Most people worry about owning property in another city, let alone another state. Here are some tips to make sure you are getting what you pay for and they are truly collecting what they say they are collecting.
In most cases, it does not seem profitable to have an onsite manager for a property unless it is 40 + units. If you have an offsite property manager managing the properties it might be more cost effective, but it definitely depends on how they like to get paid.
If you are working with property manager and you live a distance from the proeprty you might have a few concerns about expenses and income. We have put into effect a few things to help keep the honest truly honest.
First off, we tell them that we will often have a mystery shopper come in to check on things and how the property is being run. We actually execute on this. We will have different people call at different times and act like a potential tenant as well as send people over to the property to check out the process they go through to show the property. If you don't keep up on this, you might get slapped with a fine from the housing authority or for a violation of the landlord tenant law for discrimination or unsuitable housing conditions. You are liable for this, so it is definitely a good thing to plan on doing quarterly at least.
We also have a direct mailing that we send to each of the tenants addresses. Our mailings will check to see if a tenant lives there, if they really are delinquent, if they are happy with the way proeprty management is addressing their concerns. We have found that people that were said to be delinquent by the manager were actually paying them cash....hmm. Not good huh!! It is a great way to check on the truth of facts your manager offers you.
We normally will try to get some sort of seller financing on our properties in areas outside of where we live, because we now have a person with a vested interest to check on the proeprty or help us out. We have had the lender( seller) even help take over management duties while we were in transition with a manager.
We also do spopke checks too. We often will fly out at random times to check on the property. We will compare rent rolls and expenses on a regular basis . We will often call and verify expenses incurred with the property. Our repairs are handled directly by our office and not our manager, well at least the funding of the repairs. We have to sign off on everything. Our spot checks conmsist of checking to make sure that the expenses for repairs made actually did occur too.
Obviously, it would be great if we could trust without the verification,but we have found it is less stressful for us when we trust but verify.
We offer incentives for the manager to collect the highest amount of rent possible, by offering them a bonus on collections that are in excess of the prior collection. We give sliding scale bonuses for filling vacancies too.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125