When one thinks of a property manager, they think of someone who takes care of and manages a property. The reality is that, as the owner of the property, you are responsible for protecting and managing your property. If you give up all control of your investment, you have nobody to blame but yourself in the event things don’t go as you planned. If you treat your property like the investment it is and have a plan, you can reap the benefits for years to come.
The first step is to acknowledge that your property is truly an investment. As you would do with any investment, you should take steps to insure your asset. It is not enough to blindly send in your payment with your mortgage every month without checking your policy every so often. Things can change with your property and your coverage every year. If you are not aware of these changes, it can cost you if something happens. It may seem like pulling teeth, but take a day every year or two to review your policy and see what you need tweaked. This could be the most important thing you do for your property. All it takes is one storm, one accident or one injury to change everything with your property.
The next step for managing your properties is to stay on top of their condition at all times. You should have a pretty good idea how long a certain appliance will last or how long the furnace has left. You should also stay on top of seasonal maintenance and spend the time and money every year to lengthen the useful life of everything in your house. If you ignore a problem, it won’t go away. If you know that you need a new roof, you can either act immediately or start putting money away every month for when you need it. Your property is only as good as the cash flow it produces or the value you can derive from it. If things start breaking down, you will have a tough time finding tenants and rent will stop coming in. Walk around and inside your property every few months to know what items need to be updated. If you don’t, you are at the mercy of your property and will be financially vulnerable when things break down.
It is also important that you keep track of all documentation and record keeping with your property. You need to easily reference the lease or insurance when you need it. The same goes for documenting the move in and move out condition of every new lease. You also need to place any security and deposit funds in a separate account and keep deposit information. Any work that is done and anything that you will use come tax time should also be in a dedicated folder or spreadsheet. Any emails you get from disgruntled tenants or exchanges from buyers or sellers should also be documented. You never know when you will need to reference any of these items and you need to know where they are located. If you are scrambling around for a day or two looking for something you may need on a purchase or to settle a dispute with a tenant, it will cost you time and possibly even money.
Managing your property also means knowing every expense that is made on the property. This starts with the most basic items such as mortgage, taxes and insurance. Most people are not aware of their interest rate or how many years left they have on their mortgage. Refinancing could be an option that you weren’t aware existed and could save you hundreds of dollars every month. In addition to your mortgage, you should know the cost for snow removal, lawn maintenance, furnace cleanings, central air updates, property manager fees and everything that is associated with the property. In some cases, money can be saved by making a couple of changes or by getting a second opinion. If you run your investment property like you would your household budget, you can find ways to be spend your money and improve your investment.
Finally, you can manage your property by finding the best possible tenants. This means taking the time to run an application, call any references and screen any new tenants for your property. If you have good tenants, your life as a landlord will be dramatically easier. Dealing with evictions, property damage and late payments will have an impact on the property and everything else in your business. If you are hasty with the tenants you bring in, you are basically hoping that they pay and take care of your property. Take the time and protect your investment and find the best possible tenants.
As a property owner there is a lot that can derail a successful property. If you take small steps to protect your investment, it can add years to the properties life. You can hire a property manager, but as the owner, you are responsible for everything that goes on with the property. Between insurance, proper documentation and staying on top of any work needed, you can maximize the value and protect yourself in the event of disaster. There is a lot more that goes into managing properties than just figuring out how much to charge for rent and collecting checks. It is the things you do year round that will make all the difference.