Small Owners: Six Rules for Survival
Small owners must become aware of the special hazards they face and find ways to overcome those obstacles.
As an owner of small properties and a fee manager for other small property owners, I have become aware of the special hazards that can devour a small owner. When property management is not your full-time occupation, it can be very difficult to keep up with all the details that can affect your property.
I am going to share six simple but powerful rules. Six areas, that given a little extra attention, can make a cost-effective difference in your operation. Without that attention they can cost you everything.
They left home at 7:30 that evening; at 7:48 a fire broke out in a vacant unit in a 20-unit property in Fort Worth. The on-site manager called the fire department. She then called the owner, only to talk to his answering machine. The damage was not great, but required cutting off the electricity to the entire community. By the time the owner got the news and arrived, about 1:30 the next afternoon, a fire marshal and a city inspector were walking every unit. And that is when the trouble began.
All of this could have been avoided if he had used an answering service at a cost of about $50 a month, plus a pager for about another $15. I don't know anyone who likes to carry a beeper, but stuff happens. The equipment definitely would have paid for itself that night.
Make Repairs Promptly
I opened the door to find 1,267 square feet of water an inch deep. The small leak in one shower was a major leak next door. I cost myself six weeks of rent and more in repairs than I like to think about, to save a 10 minute trip across town.
Listen to Your Residents
As we looked at units, several residents told me about many friends one of my new residents had and that people came to visit at all hours of the day and night, and parking was a hassle. They asked me to check into the problem, and I told them I would and went on with the painter.
When I got to the next unit, the painter asked what I was going to do about my drug dealer? "My what!" He told me, "Those folks are talking, but you ain't hearing."
No one wanted to come out and report the dealer, but they wanted me to know about what was going on in the community.
Be Aware of Local Politicians
Cities and states are passing ordinances and laws that directly impact rental housing. They are not going to hold your hand and show you what they are going to do. Unless you are aware, you will not have a say in what happens. Don't find out after the fact.
Understand Your Insurance
Are you aware that most policies on rental property require you have on file the general liability and workers' compensation certificates of all persons who work or perform services at your property?
The painter, the plumber, the kid who mows the yard, everyone. If the lawn mover hits a rock and throws it into the face of a small child and that lawn mowing person has no insurance tag, you're it.
It could get worse. Your carrier could default because you did not meet the terms of the policy. Ask your agent lots of "what if" questions.
Many owners tell me that using only insured vendors runs up the price, and they just can't justify the cost. I tell them, "It's just like going to Las Vegas; you don't bet more than you can afford to lose. You can win a little at a time, but if you lose big just once, it's all over."
Six simple little rules: six ways to cover your assets. Be accessible, let someone know how to get in touch with you, or have someone take your calls so you can get some time off. Repair things promptly, before little gets to be big. Preventive maintenance doesn't cost money, it saves money and time. Listen to your residents. You may learn more from what they don't say than what they do. Be aware of local and state laws. What you don't know can hurt you. Understand your insurance. Keep asking questions until you do.
A fellow small owner had just shared these rules with me, but they did not seem to be important to me until I went to a committee meeting at a large management company. As they showed me files around the offices, I noted that this very large company had a person responsible for each of these areas.
Why should I have to make my own mistakes to learn? I can learn from someone else's mistakes and save myself a lot of time and trouble.
Your local apartment association has a small owners group, take advantage of the opportunity to learn from others, and they can learn from you.
Email Larry at email@example.com
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