When we look at building a large portfolio of rental properties in real estate investing in Calgary or any market outside our “backyard’ you need to hire a property manager. Or do you? This was what we thought when we started in multi-family buildings.
The asset was out of town and not a logistical drive time to our home base – so we hired the largest management company in the town. Things were good for a time until the real estate train started to fall off the rails BIG TIME! Turn over, repairs, lease-up fees started to steadily rise over just about a 1 year period.
There was a staff change over at the company, which normally should not have the impact that it did if they have good systems in place. What I learned was that the company did not own any multi-family buildings and had the following bad habits:
1. Used their own repair company that caused a bunch of issues with repeat repairs
2. Every little maintenance item was being fixed with expensive trades for items that were often tenant caused or part of normal tenant maintenance.
3. Tenant screening was not done very effectively
4. Overtime being charged for non-emergency issues
Some of the things that you need to consider when looking for a property manager are items such as:
1. checking references and referrals from other building owners
2. Deciding when you actually need a property manager
3. what is their reporting process for repairs and items that come up within the building
4. What is the tenant screening process they use
5. How often do they inspect the units?
A management company that does not OWN real estate will never treat the building with the respect it deserves, because they only think like a fee-collection machine rather than how to keep the building running smooth – for the most part, not all management companies are bad. I have just never found one that is highly effective that does not own real estate themselves.
With this asset, the solution was to hire a resident manager and shift the asset management role in the house, which is critical for the success of a multi-family asset.
Property managers left to their own devices can wreak havoc on your portfolio – you have to manage the managers even the best ones out there – because things can change such as a key staff member leaving and causing issues until they have a great replacement.
Have a hard look at whether or not you NEED a property manager, with all the modern advances in technology having a resident manager + an asset management plan could be a better way to manage your remote assets.
To you success
Tim Reid
-Respect The Hustle
