Heroic Investing
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Keep Your Property Manager Honest

property managerFor first responders who have seen the wisdom in creating wealth outside of their pension plan through income property investing, we’d like to say, “Congratulations!” You’ve taken the first step into a larger world. One of the first issues encountered by landlords is property management or, specifically, whether or not to make use of such a service. From the perspective of Heroic Investing founder and real estate millionaire, Jason Hartman, the 10% you pay a good property manager is more than worth the expense.

The key here is “good.” Experienced property managers professionally handle the day-to-day business of your rental property by collecting rent, filling vacancies, scheduling maintenance and repairs and, most importantly, depositing rents in your account. For 10% off the top, we think it’s a pretty good deal.

Unfortunately, we have to sometimes remind ourselves and other income property investors that you can’t turn a blind eye toward a property manager, no matter how much you trust him, and expect everything will be hunky dory. While the whole point of hiring property management is to allow the investor to free his day from the sometimes maddening details of servicing tenants, time which could be put to better use scouting the country for more excellent, positive cash flow deals.

One way to keep your property manager honest is to monitor maintenance, repair, and service invoices. A professionally generated bill should include a detailed description of what work was done, a signature by the workman completing the work, and a signature by the tenant occupying the unit where the work was done.

Jason recently came across a series of invoices from a property manager/maintenance company that were suspiciously vague and lacked all three of the key ingredients just mentioned. While such an oversight could be nothing more than a momentary lapse in attention to detail, it could be evidence of something more sinister like billing for phantom work. Our goal here is not to generate rampant landlord paranoia, frantically dialing the phone for the nearest private investigator. The lesson here is to simply pay attention. Don’t turn a blind eye to your property manager or he might begin to feel neglected, and nobody wants that.

Give him some landlord love (figuratively speaking) and, chances are, he’ll bend over backwards to do right by you.

The Heroic Investing Team

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Flickr / Troy Holden