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Today what we are going to talk about is people that want to do it themselves with Property Management. We get a lot of people that ask why can’t they just self-manage. I myself was an investor that used to self-manage properties, so coming from experience I understand why they are curious and why they may want to do that. One of the things you want to ask yourself is if you are attempting to do it yourself, there is a lot of complexities with self-management; we are going to just touch the tip of the iceberg here, but if you do want to go into the self-management route I would suggest you explore these options and see if maybe you can answer these questions for yourself. I feel there are a lot of pitfalls, I personally have fallen into many of these pitfalls when I was learning property management of my own properties. And I am going to share some things with you that you should ask yourself if you are the right person to self-manage.
First question I would say is can you stick to your policies and procedures if you have to evict a family that has fallen on hard times? We all know that we get people that for whatever reason why they cannot pay their rent or they are having problems. Deep down you know they are good people. Can you actually be the one to evict them, can you do that. If you cannot follow your policies and procedures and you cannot stick to them you could actually be violating a Fair Housing Law or Discrimination Law by letting one tenant slide and not the other. So, when you are self-managing you want to make sure that you stick to those policies and procedures.
Second question is how would you go about evicting a tenant? How would you go to court, what would you say in court when you are there? Do you bring all the documents and what are the proper procedures for filing the eviction in court?
Next thing is, do you feel comfortable with the tenant having your phone number? Some states you have to be available twenty-four hours a day seven day a week for any emergencies that may arise with your tenant. You got to make sure that if you self manage you may have to be available all the time and that can lead to them calling you for things that are really not major emergencies, but they may think they are emergencies.
Are you knowledgeable about the laws? Right now the landlord is the highest sued person in real estate. Mainly because they do not know some of these laws such as Fair Housing, Texas Property Code, Discrimination Law and the Fair Credit Reporting Act. All these things are rights that are afforded to the tenant and you need to make sure that you know all these rights and you know all these laws.
Next question is how you will handle situations if you are not accessible. Let’s say you are on vacation and you are traveling with your family and the next thing you know, you find out Murphy’s Law, the house is flooded. How are you going to deal with that is you are out of the country? How are you going to have somebody come and handle these situations for you? And make sure you are not getting ripped off.
Then let’s say you do have to get a contractor. How do you deal with the vendors? How do you know if they are doing quality work to your property? If you have just one property and you bring a plumber out, you are probably not going to see that plumber again, so there is no real major recourse unless you go after them in legal matters. But how do you know they are going to do good work? How do you know if you are going to get the best pricing from that vendor. And if it is an emergency, you are really going to be at their mercy if you are out of the country and you are calling them to do work.
How are you going to find the best tenant? And when you do find that tenant, how are you going to verify and background check them to see who they really are? You want to define what you will and will not accept and make sure that you are protecting their rights.
Are you able to enforce your lease and collect the late fees on what your agreement states? You want to make sure that if your agreement says you are going to collect “X” dollars in late fees you need to perform. A lease is a bi-lateral contract. Meaning you have to perform and the tenant has to perform. If the tenant does not perform, it is your responsibility to enforce these late fees.
Next big thing that a lot of owners get in trouble with is bookkeeping. How do you handle bookkeeping? How do you know all the current laws of co-mingling funds and other things that come with accounting on your rental properties? You want to make sure you are up to date and you know these laws.
And number ten, main thing is what is your time worth? Normally a property management is going to be a couple dollars a day is what it actually factors into. Maybe it is the cost of a cup of coffee. Is a cup of coffee worth your time to not have to deal with it and not have to learn these things? And obviously only you know the answer to that but you may want to ask yourself these questions. And if you cannot fully answer these questions, before you make that decision on self-managing you may want to look more in depth on how you can learn these things so that the business that you are in, which is the rental business, you know these answers.
If you would like any questions answered please feel free to give us a call. Our number is right there and you can call me, we will give a free conversation, free sit down with you and see if maybe self-managing or property management is the right fit for you.