It always seems like a great idea initially: buy a starter home, live there for a few years, and then once you’re ready to move to a larger house, rent the first.
That’s what Holly Johnson and her husband did. They started with a 1,300 square foot home in Greenfield, Indiana. Shortly thereafter, they bought a small ranch nearby and rented it out. With a bit of rental income coming in, the couple was able to buy a larger house for themselves and now had two rental units under their belts.
Holly and her husband learned a lot about being property owners—and quickly. They underestimated the cost of property taxes, didn’t have a sufficient emergency fund for unexpected repairs, and found that letting their tenants “pay when they can” meant that they’d do just that.
They also realized that they needed to check in on their tenants from time to time, or at least more than they were initially.
When one tenant broke a month-to-month lease (in the dead of winter, no less), the property owners showed up to find the house in a state of disarray: all of the doors in the house were missing—every single one.
“The carpet, which had been new when they moved in, looked as if someone had poured a giant can of motor oil all over it,” Holly recalled. The front door frame was busted and carelessly glued back together. Even worse, a giant picture window had been smashed and replaced with a window that neither fit nor matched the other windows in the front of the house.
“I couldn’t believe what I was seeing,” Holly said. “The house had been in great shape the last time we visited, which was only eight months before.”
Because the property owners weren’t around, they were completely unaware that the mother of the family they rented to had actually moved out, leaving her husband and two teenage sons behind. Because the father worked around the clock, the two boys trashed the house in no time.
Lesson learned: “A lot of damage can happen in a short period of time if you allow it to, and the only way to prevent it is to visit your properties frequently,” said Holly.
Not all property owners have the luxury of visiting their properties on a regular basis—especially those who own many properties or live out of the area. In fact, nearly one-third of property owners surveyed by Buildium stated that they felt ill-equipped to perform the tasks related to owning and managing rental properties!
This is where a good property manager is worth his or her weight in gold.
Earlier this year, Buildium surveyed nearly 500 property managers and 500+ property owners. The data were used in the culminating “State of the Property Management Industry 2015,” released in October. The property owners included a range of geographies, ages, company size, revenue and units under management—but despite this diverse cross-section of owners, most seemed to agree: property managers help save owners time, money and sanity.
Here’s a glimpse into how:
- Time: 87% of property managers fill vacant units in less than four weeks vs. only 58% of property owners who can do the same in that same time frame.
- Money: 80% of property managers spend less than $1,000 when filling vacancies; only 60% of property owners could say the same.
- Stress: 57% of property owners find the tasks related to owning and managing rental properties unpleasant and stressful.
It’s true—checking in on tenants and rental properties can be an unpleasant and stressful experience. But what’s more stressful? Having tenants take off mid-lease, in the dead of winter, and leaving behind smashed windows and missing doors. Checking in once every eight months just won’t cut it.
Fortunately, Holly and her husband were able to come out on the other side relatively unscathed. They had about $6,000 of damages they needed to repair, but in the grand scheme of things they were thankful it wasn’t worse. But when you figure that more than 75% of property management companies are able to maintain a rental unit for less than $1,000 per year, it’s easy to see that the inexperienced couple would have been better served to outsource the property’s oversight to a professional—keeping their time, money, and sanity intact in the process!
Read more on Uncategorized