By Richard Payne
You are sick and tired of dealing with tenants, cashing rent cheques, paying bills, dealing with contractors, doing bookkeeping. You just want to sell the place and quit! So…now that I have your attention, let’s see what really make sense when it comes to your property management needs and when it is time to bring a property manager on board.
I know that you are reading this and not really ready to quit. After all, you are a REIN member and we don’t give in that easy. Everybody say NO! We set goals to purchase so many properties and do all we can to achieve those goals. But there is a time when we have to take a look at everything going on in our lives, in our investments, and make a decision that is the right one. In other words, a decision that, at the right time, will make things a lot easier.
Now, as we are REIN members and sophisticated at buying and analysing properties, we always make sure that we allow in the income analyser a fee or percentage for property management regardless of what we are going to do once we own the property. Everyone say YES! Good. Doing so makes it a lot easier decision to make once the time is right. So when is the right time to make that change and take a little step back from the day to day grind? For each of us it is different but I would like to offer up some questions to ask yourself that will help identify when it is the right time to hire property managers based on the experience I have had with my portfolio. I have owned income properties since I moved to Canada in 2007 and have had them in 3 different provinces during that time.
One of the first questions to ask yourself in deciding about a property manager is “Can I get to the property within less than 60-90 minutes?” When owning out of province properties, the answer is clearly “No” so, from the start, you are likely hiring a property manager. It’s an easy decision, a no brainer - you factor it in and you have to find a property manager. So for me it was a simple decision when looking at my out of province properties, but still you have to spend the time and effort in finding that right person regardless. Personally, I sought referrals within the REIN network, called the people and went through questions and then met them personally to make sure I was comfortable with their ability. Now, did I ever hire the wrong person? I sure did when I didn’t follow my own process for hiring and got lazy, and boy did it bite me but that’s another article for another time.
Another question and probably the most telling one is “Are you doing a good job…really? Do you have the time to do it?” Be honest with yourself in asking that question. Would you hire yourself as a property manager for one of your biggest financial investments? Well….would you? If you are getting to that stage where you are not following the system that REIN show us in treating the tenants like clients and being pro-active in managing that relationship maybe it’s time to hire a professional who has a passion for always being like that.
This question is the key one for me and the reason why I decided to hire a property manager from the start on my last purchase. For me this was of those “A-Ha!” moments that you have when you think “Hang on a minute….” and it took my wife Jane to make me realise that I didn’t have the time to manage my properties correctly. I am a REALTOR® and for those of you who know us well you know that means we don’t have a lot of time to spare usually. It got to the stage where I was not managing the duplex properly and creating excuses why not. But really it all came down to having a family life and in the REALTOR® business that meant there is no time to start spreading myself thin and half-heartedly managing my duplex. Thank goodness for Jane and her direct way of making me see the light. If you have a family life and a business life that both need your attention, and I would say that they do, you need to hire a property manager from the start. My lack of attention cost me dearly with this duplex with a “midnight-mover” tenant, clean up and removal and “rent-ready” renovation costs that if I was paying attention I would never have had to pay. Sometimes it takes an outside person looking in to make you realise what is happening.
The final question in making the decision is “How many properties do you own?” And, to take that question a step earlier, “How many properties/units do you want to own?” Even with the best ability and intentions in the world, if you have a family and a full time job and own more than six properties, then to take on property management is heading for disaster. You need to make the decision to hire a professional.
I do think that managing your own properties is a great place to start when it comes to getting to grips with owning rental properties. I suggest it to all my clients. But there is a limit to how long you can do it and do it to the level needed to have a fantastic return on your investment. Realise this, act on it when you know the time is right, and you will still have a solid cash flowing portfolio as well as your own life on your own terms.
Richard Payne is a REALTOR®, Investor and founder of Real Estate Investors Halifax group. He is the trusted authority in Halifax for investors and can be reached at firstname.lastname@example.org.