By Christopher M. Leporini, REALTOR® Magazine
Property management can provide a valuable sideline or post-retirement income source for real estate professionals. However, getting started isn’t easy. New owners must quickly learn how to screen tenants, maintain properties, and deal with taxes and insurance. Fortunately, Hungry Minds, publishers of the popular “For Dummies” is here to help. Written by property manager and real estate radio show host, Robert Griswold, CPM, Property Management For Dummies (Hungry Minds, Inc., 2001; $21.99) gives readers a ground-floor introduction to the skills and knowledge they will need to become successful property managers. The book will help real estate professionals bridge the gap between their own experience and the unique demands of managing investment properties.
The book is broken into ten chapters that offer a course in property management 101, including advice on how to handle tenants, maintain records, and advertise your property. “Part 1: So You Want to Be a Landlord” should prove informative for salespeople who are curious about property management but want more information before deciding whether it’s for them.
The section helps readers evaluate whether they have the skills and personality to make an effective property manager. Dealing with tenants sometimes requires exceptional patience, particularly in situations such as rent collection difficulties or disputes over maintenance. Additionally, you must also be prepared to keep meticulous financial records and become familiar with local laws regarding upkeep and repair.
The section also discusses the pros and cons of hiring a professional management company. This places a buffer between you and the tenant, as well as putting the bookkeeping in the hands of a skilled professional. However, it might not be cost effective for smaller properties.
The book addresses another essential skill for new landlords in “Chapter 8: Eenie, Meenie, Miney, Mo: Selecting Your Tenants.” As a real estate professional, you already know the importance of staying within fair housing guidelines. But Property Management For Dummies shows you how to formulate objective, written tenant selection criteria that establish minimum standards for accepting tenants and protect you from potential discrimination lawsuits. These guidelines lets tenants know what to expect and ensure that you evaluate applicants consistently and fairly. The book contains sample statements of rental policy, which outlines your screening process for tenants, to give you an idea of how to structure this document. Additionally, the book offers advice on checking rental history, reviewing credit history, and verifying employment and income.
New landlords also might find themselves unprepared to deal with a property’s physical upkeep. “Chapter 15: Maintenance” provides advice on fixing repairs promptly and otherwise keeping properties in tiptop shape. This includes placing an emphasis on preventive maintenance—fixing problems before they grow out of control—as well as developing a maintenance plan to promptly respond to tenants’ complaints. Slow response to maintenance requests is a leading reason for tenants to leave rental properties.
As in your real estate practice, you need to develop a system (whether its e-mail, cell phone, pager, or a combination of these devices) to make yourself as available as possible to your tenants. You may also need to hire a maintenance person to handle repair tasks, the book points out—particularly if your schedule prevents you from staying on top of these requests. Finally, it’s important to keep records of these requests to prove that you answer complaints in a timely manner, should a dispute arise with tenants later on. Once again, the book provides sample forms that show you the format for documents such as maintenance requests and notice of intent to enter residential units.
Managing a rental property also means tackling complex new financial responsibilities. “Chapter 17: Two Necessities of Property Management: Insurance and Taxes” breaks down how to insure yourself against loss and liability and explains your new tax responsibilities. The chapter explains the different insurance options that you can purchase for your rental property. Options range from basic insurance packages to replacement cost coverage, which pays the cost of replacing a property without subtracting for depreciation. The chapter also explores landlording’s tax burdens and benefits. For example, the income you receive from you rental property is taxable as ordinary income. However, you can deduct operating expenses, such as payroll, maintenance, management fees, property taxes, and insurance to lower your tax burden
Becoming a landlord is seem a logical progression from selling real estate, however, it means acquiring an some new skills. Property Management For Dummies makes it easy to get up to speed on what it takes to become a landlord, as well as evaluate whether it’s a good fit for you. If you are a wannabe landlord who doesn’t know where to start, you’d be a dummy not to check it out.
By Christopher M. Leporini, REALTOR® Magazine
What do buyers want? It’s a deceptively simple question that real estate professionals must regularly ask themselves, whether they represent sellers, buyers, or both. The answer isn’t always obvious, especially when you encounter an individual who seems incapable of making the simplest decision. Placing yourself in buyers’ shoes can help you identify and devise strategies for overcoming common stumbling blocks and generally provide better service. House Hunting: The Take-Along Workbook for Homebuyers (Chronicle Books, 2002; $19.95), by Dian Hymer, a syndicated real estate columnist and real estate broker, offers practical, hands-on advice about homebuying, based on her 25 years in the business. You can use the book to gain a better perspective on buyers’ concerns, or recommend it to buyers.
The spiral-bound volume simplifies the homebuying process, breaking it down into a series of manageable tasks. It includes charts, checklists, and logs to assist readers in organizing the myriad details involved in shopping for, financing, and buying a home. House Hunting is broken into seven sections: Getting Started, The Search, Negotiating Your Home Purchase, After Your Offer is Accepted, Closing the Sales, Selling Your Home, and an appendix. Helpful chapter title tabs allow readers to quickly flip to their desired section. Each chapter starts with a brief introduction, followed by charts and explanations presenting the information that buyers need to gather at each stage and the decisions they need to make.
You can emulate House Hunting’s back-to-basics approach to fine-tune your interactions with buyers. For instance, “Chapter 1: Getting Ready” can give you a better handle on buyer psychology. You’ve probably dealt with new buyers who don’t seem to know what they want. Take these overwhelmed buyers back to the planning stages. Homebuying can be stressful even for people who have bought a home before–it can be downright paralyzing for first-time buyers. The chapter recommends developing a wish list that turns buyers’ vague wants into a concrete priority list:
- Necessary Features. It might be a yard for children or pets or a well-lighted sunroom for growing flowers, but this category contains the deal breakers–the features that the home must possess.
- Desired Features. These are the features which would be nice, such as a certain style of architecture or a bedroom with a view, but aren’t essential.
- Unwanted Features. This category contains features that would automatically rule out a potential home; for example, busy professionals might not want to deal with a fixer-upper.
If listings are your specialty, you might find special interest in “Chapter 6, Selling Your Home.” The chapter provides an epilogue to the homebuying process—the day when your first-time homebuyers decides to sell their home. The chapter contains a list of the pros and cons of selling the current home first or purchasing the new home. This list addresses various strategies that will enable buyers to purchase a new home before selling their current one, such as placing a contingency clause in the purchase contract, using a swing loan to purchase a new home, and buying the replacement home using a line of credit (secured on the current home) for the downpayment. These explanations present a template for concisely presenting these options to your customers.
Since the book is firmly targeted toward the consumer, you may prefer to suggest it to buyers who want to organize their home search. In addition to providing overviews of complex topics such as mortgage options, the book includes checklists and worksheets to guide buyers through their home purchase. For instance, its “house hunting worksheets” presents a means for buyers to keep track of their impressions of houses, with fields for listing price, property condition, and commute time, among other elements. A later checklist ensures that buyers will remember every step that they need to complete during closing, from obtaining title insurance to signing the closing document. House Hunting is subtitled “the take-along workbook for homebuyers,” and it lives up to its billing—touches such as pouches to store documents and business cards add to this sturdily constructed book’s field-readiness.
You can use the book to get a perspective of the buyers’ view of the real estate transaction process, then keep it on hand as a resource to share with overwhelmed homebuyers. Ultimately, a better informed buyer can translate to money in your pocket. Customers who know what they want aren’t going to require as much handholding as those whose buying parameters remain fuzzy. At the same time, you can better appreciate how to address their concerns after you walk a mile in their shoes.