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I bought an Investment Property, what do I do now?

August 31, 2021

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By Laurie Fahey

Laurie Fahey

Hi, I am Laurie Fahey I am passionate about providing personalized and professional Real Estate services to all of my clients. With exceptional comprehensive skills in all areas of buying and selling and in-depth experience in negotiating the best deal for Buyers or Sellers.To connect with Laurie, sign up for free / log in on moreandmorenetwork.com

 

Laurie Fahey

I bought an Investment Property, what do I do now?

 

Congratulation!  You have taken a huge leap into building passive income through Real Estate Investing.  Now your head is probably spinning, you just closed escrow and will have a payment due in the next 30 days.  You need a tenant and quick! 

I have just what you need here to help you quickly sort out the Pros and Cons of managing your new investment.  You really have 2 choices at this point, you can manage the property on your own or you can hire a property management company to oversee the property for you.

Pros of managing the property on your own.

  • Save money on management fees
  • Have full control over repairs and vendors that you use
  • You get to meet and screen all of the potential tenants yourself

Cons of managing the property on your own

  • Calls in the middle of the night for emergency repair issues
  • Navigating the many laws and regulations
  • You are the marketing, tenant screening, rent collection and accounting department.
  • Taking care of repairs, preventative maintenance and inspections around your schedule and the schedule of the tenants.

Now that you have looked at the Pros and Cons of managing your rental on your own, I can tell you from my 14 years of experience as a property manager that sometimes saving your sanity and hiring a good property management company can be worth the price.

Professional Property Management information.

If you have decided that you might not want to manage your property on your own, I have put together some great info below to help you navigate the world of hiring a professional property management company.

Hiring a property manager provides you with the opportunity to delegate most or all of the tasks and headaches associated with property management. While you will have to pay property management fees, a competent property manager can keep your tenants satisfied and safeguard your real estate investment.

 Some of the most important things are that the company will look after the repair and maintenance of your property to keep it in good condition. They will make sure that the rental property costs remain in control. They will listen to repair requests and carry out such repairs to keep your tenants happy. Periodic inspection of your property will help in making sure that no tenant is causing damage to rental property.

When Do You Need to Hire a Property Management Company?

  • You live far away from the investment property
  • You have many properties to look after
  • You are finding it hard to manage things on time
  • Tenants are causing problems for you

Common Services Offered by a Property Management Company

  • Marketing of the rental property.
  • Tenant search, screening, and signing of lease agreements
  • Collection of rent and accounting of your rental
  • Maintenance and upkeep of your property
  • Periodic inspections of the property
  • Address any complaints and repair requests

Questions to ask all potential property management companies before you hire them.

How many years have you been a property management company?

 It is very important to work with a company that has a solid track record in property management.  I would suggest checking their reviews on pages like Yelp and Google.  Not all property management companies work the same and a sub-par management company will cost you more money in the long run.

Will I have a dedicated property manager that I will be working with? 

It is important to know and trust the people that you are working with.  These people will be managing your investment and having someone to call with your concerns is very important.  You will also want to trust that they will make the best financial decisions for your property in emergency situations.

Do you have an initial set up fee to get started?

This is a fee most professional rental management companies charge from the client to set up the account. This fee is usually around $500 but some companies do it for free for their clients.

What are your monthly management fees? 

Fees and services can be a major consideration.  If you are looking for a full-service property management company this will cost more than a company that just collects the rents and checks in on the property.  This fee can be a flat fee or a fixed percentage of your monthly rental income. Most landlords prefer a fee that is a fixed percentage of their monthly income from the property.  Rental management fees usually vary but you can expect to pay around 10% to 12% of the monthly rental income.

Do you charge a separate fee for placing a tenant?

Some companies charge a separate fee every time they place a tenant in your rental property. It could be equal to half of the monthly rent or even a full month’s rent.

How often does someone from your team physically inspect my rental property?

Periodic inspection of your property will help in making sure that no tenant is causing damage to rental property.  Ideally you would like them to do an exterior/ drive by inspection every 90 days and an interior inspection every 12 months.  This way you will be able to check the condition of the property and look for any items of preventative maintenance that might be needed.

How do you do you qualify the tenants that will be living in my property?

This is a big one, a problem tenant can cost the property owners thousands of dollars.  Finding a great tenant is important and no amount of qualify will guarantee a tenant will not cause you some headaches.  There are a few things you want to make sure the management company is doing for each applicant that can save you money later down the road.  Running credit and background checks on all occupants over the age of 18.  (Make sure to ask what the min credit score that the company will allow a tenant to have to move into the property.)

Verifying the potential tenant’s employment and/or income is another way to gage whether a tenant will be able to pay their rent on time.  Using the one third of their gross income as the max rent amount is a safe way to calculate if they can afford your rental.

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WOE

You might say, “Look, I’m not just wishing things were different, I’m in action to change them.” Great…so long as you’re in action around something that can be changed. If you’re battling any of the woes listed above, then please know that i) not only is resistance futile, but ii) it is the source of suffering, i.e., only makes things worse.

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