Why is Property Management SO Important?
This question about property management has many, many answers, but I’ll focus on the biggest ones today and give you a few tips on HOW to manage a property.
Firstly, when you think of your investment properties, think of them as just that: INVESTMENTS. These properties are not there to make you a quick buck (unless you’re trying to flip, but that’s a different story). One of my favorite quotes about real estate is “In real estate, to grow rich you must simply grow old.” Remembering this quote has taught me that I’m in this for the long-haul. The more I own, and the longer I hold it, the more money I’ll make.
The downside of this is that all houses deteriorate over time. Even if you have amazing, thoughtful tenants who take care of the property throughout the years, natural deterioration WILL occur: roofs will leak, the plumbing will break, appliances will die, floors will get scuffed, and walls will be dented. The less you do to correct these issues, or the longer to wait to do it, the more of a headache you will have later. Property management isn’t about fixing things “when you get around to it” (or never, as is usually the case when people use that phrase). Instead, it’s about keeping your finger on the pulse of the property. Check up on it now and then instead of not seeing it until a tenant moves out. Keep in touch with your tenants and make sure to ask about any issues they’re having or anything they’ve noticed.
Getting ahead of problems is 99% of the battle. If you notice a small leak from a shower right when it starts, you can get call a plumber to correct it before it causes serious damage. Waiting on an issue like that is NEVER good. Let’s say a different landlord has the same issue, but because the tenants don’t mind and it doesn’t seem to be causing TOO much damage, he decides to save a few bucks on the plumber and wait to fix it until the tenant moves out. Fast forward 6 months: the tenants have been showering every day, the leak has steadily been getting worse, and now the house is vacant. You have new tenants wanting to move in, but before they do, you notice a huge wet spot on the ceiling of the living room. Cutting open the ceiling reveals tons of rotted wood, mold, and a busted pipe that is constantly leaking. Now you have to pay a plumber, a carpenter, and find someone to remove the mold. Depending on the severity of the issue, this could cost you THOUSANDS as opposed to the small cost of a simple plumbing fix. In addition to that, you lose the potential rent from the tenants ready to move in. They may not even want to rent from you anymore after seeing the condition of the house and how you allowed the problem to persist.
These types of situations lower the value of your house and your ability to make money on the property. Nurturing these properties is the key to growing your bottom line profit. Yes, sometimes repairs can be costly and not seem worth the trouble, but in almost every situation fixing a problem is cheaper in the long run than letting it get out of control.
To recap: Why is property management so important? It’s simple: If you don’t do it, you’ll lose money. Not only that, severe issues can warrant legal action from tenants which you DO NOT want. A few simple ways to stay ahead of these issues include checking up with your tenants on problems, getting eyes on issues ASAP, and fixing things before they grow to a real problem. Owning rental property can become “passive” income, but you definitely don’t want to be passive when it comes to property management.