Posted by Rich-CA on February 22, 2009 at 13:04:24:
Once I decide to hire someone, I don’t nitpick them, but I do supervise them. I spent a lot of years as team lead, project manager and so on where I had to hire people and make sure the job got done when my bosses wanted it done through their efforts. Anyone who has been in that position cannot avoid noticing that there are as many quirks and foibles as there are people, so the management style is adjusted in each case to try and bring out their best, support their weaknesses and so on. The key to this is information, and that is one area where keeping on top of things comes in. My contractor here in Richmond is also “old school”. I communicate with him at his home number at night, it sometimes takes a day or two to get back to me. But the work is impeccable, the suggestions always improve the result, and we can agree on work (and price) that I will be happy with in the end based solely on a verbal. Same with my painter, who repainted my garage door on a phone call (I left him voicemail, he left me voicemail with the price, I left him another with a go ahead, he left the bill on my front door and I left the check in the same place.
Thing is I have known these people for years, so I don’t have to rely on first impressions being accurate or having everything in writing. I did at the beginning.
With PMs the issue is different. They have different pressures and spending less time per property in order to take on more is one of those areas where there is constant pressure. If they also make sales, then when sales are good, the PM side suffers. But the trends showing which type you have (the gem or the start up) only show themselves over time and for that you need records and enough of a history.
One last example. I have 3 PMs, one in AZ, one in CO and one in TX. The one in AZ is my 3rd there, the first two having been fired (one for crappy marketing and not completing work that was bid but treating it as an estimate - stopping work once the funds were used up; the other for a huge decline in the quality of record keeping and responsiveness as well as a huge growth in the costs for work done due to the estimates missing a lot of work needed to make the property ready to market). Meanwhile in TX, I have a PM that after a few months of weekly phone calls pretty much takes care of things and we talk maybe twice a month. Same in CO. In both cases I went over their record keeping (having them pull existing property files, reading their leases, reading their management agreement, looking at their cash flow and so on) thoroughly before signing on. That was my 4 years of audit experience speaking and if I had done that in AZ out of the gate, I’d probably have chosen a different PM in AZ and would still be with them.
Rental - what would you do? - Posted by michaela-CA
Posted by michaela-CA on February 21, 2009 at 09:34:59:
So, I’ve bought a few properties and the first one, a duplex is kind of ready for rental.
With ‘kind of’ I mean we still had some things to take care of. My heating and air guy was coming out yesterday to look at the furnaces before we turned on the gas.
I found a highly recommended property manager, who’s shown herself to have a lot of initiative, last week. I told her that we weren’t ready and took some time to sign the agreement. In the meantime she met with my carpenter and looked at the property. All along I was under the impression that we still had some time until it’s ready and that’s how I interacted with her.
On thursday evening I found out from my carpenter that she already had someone who wants to move into one side, but I didn’t know when.
Yesterday I find out from my HVAC guy that the furnaces are from the 60’s and really quite dangerous. Since I didn’t want to take a risk with someone’s life we agreed to install new right before the tenant moves in (so that nobody would break in and steal before). And I was then trying to find out when the tenant was moving in.
So, this morning I’m getting an email from the PM saying that the tenant is moving in today. WHOA…I’m not ready.
And I know my HVAC guy can just jump and put in new furnaces that quickly. They need some time to schedule.
My PM says : don’t panic, it’ll be fine. But I’m concerned about liability. I don’t have insurance yet. I bought with cash and knew that I couldn’t get anything until I knew when a tenant would move in, since vacant units are not appreciated by insurance carriers. Since we didn’t rewire the circuit wouldn’t support those little ceramic heaters for long. They just seem to zap power. I don’t want them to try to use the existing furnace.
I’m really concerned about my liability here. I left her a message for her to make sure that the tenant signs a disclosure that she’s aware that the heating system is not yet functioning. It’s pretty cold in Atlanta.
Re: Rental - what would you do? - Posted by Natalie-VA
Posted by Natalie-VA on February 22, 2009 at 11:09:55:
Hi Michaela,
Glad things are going well for you. I’ve never managed property long distance or even hired a manager for my local ones. Is it normal for a property manager to approve a tenant without your approval? I’m somewhat of a micro-manager, and I wondered about that.
Also, althought I’ve placed some very good tenants quickly, I’m always suspicious when someone needs housing right away. Do you know what the tenant’s situation is?
Re: Rental - what would you do? - Posted by Rob FL
Posted by Rob FL on February 22, 2009 at 08:25:44:
You need a good independent insurance agent. State Farm is expensive and often they don’t do rentals especially if you have title in a trust or company name. A good independent agent will shop it around and get you the best deal. You definitely need to get insurance lined up if you have a tenant moving in.
Since the tenant is already moving in, I would provide space heaters until the new heater is installed (and make sure they won’t use the central heater).
We use independent insurance brokers who work with multiple carriers so they find the best policy for a particular property. (Some of them also write commercial policies.)
Also, our HVAC guy works on the weekends and even at night. If I tell him to install a new unit this afternoon, he would!
Re: Rental - what would you do? - Posted by michaela-CA
Posted by michaela-CA on February 21, 2009 at 10:29:51:
just want to add: The PM knew that we hadn’t even checked out the furnace and she was the one meeting with my HVAC guy yesterday.
I don’t want to jump all over her, since it’s quite nice to have found someone that’s actually jumping to make things happen, but then again, is there anything I should do, other than insisting on that signed waiver, to cover my butt?
Since it’s weekend now, there’s not a whole lot I can do. The tenant is moving in as we speak and I’m on the other side of the continent. I can’t reach my HVAC guy, nor can I do anything about insurance until monday.
Posted by Rich-CA on February 21, 2009 at 10:27:57:
and get the insurance in place. The agent can usually back date it in cases like this (especially since nothing has happened yet so the coverage does not really cost them anything). With a tenant moving in, the property is not vacant. Don’t worry about the tenant, take care of their side first and you will have a very good relationship that will hopefully translate into a long term tenancy. Its always good PR for a tenant to see you making improvements, even if its what you already planned to do (its not something they need know).
Re: Rental - what would you do? - Posted by Kristine-CA
Posted by Kristine-CA on February 22, 2009 at 11:51:33:
Michaela: I don’t know if you have feelings or concerns about this, but
do you know if your PM is taking fees from the tenants to place them?
There are some areas that have this is a norm. Tenants expect or try to
pay the PM to place them asap. If you didn’t make clear that you do
not allow that, it could be happening.
I had a PM that would put tenants in place overnight. Great payers,
great tenants. But it wasn’t until I was at one of properties while
prospective tenants were present that I saw how it worked. There were
definitely side arrangements being made.
There were a lot of things that were done differently than what I was
used to, like the rent being collected in cash, in person. But it seemed
to be normal and worked for all the parties involved. Just some things
to think about.
Regarding insurance: regardless of whether or not lenders like empty
properties, it is unwise to go without insurance. The period between
purchase and completed rehab is so short. Why not just buy whatever
policy you can get. It will be prorated and you’ll only pay for the
month or two that you need a rehab or vacant policy? I never go
without insurance on anything I’m involved in, even AP deals and
probate properties where I have only a partial interest. It’s cheap
compared to the potential loss.
Re: Rental - what would you do? - Posted by michaela-CA
Posted by michaela-CA on February 22, 2009 at 11:29:25:
Natalie,
I really don’t know what’s common. She did come highly recommended to me, so I will work with the situation and see what happens. We discussed what I would not want, e.g. pets, as this is the neighborhood where dog owners all have pit bulls and rottweilers for their image. It’s not really the hood, as I’m willing to walk around by myself, but it’s not a middle class neighborhood.
I’ve had several people inquire about the property, ready to move in, over the past month. The duplex next door also was being worked on the same time as mine and had people wanting to move in urgently. They’ve also just had a tenants move in so fast, that they had to struggle to get the punch out done.
Almost every house in this particular neighborhood has been foreclosed on or is going through foreclosure now due to mortgage fraud, so I think a lot of tenants are being caught off-guard by a potential eviction from the home they’re renting.
I know I’m not trying to get the most rent possible, but rather asked low as a vacant finished unit is asking for ‘vandalism’ here.
I’m flying ‘by the seat of my pants’ and hope for the best
Re: Call your insurance agent - Posted by michaela-CA
Posted by michaela-CA on February 21, 2009 at 10:33:34:
Right now I have no other houses covered. So, my only insurance is my car - with State Farm. But they wouldn’t cover these houses, as they’re so picky with virtually everything having to have been replaced or they’ll drop you.
I was planning on contacting Farmers, who you had mentioned this past week, but haven’t so far, as I thought we’re still far from ready.
So, I don’t think I’ll be able to reach anyone until monday. And I guess I’ll just hope for the best
Re: Rental - what would you do? - Posted by michaela-CA
Posted by michaela-CA on February 22, 2009 at 12:17:15:
Kristine,
I know this sounds weird, but I think you’ll know what I’m talking about: I feel that my concern comes from the left side of my brain (I should do this, I should be concerned), but that the right one says: Everything’s fine. When I listen to my gut feeling I feel that things are ok. Now that I’ve gotten past the first OMG I’m calm.
I suspect, but don’t know, that the lady that moved in is the same one that inquired about this one before. The carpenter that worked on the property next door (he also did a little work for me) told me that there’s a lady that really is interested in renting this duplex 2 weeks ago. I told him that we still have a ways to go. I came in contact with the PM on thursday 1.5 weeks ago and took my time with signing her contract. So, I think she’d already been in touch with this lady and just waited for my contract to come through to be able to finalize it. The minute I had faxed the contract I heard from my carpenter that the PM supposedly already had a tenant interested in moving in. Then everything just happened at once.
You’re right with the insurance. I’ll call around tomorrow.
Re: Rental - what would you do? - Posted by Rob FL
Posted by Rob FL on February 22, 2009 at 14:54:01:
State Farm is in the process of leaving Florida. They will eventually cancel every homeowner’s policy here. Allstate and Nationwide have done the same for the mostpart.
Re: Rental - what would you do? - Posted by michaela-CA
Posted by michaela-CA on February 21, 2009 at 18:14:54:
Joe,
you’re right. But I’m calmed down now and am quite content with the situation.
Having gone into this situation not with the thought of being a landlord, but to just hold on, because the properties were so cheap, the ‘icing on the cake’ is turning out incredibly sweet ;-).
For most of my life I’ve seen people just following and not making things happen, it totally took me by surprise to see her really taking on these rentals and making sure that everything’s done. I’ve read a lot of complaints about different property managers over the years on this site and most of the complaints are about complacency or not being on top of things. So, having the opposite ‘problem’ is something I’d prefer to deal with.
So, I realize, that I really have a very sweet set up: I have this awesome carpenter, who I can tell: ‘I just bought this and this property. Here’s the address. Look at it and just do whatever you think it needs to be able to rent it out.’ He and his wife space the work in between whatever other jobs they do and I can totally trust them. So, now I have a property manager that’s really pro-active. She’s been taking care of rentals for 25 years and I just over reacted to the situation this morning, getting a little scared of not having had all my ducks in a row.
But really, it’s kind of nice being able to kind of sit back for a change and being able to trust that things are being taken care of instead of me having to be on top of all these things.
Re: Call your insurance agent - Posted by brandoncbsre
Posted by brandoncbsre on February 21, 2009 at 11:43:39:
I buy bank foreclosures, rehab them and either rent them or sell retail. I use a State farm agent that know the homes are vacant and could be for up to 6 months. They still insure them as rentals. I guess it depends on the particular agent…try another one.
Posted by Rich-CA on February 21, 2009 at 11:07:15:
as that is when most of their clients are available and they catch up if falling behind. You might try calling agents until one answers. Mine does not work weekends, so I cannot suggest him. Farmers.com can suggest agents in your immediate area (I believe you’re no longer in Richmond, unless I misread a post).
Re: Rental - what would you do? - Posted by Kristine-CA
Posted by Kristine-CA on February 23, 2009 at 08:03:26:
Yes, they are fully paid in advance for 12 months. And I’ve gotten a
prorated refund on every one and never did anything except call to cancel
(probably 2 dozen or so).
