Expert Advice with Sam Saggers 9/11/2016
It has been my experience that events seldom happen in isolation. If you know what to look for, it’s possible to determine the outcome - or at least come as close as humanly possible - in any given situation on a fairly regular basis.
Consider, for example, the property manager you’ve hired to manage your investment properties. Will they manage your properties well - keeping your investments profitable - or will they fail you when you least expect it?
The following 7 “signs” or behaviours are clear indicators of a potential problem on the horizon. The time to deal with these issues is at the time you notice them; the longer they continue unabated, the worse the outcome for your investment property portfolio.
1. Manager is “incommunicado”.
Playing “phone tag” is one thing; lack of communication, quite another. This is a big red flag - if you cannot reach the property manager, you need to find out what is going on with your investment property(ies) - and soon!
2. Your tenant(s) come(s) to you with complaints.
Another sign your property manager is not doing their job: you’re receiving complaints from your tenants. Why are you paying your property manager....?
3. Lack of follow-through.
A major sign of unprofessionalism - and in some cases, sheer laziness. Some examples - repairs are not done on time and/or in an orderly fashion, tenant complaints are not addressed and there is a serious lack of inspections to name just a few.
4. Poor (or no) maintenance.
Take some time - especially if your property is in another state - and drive by your investment property(ies) unannounced. Aside from possible tenant clutter, if your properties look ill cared for e.g. broken shutters, missing tiles, overgrown yard, etc., take action to resolve the issue - pronto!
5. Consistently late reports.
Your monthly report is late? Again? No matter the reason - they’re overwhelmed, unorganised or perhaps even lazy - your property manager is failing to perform as promised.
6. Compliance issues.
Part of your property manager’s job entails inspecting your property(ies) for compliance issues to ensure that when a regulatory agency comes by to inspect, they’ll find little, if anything wrong. Consistent write-ups are a sure sign your property manager is clueless!
7. Inconsistent cashflow
If your property manager is screening tenants, showing your vacant properties continuously and marketing your properties well, your cashflow should remain fairly steady with perhaps a few “hiccups” now and again. However, if your cashflow is consistently dropping every month - you need to consider finding a new property manager.
So you’ve experienced one or more of these problems with your property manager - what now?
I know that life is so busy, and who has time to search out another property manager, yada yada...but you’ve got to stop everything and find a new property manager!
Take a good, close look at the agreement with your manager. The guidelines should clearly state how to cancel your contract. Be certain you obtain all records of every tenant they were managing for you.
If you plan to manage your investment properties yourself, notify your tenants as soon as possible about the change, apprising them of where and when to send their rents. (It’s strongly suggested that you appear as a property manager, rather than the owner)
If you’re hiring a new property manager, be certain that they follow your instructions to the letter.
Don’t assume your old property manager did their job - do a thorough review of all your tenant records, checking for collected rents, inspections, repairs, etc.
As soon as possible, set up an onsite inspection - giving your tenants a face with the new name, as well as the expectation that you (or your new property manager) will be more accessible.
Implement any necessary action to collect past due rents including, if necessary, initiation of eviction proceedings.
Note: Fully expect a “he said/she said” situation to arise with regards to verbal agreements between your tenant(s) and the newly replaced property manager. Unless it’s in writing, it never happened.
Should you choose to pursue legal action against the former property manager for fraud, a good way to bolster your claims is to wait until your property is operating at its highest capacity before initiating proceedings.
Bottom line - your priority should always be to improve your cash flow. This is why it’s vital to address these poor management issues as soon as you become aware of them. The longer you wait, the more damage can be done and the longer it will take to bring your portfolio back up to par.
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