Biggest common property management mistake!

[johnsu]

I think one of the biggest mistakes any investor who manages their own stuff is this:



1. Being a friend rather than a property manager.



This leads to common problems like:



1. Not immediately issuing eviction notice

2. Late rent payments

3. Making excuses to not evict tenant.

4. Feeling bad and getting screwed over when tenant is waaaay backed up in rent.



We can be professional but don't go to the darkside of personal. Banks don't do it when we're late on our mortgage payments.



Anyone have any other ones they've experienced and lived?

 

[Rickson9]

I never had a desire to manage my rentals. I am not competent enough to manage my rentals. I am barely competent enough to change a lightbulb.



I use a property manager.



Some individuals have a passion and expertise for property management. I am not one of them. I have other things that I would rather be doing.



Best regards.

 

[invst4profit]

I have never had a problem dealing with getting so friendly as to allow a tenant to pay rent late without getting a board notice on the second of the month but I do find that being around the property too much leads to doing too many favours for tenants. Especially the little old ladies, they are so damn manipulative.

The other down side is I have too much wasted time due to my tenants wanting to chat all the time. I rarely get more than half a days work done in a day.

 

[Thomas Beyer]

[quote user=Rickson9]Some individuals have a passion and expertise for property management. I am not one of them. I have other things that I would rather be doing.


I second that !



Real estate investor should focus on:

a) finding good deals, and

b) finding money partners for these deals



The rest can usually be delegated to people more competent (aka: accounting, legal, realtors, painters, light-bulb switchers, trades people, tax experts ...)



Never confuse getting things done with doing them yourself !

 

[housingrental]

Biggest mistake is taking on properties that cannot be well managed - whether because of terrible setup, location, or deferred maintenance that owner does not have will to fund repairs for. If the investment property needs $80,000 in immediate repairs, has 75 sq ft rooms, and a horrendous smell, it's hard to manage properly.



Good property management requires non-horrendous product + reasonable expectation for expenses from property owner



I've seen many other management companies run into many different issues - sometimes incompetence or indifference but very often the core problems are the above

 

[bizaro86]

[quote user=housingrental]Biggest mistake is taking on properties that cannot be well managed - whether because of terrible setup, location, or deferred maintenance that owner does not have will to fund repairs for. If the investment property needs $80,000 in immediate repairs, has 75 sq ft rooms, and a horrendous smell, it's hard to manage properly.



Good property management requires non-horrendous product + reasonable expectation for expenses from property owner




I very much like this. I still self-manage my properties, and the reason I haven't made the switch is I find it to be very little work. Of course, my properties are all nicely upgraded with functional layouts in good neighbourhoods, which makes it easier to find great tenants, as the target market is larger.



I looked at a condo in a great area of Calgary recently, 2 bedrooms and approximately 800 square feet with underground parking. It need some renovation, but the price was great, I could have easily done the work and come in well below what you would expect to pay for a 2 bedroom with those characteristics. The catch was, one of the bedrooms was very small. The master was huge, but the 2nd bedroom would fit a twin bed and nothing else. Realistically, it was a small office. If I bought that and advertised it as a 2 bedroom, everyone who showed up would have been disappointed with the 2nd bedroom. I felt to make it a manageable property, it would need to be advertised as a 1 bedroom + den/office, which changed the rent you could ask substantially, and made purchasing it non-economic.



This was a significant management time savings, because trying to rent that as a 2 bedroom would be frustrating and difficult, and I think it makes sense to avoid things that are frustrating and difficult.



Great post Adam.



Regards,



Michael

 

[TodorYordanov]

[quote user=housingrental]Biggest mistake is taking on properties that cannot be well managed - whether because of terrible setup, location, or deferred maintenance that owner does not have will to fund repairs for.






Not considering the area and the type of renters that are attracted to it.



I think too often the tenant profile for the area is overlooked. And there is very little a good landlord can do about that. You simply can not attract a good tenant to a nice house in a bad area and keep them for long.

 

[JoeRagona]

Going back to the original post, I have a great relationship with all my tenants, through my property management right to me - I am very good at having the friendship / business relationship and both parties know where the line is.



Many may not agree with it, but when my tenant is doing landscaping, and is very co-operative on every level, it's how I like to do business. I have had terrible tenant experiences but it doesn't defer me from creating lasting relationships that keep my places rented.

 

[housingrental]

Michael - Thank you for the kind thought



Todor - You are correct

 

[Nir]

[quote user=TodorYordanov]You simply can not attract a good tenant to a nice house in a bad area and keep them for long.



Does it necessarily mean it's a bad investment? Is it not possible to buy a building in a B or even C area for a price that more than compensates for the shorter expected tenancy lengths? Can an experienced property manager manage a higher turnover well? Regards, Nir

 

[Thomas Beyer]

Tenants can be found for every area of town. It has to be appropriately priced. In some areas you get high turnover and more property damage. That is OK as long as the price of the asset is appropriate. You can lose your shirt in top locations and make a killing in poor locations.

 

[TodorYordanov]

[quote user=Nir][quote user=TodorYordanov]You simply can not attract a good tenant to a nice house in a bad area and keep them for long.



Does it necessarily mean it's a bad investment? Is it not possible to buy a building in a B or even C area for a price that more than compensates for the shorter expected tenancy lengths? Can an experienced property manager manage a higher turnover well? Regards, Nir




Absolutely not. It may be a good investment, but one that requires more phone calls, more evictions, bounced cheques, damage and repairs, turnover, drug use and arrests, tenants in and out of jail. And there is nothing wrong with that as long as you are aware that this is what will take to manage the property and you are up for the job.



It just occurred to me the other day: There is no money in real estate! The money is in the tenant's pocket.

 

[housingrental]

Interesting saying Todor

 

[RedlineBrett]

Just keep a copy of that purchase contract close by to remind yourself of the trade you made when your vacancies are high and your manager is passing their higher costs on to you.



The costs of being in a AAA location show up when your mortgage payment is deducted. The costs of being in a FFF neighborhood show up when you management company sends you no rent proceeds and instead asks for you to send them money.



Both can be good or bad investments - depends on whether or not the asset class is appropriately matched to the owner!

 

[Nir]

[quote user=RedlineBrett] The costs of being in a AAA location show up when your mortgage payment is deducted. The costs of being in a FFF neighborhood show up when you management company sends you no rent proceeds and instead asks for you to send them money.



Both can be good or bad investments - depends on whether or not the asset class is appropriately matched to the owner!



Yes, both can be good or bad. I would focus on the bottom line more than the cost: expected net income, expected value appreciation. This explains why different types of properties and locations (A, B or C areas) can still match the same investor.

 

[DenisEncontre]

Just to add to Tudor's post. Someone told me long time ago.



Buy as cheap as you can stand the tenant!