your company will charge you based on how much money a tenant owes you; a percentage of rent collected means your company will charge you based on how much money a tenant actually pays you—and is generally more favorable. If you’re charged based on rent due, you’ll end up paying for property management even when your property is vacant and you have no money coming in.

2. Early Cancellation

You may also be charged an early cancellation fee should you break the contract with your property manager before the end of its outlined term. For example, if you agree to work with them for a year and you want out after eight months, you might pay an additional few hundred dollars. Be especially wary of this fee with untested property managers.

3. A La Carte Management Fees

“A la carte” management fees refer to a suite of extra fees a property manager may charge you in addition to basic services. Usually, a property manager will either charge a higher price (and no additional fees) or a lower price, with multiple additional fees, somewhat evening out. Accordingly, it pays to know what fees are applicable and what they might run you. The remaining items in this list could all be classified as a la carte management fees.

4. Vacancy

If a company isn’t charging you the full cost of management while your property is vacant, there may still be an additional vacancy fee. Rather than collecting a percentage of rent due, they may collect a smaller amount from you as a kind of retainer.

5. Advertising

When it comes time to seek a new tenant, some property managers may charge you an additional advertising fee. This would cover the cost of creating media (such as taking photos) and placing it on sources like online listings or paper publications.

6. Leasing

A leasing fee may apply when you find a new tenant for your property. This covers the cost of drafting and securing a new lease agreement and is generally low in cost. If the cost here is high, it should raise a red flag, especially if your resulting tenant turnover seems to increase.

7. Lease Renewal

Lease renewal is even simpler than initial leasing, but it may still require a fee. You may need to draw up new paperwork or renegotiate terms with a tenant, and that means your property managers will be doing a bit of extra work. Expect minimal fees here as well.

8. Maintenance

Property management fees should cover basic instances of maintenance and repair, but some companies may charge extra for big jobs, or for an inspection between tenants.

9. Eviction

Eviction can be a messy process, and if you ever need to evict, you’ll be grateful you have a property management service in your corner. Most property managers will handle the eviction completely on your behalf, but some will charge you an extra fee for the extra work involved. Expect to pay at least a few hundred dollars for this process.

Apples to Apples

Different companies might charge money in different ways, but if they’re offering similar services, you’ll likely find the bottom-line price of each to be competitive with one another. The big difference here is how you plan on using your property management company; for example, if you’re looking for long-term arrangements, an early cancellation fee shouldn’t factor much into your decision. Try to consider all these factors and all price points when comparing providers and making your decision.

Source: biggerpockets.com

Happy National High Five Day!

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Happy National High-5 Day! High-5 to our clients for supporting our family business! #NH5D#WakeCounty #PropertyManagement

A look into the life of a Property Manager:

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A look into the life of a Property Manager:

“We are all varying degrees of crazy. When in public, you hide the crazy in order to conform to what society deems “appropriate behavior.” Some are better at this than others. When you get home, within the confines of walls and away from watchful eyes, you can let your crazy run free without worry of judgment, public persecution or jail time. It’s where you can let your freak flag fly high and proud. This is what makes my job… interesting. I am privy to all of it—the freak flags and the secrets. It’s not a job for the thin-skinned, the weak-stomached or the easily-angered. It is a job for me: the Property Manager.” – Erin Huss

Hidden Costs That Can Diminish Your Rental Property Profits

1When purchasing their first rental properties, many investors believe that the assets will effortlessly bring in money. However, they soon discover the hard way, that owning rental units attract a myriad of costs, which can significantly dent the amount of rental income. It is, therefore, important for a rental property investor to understand what these associated costs are, and how to best avoid or keep them in check.

Unscrupulous or untrustworthy contractors As a landlord, you will have to work with contractors to grow and excel your rental investments. Some of these partners are property management companies, real estate agents, attorneys, accountants, as well as, service and repair contractors. Enlisting and retaining the services of these professionals naturally requires money, which ideally, should come from the rental property.
Hence, it is important that you get reasonably priced partners and contractors, who understand that for them to get their pay, your business needs to flourish. As such, their primary concern should not only be to get paid, but rather to help you grow your rental investments.

Problematic renters As ironic as it may sound, even though a tenant is supposed to give you income if you get a wrong one you might just realize that a large chunk of the rent goes to waste. For instance, the tenant might make you waste precious time to demand the rent each time it is due or compel you to spend countless hours mediating conflicts between him or her and other tenants. Similarly, you might incur costs evicting the tenant or fighting off legal suits filed by the renter.

A straightforward and economical way for you to avoid such costly inconveniences is to put in place a thorough tenant screening procedure to help you identify and qualify high-quality renters, who will pay the rent promptly.

Property maintenance One of the pains of a landlord is ensuring that the property is rent-ready and in the perfect habitable condition possible. While maintaining and servicing the rental units can be smooth and manageable, at times the cost can spiral out of control, more so, if the property is old and severely worn out. In such a case you might have to finance endless and costly repairs before the building becomes habitable.

If you wish to control such losses, make sure you carry out careful property inspection to evaluate the condition of the property before purchasing it. Moreover, only hire reliable, competent and affordable service or maintenance technicians, who will give the right solution. Lastly, inform your tenants through the rental agreement that they will be liable for certain types of property damages.

Insurance costs It makes perfect business sense for a property owner to protect his or her investment against any possible event. The challenge, however, sets in when the insurer considers the owner as an investor instead of the primary occupant. As a result, the owner has no option but to settle for the costly special landlord insurance coverage, whose premium averages about twenty-five percent more than the regular homeowners’ policy. Not only does this bite a huge chunk of the rental income, but it gets complicated if the resident terminates the lease before the full term, and the house goes for long without getting a new occupant.

A prudent way of managing such costs is to factor in the insurance premiums in the monthly rent and doing all you can to keep your renters happy so that they stay to the end of the lease. Furthermore, have in place effective measures that guarantee you always have prospective tenants who are ready to move in, immediately when the units become vacant.

Increased taxes Most states and municipalities have homestead exemptions where they offer tax breaks to owners who live in their properties. In contrast, however, they impose heavy tax burdens on the investment properties. Naturally, the tax burden will have an impact on the amount of rental income a landlord gets from his or her investment. Fortunately, there are other costs related to the rental properties which can entitle you to tax breaks. Talking to an experienced and credible rental property taxation expert can help you to identify such perks.

Miscellaneous Damages Another common yet difficult to predict cost are those that occur in the middle of another activity. For instance, a window could break during property maintenance or an AC unit could get damaged during servicing. Since it is practically impossible to foretell if and when you will incur such expenses, it becomes relatively difficult to keep the costs in check. Nonetheless, you can try to be extra careful when handling the repairs, and only let someone with the right experience and competence manage the repairs. If you hire a maintenance or service specialist, go for one who has adequate insurance coverage and offers service warranties.

Conclusion Most first-time rental property investors hardly think about the hidden costs associated with their investment until after they have purchased the units. Even though by then it might be too late to reverse the investment decision, it is still possible to keep those pesky costs in check. You only need to know what expenses are denting your income and take the necessary reactive measures to control them. Still, taking the time to assess and evaluate the property before purchasing it remains the best way to keep most of these hidden costs at bay.

Source: realtybiznews.com

Name one thing property managers wish tenants knew.

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Q: Name one thing property managers wish tenants knew.

A: We don’t make the rules, we’re simply paid to enforce them. Every property manager has encountered that tenant who is disappointed, because the property manager refuses to disobey the terms of the lease to benefit a tenant’s situation. Property managers wish tenants understood that each state has Landlord-Tenant Laws designed to protect the rights of both parties in the lease: the landlord and the tenant. When tenants sign a lease, the terms of the lease are not merely made-up by the property manager, but rather established and enforced by the state’s Landlord-Tenant Laws. The state governs when rent is due, when late fees are assessed and what amount to charge, how much notice to give before moving, a landlord’s and tenant’s responsibilities, among others. The lease constitutes a contract. Good tenants and good landlords respect contracts, and good property managers enforce them.

Bev Roberts Rentals, “We are extremely proud of our great customer reviews”.

1It’s relatively easy – and occasionally misleading – to use fancy catch phrases and promises on web pages and marketing materials in order to win over customers. Saying “We’re the best” and “Most trusted” may very well be true, but any business can say that about themselves, can’t they? How, then, can you be sure that you’re actually dealing with a trusted Leasing and Property Management firm that lives up to its reputation? You don’t rely solely on what they have to say about themselves. You rely on reviews. Here at Bev Roberts Rentals, we are extremely proud of our great reviews on reputable sites like Google, Better Business Bureau, Angie’s List, Yelp, Yellow Pages, Facebook, etc. These reviews give you the evidence that we’re treating our loyal customers the way they deserve to be treated. Online reviews are a bit of a holy grail for small businesses, because they provide an objective view of a business’s practices. But getting a review isn’t always that easy. Most people don’t think to offer a review of a company they do business with, unless that company demonstrated service above and beyond what was expected. That’s just one of the many reasons why we’re so humbled by our many reviews. Our customers have taken the time to write reviews on our behalf, because they felt as though the service we provided them was worth taking note of.