Advantages of Hiring a Professional Property Manager: EXPERTISE

Answer: In most cases, you should hire the right professional, at least until you have the skills and experience necessary to consider yourself a professional landlord.

I have been a professional landlord since 2008. This question is the one I am asked more than any other, and getting the answer wrong can cost a new landlord time, money and a ton of stress. In short, the advantages are expertise, time commitment, economy of scale, limitation of liability and increased financial performance.

I wouldn't ask Tiger Woods to take out my tonsils or hire Warren Buffet to tune up my car and I wouldn’t defend myself in a murder trial. Would you?

Managing your investment property may seem like a simple task, but it isn’t. Anyone can learn to be an expert landlord, but the learning curve is steep, and the right decisions are not always intuitive. It’s easy to make costly mistakes without even realizing you made them.

Expert (ek-spurt) noun: a person who has special skill or knowledge in some particular field; specialist; authority

When you hire the right professional to manage your investment property, you are hiring an expert. You are trading some of the gross rental income from the property for the skill and knowledge that the manager brings to the table. This skill and knowledge comes from experience.

Being a landlord sounds simple, but things go wrong all the time. When something goes wrong, it has to be handled. The decisions you make impact your finances, and your tenants' wellbeing, happiness, and sometimes even their safety.

When I first started managing rentals in 2008, every time something went wrong, I had to invent a solution. Unsurprisingly, those solutions weren’t always right, but over 17 years, my staff and I have seen a lot of problems and gained a lot of experience solving them. We are experts.

Anyone can develop expertise, but professionals manage tens or hundreds or thousands of homes, year after year. We are exposed to problem after problem after problem. It takes a lot longer to learn when you only have one or two rentals to deal with.

Here are some questions for you to answer in areas that could cause major problems in a landlord-tenant relationship. See how many you feel competent in:

Preparing a vacant home for the market

- When your home is vacant, how much painting should you do? Every wall? Can

you just touch up the bad spots? How about the trim paint? Inside the closets?

What about the ceilings?

- When should you change locks on a property?

- Do you need to provide window coverings or should the tenant do that? If you do

it, what sort of window coverings make the most sense?

- If you need to store some of your personal items in your rental property, where

should you store them?

- How often should the exterior be painted?

- What can you add to a house between tenants for a small cost that will attract

better tenants?

- Should your home have an alarm system? Security cameras?

- Do you need to replace carpets or just clean them?

- Is LVP flooring worth the cost of upgrading?

- If you have an unfinished basement, is it OK that water gets in occasionally?

- Why is it important to know what year your home was built? (Hint: big legal issue)

- How do you determine the rent amount?

- Is it better to ask for too much rent or too little rent? Why?

- What are the disadvantages to asking for rent that is higher than the market calls

for?

HOA issues

- When in the process should you carefully read the HOA covenants and bylaws?

- How much power does an HOA have?

- What common problems do landlords have with HOAs?

- How can your HOA put you in legal jeopardy as a landlord?

- What can happen if your tenant violates HOA rules?

- What can happen if you violate HOA rules as a landlord?

- What big HOA related mistake can you make that could cost you tens of

thousands of dollars?

Where to advertise for renters

- Where do tenants find rental homes most frequently?

- How important are signs in front of your rental?

- What is the most efficient way to get the word out about your property?

- Which online sites are worth the cost?

- Which online site has the most fraud (BY FAR)?

- What laws do you need to know before placing an ad to avoid big problems with

the federal government? Rental Applications

- What do you need to know about your tenants before you sign a lease?

- How important is a credit report?

- How do you obtain a credit report?

- What laws do you need to be concerned about when you take a rental

application?

- What questions should you never ask a potential tenant?

- Can you turn down a tenant because you don’t like them?

- Can you turn down a tenant because they are philosophically different than you?

- Can you turn down a tenant because they are a lawyer? A preacher? A drug

dealer?

- Can you deny an applicant because they look messy? Because they love to cook

spicy, aromatic food?

- When you deny a tenant, what laws must you follow?

- How do you verify that the information on the application is true?

- How do you verify income from a self employed person?

- How do you qualify a person with no source of income?

- Are student loans considered income?

- How do you qualify unrelated roommates?

Writing the Lease

- What should be in your lease?

- What MUST be in your lease?

- Where can you get a pre-written, fill-in-the-blank lease?

- Do you need a lawyer when you write a lease?

- Suppose the tenant asks you to make small changes before they sign the lease?

- What should the lease say about the security deposit? Security Deposits

- How much should the deposit be?

- Is it OK to ask a tenant for a larger deposit than you asked another tenant for?

- What do you do with the deposit during the tenancy? Do you have to have a

special account?

- What can you use the deposit for?

- If the tenant damages the property during their tenancy and you make repairs,

can you use the deposit before they move out?

- Who decides how much of the deposit to return to the tenant?

- What are the requirements for handling the deposit when the tenant moves out?

Is there a time limit? How do you document it?

- When can you accept the deposit without putting yourself in jeopardy? Move-in Day

- What should you do on move-in day to protect yourself at the end of the lease?

- What do you need to give your tenant when they move in?

- What does the law require that you do before you accept a security deposit?

- What do you do if the tenant decides not to move in?

- What do you do if the tenant is unhappy with the condition on move-in day?

- What do you do if someone not on the lease shows up instead of the tenant?

Collecting rent

- How do you collect rent?

- Suppose the tenant needs a few extra days to pay the rent?

- Suppose the tenant only has part of the rent but will pay the rest next week?

- Suppose the tenant simply does not pay the rent?

- What do you do if the tenant says they made a repair to the property and want

credit against the rent?

Maintenance

- Should you do your own maintenance?

- What maintenance can you expect your tenant to handle themself?

- How do you find good contractors?

- Are you responsible if your contractor does something wrong?

- How long should a tenant expect to wait for a repair visit?

- What maintenance should be treated like an emergency?

- If your refrigerator breaks, who pays for the spoiled food?

- If your laundry equipment breaks, do you have to fix it or can you remove it and

tell them to get their own? What about the oven?

- What do you do if your tenant breaks something by accident and asks you to

repair it?

- If lightning strikes your home and fries all of the tenants’ electronics, do you have

to replace them?

- How does a septic tank work?

- How do you decide whether to repair or replace your HVAC system?

- How do you decide to repair or replace a microwave? A dishwasher?

- What should you do if your tenant complains about mold?

- Suppose a tenant sees a leak and ignores it. A year later they finally let you know

and there is significant damage that could have been avoided. What should you

do?

Lease Violations

- What do you do if people not on the lease move in with your tenant?

- What do you do if the tenant smokes in the property?

- How do you handle unauthorized pets in the home?

- Suppose the tenant won’t cut the lawn?

- Suppose the tenant does something that is clearly unacceptable but you didn’t

cover it in the lease? Maybe they hung a twenty foot high picture of their cat on

the side of the house. Can you do anything about that? Disputes

- Who makes the decision when you and your tenant disagree?

- What do you do when your tenant has a dispute with a neighbor and your phone

is ringing off the hook?

- What do you do when the tenant doesn’t clean up the yard or paints a bedroom

neon pink and they still have a long time left on the lease?

Eviction

- What constitutes grounds for eviction?

- What must you do before filing for eviction?

- Do you need an attorney to evict your tenant?

- Suppose people not on the lease live with your tenant? Can you evict them?

- What can your tenant do to prevent you from evicting them?

- Can you turn off water and power to a non-paying tenant’s residence?

- How do you prepare for your eviction hearing?

- What do you do if the judge evicts your tenant and they still refuse to leave?

- Suppose your tenants move out in the middle of the night? Do you have to evict

them before you can rent to someone else?

Emergencies

- What do you do when there is a fire at the property?

- What do you do if someone dies in the home?

- What do you do if a tree falls on the house and crushes part of it?

- Who is responsible if a tree falls on a tenant’s car? Pets

- Should you allow pets?

- Should you limit the number, size or type of pets?

- What is a service animal and is that important?

- Are there any special laws regarding service animals and tenants?

- What do you do when the pet that lives in the property does not look like the pet

on the application?

Disabled Tenants

- What are you required to do when your tenant is disabled?

- Can you turn down a tenant with disabilities because you don’t think the home is

a “good fit?”

Rental Assistance Programs

- What do you do if an applicant wants to use “Section 8” or another rental

assistance program?

Long Term Tenants

- What can you do to keep your tenant for years or decades?

- When should you address a lease renewal?

- Should you raise the rent when you renew?

- Do you need to paint or clean carpets while your tenant is living in the property?

- What are the benefits to not renewing a lease and finding a new tenant instead?

- Can you terminate a tenants’ lease when it ends without a reason? Insurance

- What is the difference between homeowner’s insurance and a landlord policy?

- Who is responsible for the tenants’ belongings in case of a fire?

- Should you require your tenants to obtain a renter’s policy?

- Should you require a special policy when your tenant has a pet?

I could go on and on. Many of the areas listed above may seem very simple and unimportant... but each situation is different, and small mistakes don’t just add up - they compound.

I can discuss all of these issues in great detail because I have been dealing with them for 17 years. You may have some thoughts, but with little or no experience, you can’t be sure how your ideas will work out until you try them.

Have fun today!



Chris Compton - Broker