Can you save money by managing and turning over your rental property yourself?

Duh, of course you can!!!

But you need to be sure what you are doing, or it will end up costing you a lot more.

 A property owner we are working with is learning this lesson the expensive way.

 

This property is located in Baltimore City, very nice rowhouse, really did not need too much done to it, really should have been turned over is a week or so.  This little project, for the property owner started back in April 2012, it is now March 2013.  As of today, we are still not sure when we might be able to expect a tenant, or even think about anyone to even take a glimpse at the property.

So this is how this debacle began;

 

Our property owner bought a property, moved a relative into the property, as relatives often do, they no longer felt the need to pay the rent.  Later the owner found that they had neglected to pay the water bill as well.

 

So with their family, I mean tenant, out of the way, the property owner can get the property ready to move a new family in, and maybe collect some rent!!

It should not take too long, a new coat of paint, some new floor coverings, a few nicks and dings, a new kitchen, some yard work, the owner planned on a month.  I would have planned on two weeks, but we are learning the lesson of the property owner here.

Owner decides to help his “friend” out, and gives him the painting job of about 800 square feet of painting services, for the bargain price of $3,000.00, plus the cost of paint.  So our property owner puts out the price of paint, several hundred dollars, and $1,000.00 to his friend, to get him started.

Three months later, ninety days, nothing has been done except a lot of gallons of various colors of Sherman Williams paint have been dropped off at the house. 

It is now July 2012, the property owner contacts us, about giving him an estimate about doing the work and managing the property.  So we set up a time to meet, at his convince, about a week later.

So the walk-through is done, the estimate is prepared, all the back office things are done for taking on a new property, we meet with the property owner again.  The owner is happy with the prices and the times estimates.  He is pleased with the proposed rent to be charged and okay with the management price if all things fall into place.  We should be on our way, but not so fast…

We encourage property owners, except for very high-end homes, to paint all the walls the same color, any color they wish, but one color.  We prefer a soft white or cream, but whatever the owner desires.  It is easier to “touch-up” easy for tenants to decorate with, easy to see damage.  The property owner agrees and states that he will return the paint and we can begin, he just needs to “find” the receipt.  Okay, so we wait, for three weeks it is almost August now, and the property owner is not able to find his “friend” and when he does, he tells he that he got busy, but he will get by there soon to finish the job.

Now it is the first week in September, the property owner returns, said that his “friend did not get to back finish the painting job after he gave him the second $1,000.00, and was wondering if we could maybe fit finishing up this job into our schedule.

So we schedule a time to go back out to the rowhouse to give an estimate, the property owner said he was not sure what was done so far.  We wanted the property owner to attend, so he knew what we would be charging for.  Nothing, not a thing was done since the last visit.  Incase you are wondering, we take photos of everything.

So we give him a price with the paint included that is $1,800.00 and tell him it will be ready in one week.  We can start showing the house once he has a schedule for when everything will be done, and the paint is dry, I am thinking we have a slim chance but a chance none the less of having this place rented by the second week of October.  He said that his other friends were helping him out with the floor coverings and the kitchen.   We asked for a deposit, for the paint job.  Our property owner has the wrong checkbook with him.  He tells us he will bring the check the following day.  Tell him there is not a need, he does not have to travel so far, just mail it.  He is insistent to bring it.

Two weeks pass before he drops off the check, in our drop box.  The next afternoon, he calls and said don’t deposit that check, yet, I will bring you a different check.  That his a little short because he has not been collecting rent.  Well he has not collected any rent since April I know.

Now it is mid December 2012 and we have a deposit for the painting job, the floor coverings still not in, nor is the kitchen, although he has paid his friends deposits for both of these projects.  The week he  gave the deposit we sent a team in, had everything painted and cleaned up in three days.

Here we are in March 2012.  The kitchen is still not in, nor even picked out, the floor coverings have not arrived much less been installed, the water has been turned off by the City, as no one paid the outstanding water bill from early in 2012.

 

Here is how this property owner saved money:

 

The rent he had hope to receive $700.00 per month  (our projection was $1,000.00 for a voucher holder tenant)

$7,700.00 (11 months x $700.00)

$4,000.00 he gave to his friends

$500.00 in paint

$1,800.00 for paint and painting job

$50.00 reconnect fee to the City to have water turned back on

$14,050.00 is what he is out of pocket right now

 

The property owner has not paid for the kitchen and floor coverings $2,800.00

 

Don’t forget he has had a mortgage and property taxes he has had to pay, not to mention the past due water bill of $454.00.

 

Had the property owner gone with a company that just does property turn-overs and management, he would have been charged for their services of course, our estimate was $4,600.00, a three week turnover, and a management fee of 10%.  At first the price may seem high, however short cutting rarely pays off, as this property owner has found out.  We hear from him on a regular basis, and we are ready to help him whenever he is ready.  But this has been a debacle form the start for him.

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