Be forewarned, this post isn't a get rich quick idea, or a magical formula to turn straw into gold. Not much comes without some hard work to even the best of us these days, not since at least 2005 that is, when phantom property values topped out.
What I am suggessting is that investment realestate owners who are looking at their bottom line closely these days absolutely have a choice to save $100, $200 or more per month right away! To get to the point, I'm talking about property management. Take the following very short quiz:
- Do you live within 30 minutes of your investment properties? Yes/No
- Can you balance your own checkbook? Yes/No
- Do you have a computer with a printer, or typewriter? Yes/No
Did you answer Yes to #1? If so you are an excellent cantidate. Items 2 and 3 are optional because there are other tools to get around those, but I trust anybody reading this article has 2 and 3 covered anyways.
Investors are often giving up to 15% of their PROFIT on their properties away. I'm certainly no exception, I used property management for years. Right before I chose to discontinue their services, I discovered what they really do. They place tenants, collect rent, post notices, and take care of repairs. Most property management companies charge very expensive placement fees for placing tenants, and I know many successful landlords who know how to place a classified or craigslist ad and often fill their units quicker than property management ever did. Collecting rent is easy, posting notices is just as easy, and repairs can be handled extremely cheap with all the out of work professionals in the country.
There's some that mistakenly believe property management companies take on some or all of the liability of a property owner. This may well have been true in the past, but not so much anymore. Every property management contract I've seen in the last 3 years has defense clauses in it that state not only are they not assuming any liability, but if they get sued by your tenant, you must pay for their lawyer as well. Check your contract.
I missed on important item above. You know that monthly statement you get in the mail from your property management company. I used to love those things! At the end of the year I could just hand the December statement to my CPA and thats all he needed for my Schedule-E on my federal taxes.
OK, here's the plug, not just for our software, but almost any property management software. If you answered yes to #1 up there, then a good property management software like Rentec Direct can help you with all the rest of the items.
Placing Tenants - Rentec Direct, and other services can give you instant tenant screening results and also help you place property ads online for greater visibility.
Collecting Rent - Your tenants can drop off a payment to you or mail it to your address just as easily as they can send it to a property management company. Your property management software will help you keep track of these payments and who's do when. It will also keep track of late fees.
Post Notices - Notices can often be posted on the door of the tenant and/or mailed to their address. There are plenty of free resources online for notice templates. Sending them is just the cost of a stamp. Keep track of the times/dates in your property management software.
Repairs - Open up craigslist and post an ad for a handyman, or a specialized professional for your repair needs. With this economy, or even when times are good, there is always somebody responding to these ads. They go in the gigs section of craigslist. You'll probably find someone you like and continue using them for years.
Monthly Report / Taxes - A good property management software like Rentec Direct will provide these reports to you monthly, or whenever you need. Additionally, there's a specialized form designed to track tax deductable expenses automatically that you can print out at the end of the year and just hand to your CPA.
So while some investors have a legitimate need to hire property management, or just like giving money away, others have a choice to manage their own properties. With a good software application to help out, I've found it's hardly any more work than managing a property management company. In most cases because you become materially involved in the property management yourself you get significant additional tax breaks as well. Some of us only have 10-15% profit in an investment property, lets keep it!
p.s. Before taking my advice, check your property management contract for terms and exit costs.
