Would you like another layer of stress heaped onto what you already have from your normal work and life?
Then buy a property in another country and attempt to manage it yourself.
You are guaranteed to go nuts.
If a Tenant Breaks a Window, Does Anybody Hear?
Last month a tenant broke a large window in one of our properties in Canada.
Well, I should say that the tenant “allegedly” broke the window, as the tenant denies having anything to do with it. They say that it slowly cracked as a result of “stress” from the building’s foundation.
However, I know that’s not the case.
And how do I know, seeing that I live about 10,000 km from the property in question?
Because my property manager told me.
In fact, I didn’t even know that the window had been broken until a couple of weeks later when I saw the bill for the service call uploaded to my property manager’s online portal.
I sent off a quick email asking for the details and they got right back to me with the story and pictures of the window clearly showing a hole where an object had passed through it.
Their assessment: it was not due to stress.
And since the tenant was not claiming that somebody else had thrown something through the window, there is only one conclusion that can be drawn: it is their responsibility.
So the property manager contacted the tenant and explained the situation and that they would have a couple of months to pay for the window to be replaced. They even got a quote from a window company and told the tenant that they could arrange for it to be done for only the cost that the window company would charge.
Sounds fair, doesn’t it?
Only one problem: the tenant refuses to pay.
Now this is a long term tenant who has been in the property since we bought it 8 years ago, so what do we do?
Well, it just so happens that our property manager can draw on their years of experience in the industry and knowledge of the landlord/tenant laws and current rental market to advise me on the best course of action.
It only took a quick Skype conversation to formulate a plan before I went back to my daily business, confident in the knowledge that my property manager was in control of the situation.
Can you imagine what it would have taken for me to deal with the situation on my own, living 11 time zones away?
How about this for starters:
- Take tenant’s call sometime in the middle of the night.
- Try to contact a handyman the next morning and arrange for him to go and have a look. (This step assumes that you have previously spent time developing a relationship with a contractor you can trust and that he is not too busy. Of course, trustworthy contractors are usually very busy!)
- Call tenant back and tell them that the handyman is coming.
- Contact handyman again after he has visited the site and get an assessment of the situation.
- Ask handyman to get a quote to repair the window.
Now here comes the really hard part:
Contact tenant again and explain that they must take responsibility for the $700 bill. Deal with all the emotional G-A-R-B-A-G-E related to their response to this issue.
I’ll stop here because this is where I would be banging my head against the wall wondering why I just didn’t pay that 10% of the rent to a property manager to deal with it! (Of course, you factor that cost in when you buy the property to ensure that the cash flow will cover it. If not, you don’t buy the property.)
Your Property Manager Is Worth Every Cent…And More
This is only one of the dozens of important tasks that my property management company takes care of for me while I get a good night’s sleep.
They also find me good tenants who pay on time and don’t wreck the house, do move-in and move-out inspections, draw up lease documentation, pay bills, ensure the proper taxation documents are completed, pay the taxes each month, receive rents, suggest the amount of rental increases, deal with minor repairs, etc., etc., etc.
In fact, I can’t imagine how anyone could effectively manage their property from overseas and stay sane. In my opinion, you simply must have a property manager if you don’t live near your property.
The challenge, however, is in finding a good one.
How to Find a Good Property Manager
Finding a good property manager that you can be confident in can be just as difficult as finding a good contractor. Here are some suggestions that I have adapted in part from a posting on the discussion forum at the Real Estate Investment Network:
- Referrals from friends or other investors
- Referrals from your real estate agent
- Search online for ” Property Managers in <insert your area>”
- Search online for apartments for rent in that town “apartments for rent in <insert your area>”. You can then get a list of people and property managers advertising in that area to determine if there are any potential candidates.
Once you find a couple of good candidates, you are going to want to interview a few of them:
- Do they have references available?
- How many properties do they manage?
- What services do they provide? How do they charge for their services? Do charges change as you own more properties?
- How long have they been in business?
- What are their strategies for finding tenants?
- When do you get your payment? Your statement? (what time of the month)
- Get a copy of their owner’s statements (the statement they send to the owners)
- Get a copy of their Property Management Agreement – you will want to review this document in detail.
- Do they have an online portal where you can access real-time information about your properties?
- How do they determine how and when to raise rents?
If they answer the above questions well, then as a final precaution ask for a few addresses of buildings they manage. Drive by some or all of these properties and check the condition of the buildings.
Managing the Manager
Now that you’ve found a good property manager, don’t get lulled into thinking that you can just leave everything to them and blissfully go on with your everyday life ignorant of the basics of being a landlord.
You are still going to have to “manage the manager” by periodically monitoring your account. After all, they are only human and may make mistakes with the accounting or misfile a bill that does not get paid, etc. I particularly get involved with marketing my property when I have a vacancy. I take the time to create a good advertisement and also keep in touch with my manager to monitor the tenant-finding process.
In order to be able to interact with your manager with an educated mind, you should have a decent working knowledge of the local landlord-tenant laws and should educate yourself on the basic principles of being a landlord by reading a few books or attending workshops on the subject.
It is only by having a good understanding of the challenges of being a landlord that you can understand how your properties should be managed and thus verify whether or not your manager is performing well.
Get the Manager BEFORE the Property
So, are you still up for the stress of managing your own property from afar?
If you are, I wish you all the best. But if you aren’t, make sure you develop a relationship with a property manager BEFORE you even put an offer on that property.
You don’t want to buy a place and then find out that there is nobody within miles who is trustworthy enough to manage it.
And if all this sounds like too much work?
Well, there is always the easy way to own property which I wrote about a while back: REITs.
How about you? Do you have any advice on finding and working with a property manager? Do you manage your own properties? Any nightmare tenant stories? Share your wisdom with our community by posting your comments below.