Many people think they are completely capable of managing their own rental properties themselves, but that’s not always the case, says Craig Tice, Chief Operating Officer of LB Property Management, based in Sherman Oaks California. Having the right knowledge as well as technical expertise in a vast array of fields is important, and as few people have it, it’s often better to leave the job to the professionals who can do it right.
I think people can successfully manage their properties themselves, but only if they are truly equipped for it and have the right knowledge. Property management requires knowledge in such a vast array of fields that it is hard for a landlord to be fully equipped, especially those starting out in the business.
If you don’t have the proper amount of knowledge of landlord-tenant laws, for example, then every nickel you save can be lost with one bad decision. If a manager mishandles the personal property that is abandoned by a former tenant, and that tenant comes back looking for his property, all sorts of problems can ensue. I have seen landlords get judgments in excess of $25,000 to $50,000 for what was clearly a pile of junk, but because they mishandled things, they set themselves up for easy lawsuits.
Huge Liabilities
There are many other aspects to property management that require a great deal of technical expertise. This is a simple one, but abandoned property becomes a huge liability if the specific rules about handling property are not followed.
Landlords can often also find themselves losing money because of employee theft, but their lack of experience opens the door for resident managers and savvy vendors to exploit that lack of knowledge. Losses are also suffered by what we would deem professional tenants. These are tenants who know landlord-tenant laws better than the landlord, and use those laws to extend the periods in which they remain in their units without paying rent.
Misrepresenting Facts
If a savvy tenant knows that a three-day Notice to Pay Rent or Quit is defective, he may allow that process to proceed and bring up that issue at the last possible moment. He might also file an answer to an eviction lawsuit that misrepresents facts, knowing that by doing so, it will extend the time that he is able to stay in the unit rent-free.
Then, when the unit is ultimately returned to the tenant and the landlord has a judgment against that tenant, the landlord may discover that the name of the tenant was not actually the person who was occupying the unit. So in essence, the landlord can end up getting a judgment against the wrong party because he did not do the proper screening - which is a trap that an experienced property manager is less likely to fall into.
The bottom line is that a landlord can spend a ton of money to regain possession of a unit only to have things backfire. So you can see how in the long run, it definitely pays to hire a professional to manage your property for you.
