Property management is one of the most aggravating chores a real estate investor deals with on a day to day basis. Property management takes time, but it doesn’t have to be yours. You will want to hire a team of helpers such as contractors and repair people and put together your own property management team if you start to acquire multiple properties.
If you own multiple properties out of the area or out of state, or are an international investor, you may want to consider hiring a professional property management company to collect rents, fill vacancies and take care of routine maintenance items. Using a good property management company can end up saving you time and money so you can concentrate on acquiring new investments instead of dealing with someone's toilet being clogged in a unit you own or a leaky faucet. Having to handle these phone calls and then outsource them to individual contractors can become a full time job and is not the reason you decided to become a real estate investor.
Another way to manage certain properties is by having someone live on the premises and take care of any maintenance issues and collect rents, etc, in exchange for living rent free. This takes the concept of a building superintendent and expands on it. Obviously this only works on multi-unit developments.
I have a client who only invests in mobile home parks. These can be amazing “cash-cows” if they are already rented and generating a nice positive cash flow. When he takes over one of these developments he runs ads in the local paper saying “Property manager needed for mobile home park. Light maintenance required. In exchange for salary will let you live on the premises for FREE!”
After running one of these adds he normally has a pile of responses sitting on his desk. He will do phone interviews with the ones that sound good. Then do background and credit checks on the ones that he weeded out from the rest. (You want to make sure they are also not on the sex offender list for that county or wanted by the police!). Then he will hire them using a contract that specifically states this is a 90 day probationary period and if it doesn't work out then he can cancel it and they must leave the property immediately. He also states in the contact that this is an employment contract and not a landlord/tenant lease. This is to prevent the person he hires from availing themselves of the landlord/tenant courts and potentially starting a long eviction process.
This process works for him because the rent he loses from that particular unit is normally a fraction of what a Property Management Company would charge him to do the same exact work, and they are not living on the property 24/7. He has told me of incidents where something happened at three o'clock in the morning and his person on site was able to take care of it immediately whereas if he had to wait for a call to his Property Management Company that morning it would have cost him much more to fix the problem.
Either of these management strategies can work for you. It depends on your level of trust in the individual or company you hire as well as their ability to solve problems and be available to deal with emergencies.
Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner.