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.