When you’re managing your property manager — which you absolutely will need to do — setting and managing expectations on both sides is just the first step. The second step (but far from the last) is setting up a steady and useful flow of information between you and your PM. This involves knowing what metrics you need to be tracking and how you like to receive the information.
Download Your FREE Rental Application Form!
It may seem like a small thing, but having a solid rental application is the first step in finding great tenants. Since BiggerPockets is all about helping you succeed in real estate investing, we’ve put together a complimentary Rental Application for you to use. Download it today and go find some great tenants!
Every month, like clockwork, your property manager should be generating — and if you’re interested in maximizing the value of your investment, you should be requesting that he send you — at least these minimum reports:
Rent Roll (Receivables)
A report showing the rents collected and owed for each property or unit. How else will you know if your PMs are collecting rents timely or evicting non-paying tenants?
Profit & Loss Statement
A summary of the revenues, costs and expenses incurred that month. This is how you know where your money went if it didn’t end up in your pocket. It should also support how much your PM has sent you for the month.
A report that marks all of the debts that are owed on your property, but have yet to be paid. This is important because it indicates what is due and when.
Additional “Special” Tracking
When your investment property requires special work — from a repair to a capital improvement — you should expect additional information, no matter how independent you expect your PM to be in handling the situation. You absolutely need to see, every month:
Timetables and Schedules
The anticipated dates of completion of each step of the process, so you know when to expect to see a profit again, and why that date may have changed since last time.
The anticipated costs of the project, and what your funds have been spent on.
Following Up on the Reports
Of course, it’s not enough just to receive these reports — you must also read, understand and follow up on them. In particular, you should be looking carefully at every instance of unpaid rent, every unexpected expense paid out and every adjustment against your favor within the timetables and cash flow projections. You should be looking at them, and you should be asking about them.
A decent property manager will be able to tell you precisely why each tenant hasn’t paid, what their excuse is, why the PM considered it acceptable and when they intend to pay how much. They’ll also be able to explain why each expense and each adjustment of the timetables and cash flow projections occurred.
It’s important to know that some degree of events going imperfectly is not only normal, it’s unavoidable — but it’s also important to know that a property manager who isn’t on top of these everyday issues is quite likely to be missing details on other important issues as well.
Furthermore, following up on the reports lets you hear the kinds of stories that your PM is willing to accept from tenants, contractors and suppliers — and you shouldn’t hesitate to tell them if you consider those stories less acceptable than they do. That’s the only way to be certain that your PM is operating from the same basic set of assumptions that you are, which is almost certainly going to reflect on how you want your investment to be run.
What reports do you require from your property managers every month?
Leave a comment, and let’s talk!