Should you hire a property manager?

4/28/2008 8:02 AM
Out of State property management is my only experience in this area of real estate, and I cannot recommend it as a rule. While going to ASU in the State I would really like to see have its name changed to something like "zing pow Elvis", I rented an apartment that was mold infested. This is a complex real estate issue no matter where you live, and when covered up by complicated laws and rules that are governed by another State, when the property management is located across the country it is a recipe for litigation. The property management in this case was on site, but operated under contracts from Oregon, and in fact the lease was co- governed by both jurisdictions. This can be a tricky situation when a problem comes up involving the health or safety of a tenant!
My strong counsel based on experience in this matter, is to hire a company that is local, with a proven track record of managing within the state that the property is located in. Each State has a different set of standards regarding landlord tenant disputes, and the mold issue puts a second monkey wrench into that argument. Having a local, well-established company in that case would have kept a conversation on the table, and keeping dialogue open keeps everyone out of litigation, which is counter, productive to earning a profit in your investment. I live in the real world where I am painfully aware that litigation is costly, and if a lawyer smells blood in the water they are coming after your property (if they can get it). When you have good management with a skill set that includes keeping the dialogue open, and keeping the matter from escalating into litigation, you reduce your risk of loss to your investment. Similarly, not having a professional management to bounce ideas off increases your risk of litigation. Litigation and fire are real enemies to investments! You want to protect yourself from both, so a good insurance policy and smart professional management that knows the local laws, and can keep you out of litigation is never a bad idea in my book. From where I sit, having out of state property management puts the investor at a risk, and while it can be a saving grace if you know the property is a slum, the problem is when you hide your head under the sand, your ass is still standing in the air! Being local makes it impossible for people not to present problems, and you might have to reach resolutions as an investor on more regular intervals. However, it also keeps the door open to prompt and swift solutions if and when a problem comes up that need management. Being on hand, or near the property and having knowledge and skill in that specific location about who to call to resolve problems can lead to less expensive outcomes for the investor. Not having professional management is like driving a car without learning the rules of the road, and having one located somewhere else is like driving a car in one state, but following the rules in another country. When the driver gets pulled over for breaking the rules, the ticket can be costly; in fact they can take away the license to drive! I like the idea of having a strong team behind you in whatever you do, but I believe part of that strength is having your team KNOW that they know the local rules that govern your investment!
Loopholes in management are for chumps, if your going to have one- I say get with one that KNOWS how to manage your investment, and CAN prove it!
Take a look at other properties and investments they manage before you agree, and know the history of the company, and what they are capable of pulling off! Talk to other clients that they manage for, and make sure they are pleased with the results of the company. Be a smart consumer of property management is my advice!

Tam Tam tough on trade!

I pretty much agree. I got overwhelmed with the management side of things when starting out and the business stagnated as a result. However, I DO think there's some value in learning what to expect of the property manager by having to do a little yourself to begin with.

Scott.
http://www.investing-secrets.com/investing-team/