If You Own Multiple Rentals, Hire a Good Property Manager
Investors with multiple rental properties often start with a single property. Back in the late 80s, Nancy had a friend who owned rental property and told her of a good property for sale. Like many investors who begin a path to owning multiple rental homes, Nancy bought the home and lived in it before turning it into a rental. When she had enough capital to invest, she purchased another home and eventually owned three rental properties in Boulder City, Nevada.
“I started out being a landlady and had friends and resources to help me out,” Nancy said. “I had great handymen that wanted work and were good with fixing properties.”
Her friends in Boulder City moved to Cedar City, Utah and Nancy decided she wanted to live near them. After investigating the town, she immediately did exchanges for houses in Cedar City.
One of the people who moved to Cedar City was Nancy’s property manager in Nevada. He managed her homes in Cedar City for a while but then wanted to retire.
“I hired a property manager in Utah, and they did fine but I was somewhat irritated with the type of bookkeeping they did. I saw the books for the end of the year planning and it was confusing. A friend reviewed my financials and recommended I check out Real Property Management Cedar City, and I’ve been with them eight years now.”
“Matt and Alaina take care of me very well. My accounting records and financials are great, and Matt did an excellent job helping with the accounting and clearing up all my tax information for my accountant. Alaina screens the tenants and keeps the properties rented, and gets them fixed up fast between renters so properties don’t sit vacant. They even helped me with emergency flooding at my personal home as well. I’m pleased with their maintenance and repairmen.”
Nancy slowly kept adding rentals and has owned eleven rental properties over the years. She plans to keep them for the next ten years, as they are performing well financially and are in decent shape.
Matt Phillips, the owner of Real Property Management Cedar City, has been involved in real estate and tenant-related matters for over 25 years. (Read Matt’s investor tips below.)
Matt says, “My goal is to help clients bring in as much revenue as possible for their investment property. I treat my clients’ properties like they were my own rentals.”
Even though Nancy trusts Real Property Management is taking care of her properties because her rentals are a sizable portion of her investment portfolio, she worries a little since many are rented to college students who she says may not have as much interest in the property as others would. To ease her concerns, she occasionally drives by to make sure the properties are well-cared for, stays in touch with the property management team, and understands that a renter here and there may not work out.
To those considering investing in rental property, Nancy’s advice is to “invest only if it appeals to you. There will always be issues that come up, and it’s a matter of whether you want to be thinking of rentals or not be bothered. A property manager helps you to not be bothered, but you can still drive by and keep an eye on them if you want.”
“If you have a few rentals, hire a property manager, especially if you’re not handy. They will ease the burden of finding tenants, collecting rent, fixing homes, and taking care of the books.”
Tips and Advice for Investors
Matt Phillips, the owner of Real Property Management Cedar City, manages nine rental properties for Nancy and has been involved in real estate and working with tenants for over 25 years. Matt offers the following tips and advice for investors who are considering investing in rental property to diversify their portfolio.
Focus on the long-term benefits of owning rental property.
“I tell both non-seasoned and seasoned investors that even if you have a negative cash flow for a few months here and there you’re not losing money. I remind them their property value is increasing, and even with a negative cash flow every month for a year, they could still have generated a positive ROI and possibly gained $20,000 in property appreciation. So regardless of cash flow, the growth of the investment itself can be significantly better than many investment options such as savings accounts or the stock market.”
Invest in homes for families.
“If you’re investing in rental properties, single-family homes are still a great investment. More and more families need a home and are renting. Families tend to stay longer. Look for a home with 3-5 bedrooms as they tend to attract tenants who will stay longer and take care of your property. There is more competition in the real estate market with large investment groups buying or building multi-unit complexes, making it difficult to compete with them. But the single-family residence market remains a great option.
Look for homes that are 12-20 years old.
“For a rental property, you will get more for your money if you invest in higher-priced homes that are 12-20 years old. You may have to spend some money on a hot water heater, flooring, and paint, but you still get more for your money than you would buying homes that are 3-10 years old. If you’re looking for a project home, then older homes (20-70 years old) are fine, but expect to make significant repairs and replace electrical, plumbing, etc.”
Work with a professional property manager.
“Professional property management companies such as my Real Property Management Cedar City office appreciate working with clients who own several properties. These clients tend to treat their investment properties as a business and allow us to take away any emotional ties to the properties or the residents who live there. For example, a property investor may want to put in top-of-the-line carpet because of their personal preferences and emotional connection to the home and to the renters, but we will guide them to install less expensive carpet which can save them significant money, still appeal to the residents, and will last just as long as the expensive carpet.”
“We also look out for our clients’ bottom line. Many investors do not account for all of their expenses or realize the impact on their bottom line. We want to make sure investors understand the accounting aspects of owning multiple rental properties, and provide monthly easy-to-understand statements with income and expense details for each property. In addition, for clients who have us manage several properties, we can often purchase maintenance items needed for all of their properties at preferred, discounted pricing which impacts their bottom line.”