For real estate investors who wish to own property in areas outside of their own town, a key component of their business is a property manager they can rely on. They need someone to handle collecting rents, fill vacancies, make repairs, and be there to do the things an out of town owner can’t.
The property manager needs to be competent, reliable, and responsive; if he isn’t he needs to be replaced. Seems easy enough, but what if it’s a small town with only one property manager? That’s where things can get dicey and that’s exactly what happened to me.
Small Town Rentals
For several years I have owned a number of rental properties in the northeastern Nevada mining town of Ely (article). It’s a great area for investment properties in that there is a shortage of suitable housing and rents are fairly high in relation to purchase price. The workforce is stable and vacancies are easy to fill because of a strong demand for rentals. Ely is located about 250 miles from where I live so I’ve used the services of a property manager – the only one in town.
While not the greatest property manager I’ve ever worked with, rents were collected, vacancies were filled, and money was sent to me in a timely manner. Things were fine until the property manager died unexpectedly. This was a big problem because Nevada law requires property managers to be a licensed real estate agent with a property management certification. Not to worry though, a former real estate agent with a property management background was going to open his own office and take over the deceased manager’s accounts.
The new property manager set up shop and went to work. Problems arose almost immediately. He was not very responsive and slow to return phone calls if he returned them at all. Investors complained that he was very slow paying them, didn’t fill vacancies quickly despite the number of people looking for rentals, and did a poor job in general.
Initially some of this could have been attributed to growing pains, difficulty in getting a business off the ground, and a lack of support staff. He would assure people that things would soon be turning around as he got up to speed and became more efficient. This went on for some time. Then it got worse.
Stories started to emerge about landlords being overcharged for repairs or being billed for repairs that never happened. One out-of-town property owner was told her house was vacant when it was indeed occupied. While this individual turned out to be a poor property manager, he was very quick on his feet and seemed to have an excuse for everyone.
Whenever I shared the story with real estate investors in Las Vegas where I live, their solution was seemingly simple – get a new property manager. If that were possible I would have done so at the first sign of trouble. Unfortunately when you are dealing with the lone property manager in a small town it is necessary to try and make it work.
That didn’t happen in this case. Next week – Part II of this story.
There’s one way to find out if a man is honest – ask him. If he says, “Yes,” you know he is a crook. – Groucho Marx
Photo Credit: turkeychik