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The Advantages and Disadvantages of Using a Property Manager to Rent Out Your Property

One of the biggest advantages of having a property manager in place is that they not only do all the actual management for you – selection of tenants, completion of appropriate paperwork, inspections etc. – but they also do much of the accounting. From most of my property managers, I would get a monthly statement detailing the gross income, the expenses incurred, their commission and the net amount transferred into my bank account. This makes for very easy accounting.

Typically, property managers charge anywhere from 4-15% of the rental income to manage your properties. Usually the bigger your portfolio, the lower commission rate they will settle for.

Another advantage of using property managers is that the less pleasant work of evictions, notices of rental increases and notices requiring tenants to remedy shortcomings in keeping the property clean and tidy, no longer need to be handled by you personally.

So how do you choose a property manager?

Just like with the selection of a property to buy, or the selection of a real estate agent to work with, or the selection of a tradesman to work on your properties, it is somewhat of a numbers game. Go with recommendations from friends or other landlords, interview prospective managers, ask them how they have dealt with particular problems in the past, and then try them out. You can always change them later on if you do not see eye to eye. However, it may not always be so easy to change agents, especially if you have bought the property with the tenants in it.

Let me tell you about an experience I had with an agent in the UK. I bought a property with tenants in it and by extension I got saddled with the agent who had originally rented it to them. As it was my very first investment property, I didn’t want to have an agent manage the property for me, I wanted to manage it myself. But it wasn’t that easy. The agent kept their security deposit because he had found the tenants and even though it was my property, he demanded that they pay the rent to him and then on top of that, he withheld that rent and didn’t pay it to me. I had no legal recourse unless I evicted the tenants which ultimately I had to do. It was all very amicable as the tenants knew what was happening. They spent one night away from the house to make it legal, I then presented the eviction notice from the courts to the agent and he was forced to return the security deposit and pay me what he owed me on the rent. After that, my tenants came back to me, we signed a new lease and I managed the property myself. But as a warning, it does not always work out that way where there is an amicable eviction and wresting your property away from another management agent.

Just because you use one management company to look after one or several properties, it should not be a foregone conclusion that you always use the same firm for any subsequent properties you acquire in the same area. In fact, engaging two competing firms can be healthy, in that they will each try to do well by you to win over more business. This relates back to my earlier programme on selecting builders. Always get three quotes for any job and don’t get complacent by using just one builder all the time. The same applies to agents.

You can lose your tenants and your rent very quickly if the property manager does not respond quickly to repairs or complaints from tenants. Let me tell you about a situation I had when I first went into the property investment business in the UK. I had some tenants move into one of my properties and they had signed a lease agreement and paid a month’s rent in advance as well as a security deposit. I had turned the management of that property over to an agent with the understanding that my tenants would call them with any problems that arose and they would act on my behalf immediately upon hearing about any issues that needed to be resolved.

What happened next with these tenants was a nightmare. Unbeknownst to me, the roof started to leak in the master bedroom from day one. During the night, if it rained, they had to set out buckets to collect the water that was coming through the roof. They called the management company the next morning and were told that a roofer would be there to fix the problem. This went on for three weeks and each time the leaks were getting worse. The management company kept promising to send the roofer.

At the end of the three weeks, my tenant’s father who was a lawyer, sent a letter to me threatening to sue me if I didn’t give the tenants their security deposit back, but also their first month’s rent and another month’s rent to compensate them for all the emotional upset that had been caused and the physical inconvenience of living under those conditions as well as all the time that they lost from their jobs looking for another place to live. The upshot of the story is that the management company never sent the roofer, they never notified me and they behaved totally irresponsibly. In the end, I lost my tenants, I lost money, and the management company lost me as a client.

Of course, none of this would have happened in New Zealand because the law protects both landlord and tenant. However, if you are looking to invest in other countries, be sure that you know the current laws regarding all aspects of property investment.

To summarise:

On the plus side agents can save you:

paperwork
having to deal with courts and eviction notices
unpleasant issues like informing tenants of rent increases and complaints against them
On the minus side, they can be:
Lazy or irresponsible or negligent
Slow to get the proper repairmen out quickly
Neglectful about informing you when there are serious problems with your property

Here are some additional facts that could be deal-breakers for a landlord in selecting a property manager.

One of the first things I learned to do when selecting an agent was to see what the caliber of his tradesmen were like. Did he have a decent plumber, roofer and electrician? Were they reliable? How much were their average prices? One of the most frequent expenses a landlord can have with his property is plumbing. During my years as a landlord, the number of times I had been called to send a plumber to one of my properties, and the number of times other plumbers who picked up on previous plumbers and told me they did it wrong, and the outrageous sums of money they charged for their mistakes, made me seriously consider going to school and learning how to be a plumber. I eventually did find a plumber who was moderately priced and knew what he was doing. The downside was it took so long for him to come out and fix the problem. So if you get a property manager who seems reasonable, try to check out the tradesmen that he has on his books. As nice as the property manager may be, it’s his tradesmen who can ruin your reputation as a landlord.

Now let’s say that the tradesmen all check out. Now you are faced with an equally monumental task of checking out the capabilities of a prospective property manager. The laws of a country change frequently and you, as well as your property manager, should keep on top of those changes. Your manager has to chase the rents, document everything, pay you the rent on time and make sure that he has referenced the tenants properly and has accepted documents that are legally binding. Both you and the management agency have to keep on top of all the properties that you own: when the rents are due, when they are paid, when they are posted to your account, whether the correct amounts have been paid, that you have up-to-date agreements between yourself and the agency, that all your tax records are accurate.

If you think that property management is like a walk in the park, you will be in for a rude awakening. There are complex tax issues, laws governing those taxes, laws concerning tenant rights, landlord rights, evictions and contracts. You need to be prepared to spend a great deal of time and energy as a property investor. It’s not a question of just finding a wonderful property. You then have to make sure it remains so. A property manager may not know that the building is developing dry rot. He may not know that the wiring needs to be replaced. He may not know that there is subsidence to the building. But since all of these things and many more greatly affect the property that you are buying, you need to keep on top of these things. These are things that the property manager is not responsible for. So while you can always get yourself a property manager to handle the day-to-day operations, you cannot really afford to be an absentee property owner.

A Simple Product Creation and Product Launching Formula

If you tried to think of people involved in product creation, who would come to mind? You may think of Edison, Franklin, or maybe Henry Ford. Would you ever think of yourself as someone who can create a quality product? Product creation is actually relatively easy and product launching is not that tough either! If you follow a few easy to understand steps, you could be starting the product creation and product launching process sooner than you think.

The first step in creating your information product is to know and understand your market. This can be very time-consuming, especially if you are unsure of what to do or where to look to know your market. Studying your niche market and understanding the buzz words and buying patterns can ease the process dramatically. Personally, I would recommend networking with someone who has had success in the niche market you are considering and learn from their results. If they are into product creation and not very business savvy expect some hesitation. If they only sell products and have nothing to do with product launching or product creation you may your first affiliate (sales person)! Something else you can use to find hot trends is with the Google Trends tool.

The second step is the product creation process. Take your niche market and brainstorm ideas and topics relating to it. There are a lot of product launching contests going on recently relating to a newly created internet marketing tool. There are so many aspects to the mentioned niche that literally, and unfortunately, anything can be considered an Internet Marketing tool. The reason that anyone can basically create an Internet Marketing tool is because of something called Private Label Rights products.

What I use private label rights products for, and highly recommend them in this specific manner, is to cure writer’s block especially when it is lingering. Many people base their entire product creation and product launching on a private label rights product. This is where you can start to shine and build a strong brand for yourself. If you set goals for yourself, short-term goals to be exact, you can see your product creation come into being much faster and there is a good chance with less revision needed. If you keep hitting time restraint road blocks; however there is nothing wrong with a slow and steady approach, you can consider outsourcing portions of your project. Outsourcing can be an extremely huge benefit or just as great of a disaster.

You can find someone to outsource work to at a freelance site such as Guru.com or eLance.com. When reviewing proposals it is almost mandatory you perform a background check on them as you are in essence hiring them. Doing a background check on freelancers is as easy as asking for samples of their work and reviewing feedback on the freelance site from previous customers. Depending on the size and requirements of your project this can add up to a decent sized investment, so caution is very important. One tip I always recommend to people looking to hire an individual is to ask them what they can provide you that no one else can. This simple question gives them a chance to “toot their own horn” and acknowledge where they feel most competent as far as their skill set.

The final portion of the product creation and product launching formula is the launch. This can literally make or break the effort, time, and maybe (if you invested) money you put in to your project. There are numerous aspects to product launching and although their relevance is debated in terms to their effect, experts agree all must be followed. The person in your field who you asked for product advice from can help you substantially if you have kept in touch. If not, the first thing you need to do is to create a visually appealing website with flawless design work.

I also mentioned outsourcing before, this is one aspect of product launching I have little strength in and I always outsource this portion. The website does not have to be large however the content (ad copy in Internet Marketing) must be stellar and as perfect as possible. This is where advertising knowledge or experience is beneficial. When the site is set up you now put a lead capture form on your website.

I put two lead capture pages on all products I create on the internet and is one of the best methods of getting a solid start when you are in the product launching stage. When you gain information from a prospect or someone looking to get paid for referring sales you are able to provide them updates or specials. Many people abuse their prospect or affiliate lists by in turn emailing them with a new product daily and I find the recommendations to be totally unrelated to their original need, problem, or interest.

Another stage in the product launching stage is creating a free report or demo version of your product to entice the product to sign up to your email list. Using proper follow up with this can help generate numerous sales for you. One thing you need to ensure is that your free product completely relates to your main product that you are looking to sell.

You are now ready to advertise your product launching to customers as well as the opportunity to sell for affiliates. This is the single aspect that many product creations and launches fail on. It is actually not entirely difficult. One thing you can do is write articles (and a good amount of them) on topics relating to your product. I am a huge advocate of giving a solution in forums. When you join a forum you are normally offered the opportunity to create a signature. In your signature, you should enter the link to your opt-in or lead capture page. When you respond to posts, you are advertising your opportunity.

It is not impossible to create a product and it does not have to take a long time. You need to setup a plan and stick to it. If you get stuck, look at similar and successful products to your own and try and see how they did it. When you sit down and brainstorm you will be surprised with what you can imagine.

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Is Network Marketing a Good Option for Building a Successful Home Based Business?

Hundreds of thousands of people are trying to build a successful home based business with network marketing. Indeed, Robert Kiyosaki calls it the ‘The Business of the 21st Century’.

But how does network marketing – also known as multilevel marketing or MLM – stack up against other options if you are looking for residual income opportunities? Three questions spring to mind:

1. Can MLM earn you substantial residual income?
2. What are the drawbacks – if any?
3. Is it the only game in town, or are there other options?

Can you earn big money with an MLM home based business, or is it a scam? Well, I’ve spent the past 18 months or so as a distributor with one network marketing company. It has not brought me riches, but I am completely convinced that it has the potential to do so. I say that because I know other distributors in the same company who are doing very well indeed. So it can work.

However, detractors point out that you have to get other people to join up as distributors if you want to achieve high income levels. You don’t get rich selling a company’s products, they say, you get rich by recruiting other people into your team – and your team then make the sales that builds your residual income.

In my view, that’s not a huge problem provided it’s relatively easy to sell the company’s products. If the products are easy to sell, that means that you are bringing other people into a genuine money making opportunity.

The two main issues I have with MLM are the need for ‘selling skills’ and the fact that you are dependent on the long term financial health of the networking company.

You do need decent selling skills to make money at MLM. Either you’re selling product or you’re selling the opportunity to potential new distributors. If you don’t like selling, your chances of making large amounts of residual income are low.

But what if you do well, and build a decent income? What happens if the company goes bust, or something else nasty happens to it? What if you’ve spent ten hard years building your network marketing business?

Given these issues, I believe that it makes sense to look at other residual income opportunities – either as a complete alternative, or to run at the same time as your MLM business. For example, another very popular low cost option is a computer based business. The world is your market nowadays, and many ‘internet entrepreneurs’ are earning levels of residual income equivalent to MLM. Also, with a computer based business, you may not be so dependent on the financial health of another company.

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