August 2003 Owners Update

Small Owners: Six Rules for Survival

Small owners must become aware of the special hazards they face and find ways to overcome those obstacles. As an owner of small properties and a fee manager for other small property owners, I have become aware of the special hazards that can devour a small owner. When property management is not your full-time occupation, it can be very difficult to keep up with all the details that can affect your property.

I am going to share six simple but powerful rules. Six areas, that given a little extra attention, can make a cost-effective difference in your operation. Without that attention they can cost you everything.

Be Accessible
Make sure that your residents know how to reach you if an emergency situation arises. With the advances in communication technologies, there really is no excuse to be out of touch. Certainly you would want to know right away about a broken water line or a problem with the furnace which leaves your tenant with no heat! If the cell phone isn't your thing, you may at least want to have a pager with you to be contacted by your tenants when the need occurs. Being accessible as a landlord just makes good business sense.

Make Repairs Promptly
A resident in a duplex called in to report a "small leak" coming from the shower head. I was going to show the unit next door that coming Saturday, so I put off the service call until I had shown the vacant unit. I opened the door to find 1,267 square feet of water an inch deep. The small leak in one shower was a major leak next door. I cost myself six weeks of rent and more in repairs than I like to think about, to save a 10 minute trip across town.

Preventive Maintenance
Each spring and fall, we make a preventative maintenance call on each unit in our inventory. Among other things, we check the operation of all the appliances, we clean the inside and outside coils of the HVAC unit and comb the fins if needed. We also check the tightness of all the lugs in the breaker box. We know that this service has saved us at least three compressors and an untold number of service calls, and in the case of the breaker lugs, it prevented a fire.

Listen to Your Residents
Sometimes residents will try to tell you something without telling you. About a year ago, I was walking a small community with my painter. As we looked at units, several residents told me about many friends one of my new residents had and that people came to visit at all hours of the day and night, and parking was a hassle. They asked me to check into the problem, and I told them I would and went on with the painter. When I got to the next unit, the painter asked what I was going to do about my drug dealer? "My what!" He told me, "Those folks are talking, but you ain't hearing." No one wanted to come out and report the dealer, but they wanted me to know about what was going on in the community.

Be Aware of Local Politicians
More than ever before, the owners of small properties have got to keep tabs on what local and state governments are doing. Cities and states are passing ordinances and laws that directly impact rental housing. They are not going to hold your hand and show you what they are going to do. Unless you are aware, you will not have a say in what happens. Don't find out after the fact.

Understand Your Insurance
In all probability, your attorney can't read and understand his or her insurance policy. What makes you think you can understand yours?

Are you aware that most policies on rental property require you have on file the general liability and workers' compensation certificates of all persons who work or perform services at your property? The painter, the plumber, the kid who mows the yard, everyone. If the lawn mover hits a rock and throws it into the face of a small child and that lawn mowing person has no insurance tag, you're it.

It could get worse. Your carrier could default because you did not meet the terms of the policy. Ask your agent lots of "what if" questions. Many owners tell me that using only insured vendors runs up the price, and they just can't justify the cost. I tell them, "It's just like going to Las Vegas; you don't bet more than you can afford to lose. You can win a little at a time, but if you lose big just once, it's all over."

Six simple little rules: six ways to cover your assets. Be accessible, let someone know how to get in touch with you, or have someone take your calls so you can get some time off. Repair things promptly, before little gets to be big. Preventive maintenance doesn't cost money, it saves money and time. Listen to your residents. You may learn more from what they don't say than what they do. Be aware of local and state laws. What you don't know can hurt you. Understand your insurance. Keep asking questions until you do.

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