Which Management Mistakes Are the Costliest at Your Seattle Rental Property?
Here we are again, talking about Seattle rental property investments and how to be as successful as possible when you own them or when you’re thinking about buying them. Our guest is Enrique Jevons, who has a wealth of experience on this topic. He is the Regional Director of Mynd Property Management, and his team manages 850 rental properties in the Greater Seattle area. On top of that, he owns 73 units personally. He understands the full 360-degree experience of real estate investors and how to be successful, specifically in Seattle.The question we are asking Enrique is: What are the three things that cost investors the most money?You might be thinking those are easy answers – vacancy, maintenance, finding new residents, etc.It’s not quite that simple, and we asked Enrique to share his personal and professional experience on this subject. He’s made some mistakes, which he’s learned from. He’s seen others make mistakes, too. Part of being a successful investor is not wasting your money. So do everything you can to avoid these three money disasters.
Major Cost: Not Paying for Expertise
One of the top things that cost money is a lack of expertise. This is unfortunate for a lot of people because you don’t know what you don’t know. Give yourself as much education as possible when you’re managing a rental property or even buying an investment home. There’s a lot you can do thanks to the technology that’s available today. Read all the blogs and newsletters and articles and websites that pertain to real estate investment and property management. Listen to podcasts and go to events. Really soak in all the information you possibly can before you move forward with your investment goals.But, even with all those things, it’s critical to align yourself with an expert or a group of experts who can help you with the tools, resources, and knowledge that you need. Save yourself some money by not losing it. Get the help you need from experts.People will be strangely willing to move forward in the investment process without experts. They just don’t seem to get it. When you don’t partner up with a real expert in this field, it’s a quick and easy way to lose money and fail on your real estate investment.This expertise is something you need across the board. You have to know who the good property management companies are in Seattle. You have to know who the good plumbers are and which electricians will come out and rewire an older home if that’s what you bought. You need to know which cleaning crews really pay attention to detail and how to find a landscaper that understands your property’s lawn needs.You need an attorney who understands what needs to be included in a Seattle lease. You need legal experts who can protect you if you need to evict a resident. Don’t just settle for anyone, either. Find the rock stars. If you know a good Seattle property management company, you’ve already got your team of experts lined up. Property managers will already have a reliable list of excellent electricians, plumbers, attorneys, landscapers – the list goes on.Make sure you’re asking the right experts for those referrals. Your neighbor might know an attorney, but the better referral will come from your property manager. You want to work with people who are really good at what they do.
Major Cost: Spending and Losing Your Own Time
Another sure-fire way to lose money on your Seattle investment property is by wasting your time. Investors don’t have the time that’s required to manage their properties well. They’re unwilling to give up control to others, and that can be costly. As an owner, you might decide to paint your house during a turnover period because you know how to paint.That doesn’t mean you should be the one painting.Maybe knowing how to clean a house really well, so you decide to clean the units personally before having a new resident move-in. That’s not a good use of your time, and it’s better to leave tasks like those to the professionals. The highest and best use of your time is likely not cleaning a unit.Are you really going to want to clean a rental property after cleaning your own house or after spending 40 hours a week at your job? This is money that’s lost forever. It’s going to cost you a lot. Paying someone to clean the unit today or landscape the yard today is far more cost-effective than doing it yourself in a week. You can never recapture the lost revenue that flies out the window when your property is vacant. Even an extra day is costly. This is similar to airlines who lose money on every vacant seat. You can’t earn that back.Make good use of your time. Don’t have such a personal and emotional stake in your investment property that you feel you have to do everything yourself. This is a business, and you don’t have to do everything yourself. The better business decision is to leave the work to the professionals, turn that investment home around quickly, and start collecting the maximum amount of rent that you can.
Major Cost: Not Having the Money to Invest
Not having money costs money.If you don’t have enough money to buy and operate your rental property, you’ll run into some problems. A lack of funds is actually a major reason that investors fail, even after they’ve purchased a property and they think that collecting rental income will take care of every possible expense.Businesses fail because of a lack of capital, and real estate businesses are no different. You need sufficient capital available for emergencies and unexpected disasters. It’s advisable to have enough money to cover inconveniences like longer than expected vacancy periods. Maybe there’s a catastrophe at the property that will ultimately be covered by insurance, but you still need the money to move the resident out and keep the property operational until the insurance check arrives.There are different ways to access money and capital, and maybe you’ll want to focus on one in particular or maybe you’ll want to have different streams of funds that are available to you when you need them. The money can be your own funds growing comfortably in a savings account. It doesn’t have to be your own money, however.It’s a good strategy to have some credit available. This might be a credit card with a high limit or lines of credit from banks and other financial institutions. A lot of owners don’t like this because maybe their credit card comes with a 19 % interest rate. No, you don’t want to pay 19 % interest on your credit card. But, if there’s an emergency, that 19 % interest will cost a lot less than losing your property because your entire business has failed.Enrique likes to use equity lines on the investment properties he owns. With 73 units, something is going to fail at some point, and he wants to be ready for new roofs and new furnaces and other expensive and unforeseen circumstances. So, he uses business and personal lines of credit to provide the financial security that he needs. By lining that up in advance before he actually needs it, he knows that he’ll have the cash available when something goes wrong.Don’t lose money by refusing to work with experts, by wasting your own time, and by forgetting you need money available to you.There are a lot of nuances to what we’ve talked about, and if you have any questions, please contact us at Mynd Property Management.
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