By Paul Branton, Director of Investor Services for Home Rental Services
This story is geared toward people that currently own rental investments and have ever considered, or are currently considering, a change in management of their property.
I imagine the biggest question that you’re going to face when you consider a change in management to be something like… “If I go to all this effort to switch, will it really be any better with a new PM?”
Here are some recent examples of what our newest clients were dealing with when they made the decision to switch to Home Rental Services:
Example #1: Out of state investor who bought his investment property from a turnkey provider.
I’m all about the turnkey model. I think it’s a decent way, especially for out of state investors to scale their portfolio.
This turnkey provider did a decent job on the renovation. That’s their primary business, so I would hope that would be the case. However, once they were done with the renovation and sold the home to the investor, that’s where things started to sour. The investor soon realized that this company was not nearly as good at leasing and property management as they were at fixing up homes.
They placed a poorly screened tenant who after months of delinquency had to be evicted. They had not treated the property well. Once the tenant was evicted, the owner brought the vacant property over to us and we performed a make-ready that was equal to 10 months of rental income.
Lesson learned: Go with a property management company that does property management as their core business.
Example #2: Owner became concerned after two months of not receiving any rent or communication from PM.
After not receiving rent for two months and not seeing the home advertised for rent, the owner reached out to the “big-box” PM. They discovered the PM was completely unaware that the lease had ended and the property was vacant!
Lesson learned: Go with a property management company that is not so big that your properties “slip through the cracks” and don’t get the attention they deserve.
Example #3: Current PM extended the leases on a month-to-month basis, without a rental increase and without consulting the owner.
Once the initial lease terms ended, the owner realized that the PM’s lease automatically extended on a month-to-month basis… at the same rental rate! This is certainly not in the owner’s best interest but it’s less work for the PM.
Lesson learned: Ask to review a copy of the lease when talking to PM companies and ask the PM company how they handle lease renewals. (DO NOT let the lease automatically go month-to-month!)
Are you feeling the pain of an under performing rental?
Give us a call and let us be your ibuprofen.
*Potential side effects of switching to HRS: Increased Rental Income, Lower Vacancy, Fewer Headaches
As a special offer/incentive for those of you who make the switch, mention this blog post and we’ll waive our $250 “take-over management” fee.
(Offer valid until 12/31/2019)