I was just now reminded of this by an email that I received.
If you want to own rental properties, I highly recommend that you use a competent Property Manager (PM). But even so, you will have to manage your manager. Check every statement. Stay on top of them about people who do not pay (so that they will stay on top of the people who do not pay).
Like I said, check every statement. My most recent statement contained an error for an expense that was charged to me. It was actually an expense that should have been charged to a different property owner. Honest mistake, but these things do happen and you do need to check for them. It's not truly "passive" investing.
Indeed. One other tip to go along with that is to do a background check on your PM. Hard to believe, but in NC a convicted felon can get a brokers license. On top of that, the felony was for white collar crimes for cheating people out of money. When the pattern continued (this person, many years after the felony conviction, was once again stealing money from customers), the NC REC took away this person's license. Unfortunately, not permanently.
It may be an "Honest mistake", but how do the reconcile their ledgers? Makes me wonder what systems they have in place to detect such errors.
Some great questions to ask potential property managers here:
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