|Rental property management: Yes
As more people invest in rental
real estate, they're discovering how much time and effort is involved in screening
applicants and doing upkeep on the property, not to mention the process of cleaning
up after a tenant moves out or handling an eviction. As a result, they often turn
to property management companies. It's not always a pleasant experience.
Rob and Amber Hill hired a property
manager to oversee a rental house they owned after they moved from
Atlanta to Savannah, Ga. When their tenant moved out, they paid
the property manager one fee to screen applicants and another to
place a new tenant in the house.
What the Hills didn't know until
later was that the "new tenant" was, in fact, already
living there. She was their tenant's live-in girlfriend. When the
relationship ended, he moved out and she stayed. The property management
company simply had her fill out an application and sign a new lease.
"Her credit was total crap,"
says Robert Hill, the author of "What No One Ever Tells You
about Investing in Real Estate: Real Life Advice from 101 Successful
Investors." "She lied about her employment. She told them
she had three kids; she had four. She lied about having pets; they
tore up the property. They didn't screen her at all."
So, how do you find a good property
management company? Maybe the question to ask is: Do you really
"It's not as much work as you think it would be," says
Christine Karpinski, author of "Profit From Your Vacation Home
Dream" and the owner of several vacation rental properties.
"What is that management company doing when there's a repair
to be made? They're not going to the property. They're hiring someone
to do it. I can do that, too. I can use a telephone. I just had
a well go out in my property in Tennessee. I picked up the phone
and called the well-drilling company."
Jeffrey Taylor, author
of "The Landlord's Kit" and founder of the online landlord community,
MrLandlord.com, is another advocate of doing the work yourself. One reason is
the expense. It's common for property managers to charge a flat fee of 6 percent
to 12 percent of rental income per month. Tenant screening and placement is extra.
For a small investor with one or two properties, that could pretty much wipe out
That doesn't mean, however, that
you should be doing everything yourself. Both the Hills and Taylor
highly recommend attending a meeting of a local chapter of the National
Real Estate Investors Association to ask other local investors
for referrals on service providers.