I’m New To Real Estate Investment: Should I Hire A Property Manager?

WHAT DOES A PROPERTY MANAGEMENT COMPANY OFFER? #5: LEGAL COMFORT

SERIES OVERVIEW:

As the world around us gets more and more expensive, it’s common for smart investors to look to see where they can save a couple bucks. Professional Property management might be skimming anywhere from 14 to 6% off your monthly bottom line…so is it worth the expense? Is this somewhere you can save to build a cushion against the increasing financial risk that comes with rising insurance prices, taxes, maintenance costs, and changing conditions for tenants?

LEARN MORE: CHANGE THE WAY YOU LOOK AT MAINTENANCE AS A LANDLORD

WHY PROFESSIONAL PROPERTY MANAGEMENT IS INVALUABLE

While going it alone might save you a couple bucks on the front end, it also leaves you highly exposed should something go sideways, which is all the more likely due to the variables noted above. Partnering with a reputable property management company is akin to purchasing insurance. You’re enlisting a tool that will help you avoid a crippling loss, which is the number one best way to invest successfully. All too often we see newer property owners stressing over how much income they’re taking home each month and we remind them that they’ve taken their eye off the ball. Owning investment property is not about this month…there’s a reason mortgages are often 30 years long. Investing is about long-term wealth building, not monthly cash flow

REASON #5: ODD ISSUES WHERE LAWYERS GET INVOLVED

As tenants feel the stresses of modern life, they’re more likely to end up in desperate situations. Here are two examples that have come up across our offices in just the last two weeks:

UNHAPPY TENANT WANTS TO BREAK LEASE EARLY:

A new tenant signed a lease and within 14 days communicated to us that she wanted out. She wasn’t happy with the unit and complained of issues that included the parking area being too dark, the apartment shaking (as it’s over a garage) whenever anyone in the driveway or neighborhood accessed their doors, and a supposed rodent infestation. We’d suspected early on that there might be an issue as she refused to change the electricity into her own name and failed to communicate to routine correspondence. So, rather than working with us to remedy any issues she contacted a family friend, who is a lawyer in New York, and we received a formal letter with multiple attorney partners CCed insisting the lease be revoked based on the property being “uninhabitable”. They referenced the complaints the tenant had and accused the owners of leasing the property illegally because there was no record of them registering their heating system with the Board of Safety. They were using the full bullying power that lawyers can exercise in these types of situations. If you are new to owning rental property, what would you do?

DOMESTIC ISSUE BETWEEN TENANTS ON A JOINT LEASE:

Just a day earlier we received a scathing letter from a personal injury lawyer in response to our efforts to collect rent from a tenant who was 22 days in arrears. We were made aware by the owner that police had been to the house but had no notification or additional information beyond suspicion that it was around a domestic dispute between the two occupants, both of whom were named on the lease. We only had contact info (phone, email) for one of the tenants so we sent an informal letter trying to connect. Instead of connection, we received the written wrath of the tenant’s legal counsel who ultimately threatened to take us to court…nonetheless, we need the rent to be paid. What next?

LEARN MORE: HOW MUCH INVOLVEMENT SHOULD YOU HAVE WITH YOUR RENTAL PROPERTY?

SIMPLE SOLUTIONS WITH A PROPERTY MANAGER IN YOUR CORNER

In both cases, our team consulted with our partnering attorneys and crafted appropriate responses without issue. As an individual property owner, it doesn’t make sense for you to have a real estate attorney that you can connect with regularly, or at least when an irregularity like this arises. But for a property manager with over 1000 properties under management across New England, it’s essential. The ability to disarm the bullying tactics of attorneys with confidence is an additional reason why hiring a property manager, for just 8% a month, is well worth the investment.

We were able to see through and push back on the exaggerated claims and accusations of both attorneys and defend our clients in a way that is most likely to lead to the most appropriate outcomes, namely them receiving the rent payments owed to them. In both instances, we’re dealing with highly emotional tenants and that is becoming more and more typical as the stresses of life increase for people up and down the financial ladder. These examples are all short of eviction, but the same familiarity and comfort applies if you need to go down that road. Having an experienced professional in your corner is invaluable when things get weird…which they inevitably do at some point.

LEARN MORE: YOU ARE NOT GIVE UP CONTROL WHEN YOU HIRE A PROPERTY MANAGER, YOU’RE GAINING A TEAMMATE

CONCLUSION AND NEXT STEPS:

Nexus Property Management® has been partnering with rental property owners for over 12 years and now has franchise offices in four states. We are committed to the principles that helped our Rhode Island office grow rapidly and the most essential is the focus on long term results. Our clients come to us with varying degrees of experience and the vast majority become effective investors in no time. Reach out to the Nexus team closest to you.

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Mick Lefort is the General Manager of Nexus' New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management®, a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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