As mentioned in Buying Investment Housing two of the primary reasons we invest in real estate is for positive cash flow and equity appreciation. Equity appreciation is achieved two ways: Steady market appreciation due to inflation over time and forced equity. The first is something we have very little control over, but the later can be achieved through improved property condition by way of improvements and increased property performance. Great management is the most critical component for achieving optimum property performance.
This leads to the question of whether you should attempt to manage the asset yourself or hire a property management company. The biggest mistake we see investors make is attempting to save money by being the landlord. This usually spells disaster unless one obtains extensive education, has great people skills, and develops a thorough understanding of Landlord Tenant law. This is also a very time consuming proposition that cuts into the leisure and family activities and usually doesn’t just stop with being the landlord. What we typically see is that in order to save more money, the owner ends up doing the maintenance, repairs, make readies, tenant screening, and leasing of the property. What is your time and sanity worth? Again, the primary objective is to make money. Most people are not really looking for another part-time job but performing these tasks is exactly that!
As we mentioned earlier, property management is probably the most important part of your team. Great management companies can make your investment housing very profitable and poor management will most certainly put your business in the red. Our philosophy at IHS Property Management differs from most other management companies because our entire team is made up if real estate investors who actually own investment housing! As a result, we are very aware of the importance of running a lean operation focused on creating the highest return for our owners. This is achieved through a rigorus screening process in an effort to get great residents living in your property and offering great customer service to them in order optimize tenant retention. This results in lower vacancy which also reduces not only down time but avoids costly make readies.
Much of our investment portfolio lies outside of the Tri-Cities area which has provided us a ton of experience working with property management companies in other states. The knowledge we have obtained through managing managers has given us a very unique edge for how to run our local management company. Please contact us if we can assist you with your property management needs whether they are here in our local market or elsewhere.
Below is a link of the interview questions we always ask when we hire a new property management company. Even though your may decide to handle these responsibilities on your own, they may provide you with some things to at least think about: