The #1 Way to Screw Up the World’s Greatest Investment (OKC Rental Properties)
I am a strong believer that rental real estate is the best investment that the average person can use to become financially independent. I’m not alone in that belief. On a recent interview with Fox News, Warren Buffet stated that if he could load up on a couple hundred thousand single-family homes, he’d do it. The trick is finding a way to handle the property management.
As you know, becoming wealthy with real estate doesn’t happen overnight. But it does happen with the right plan executed consistently. It’s not for everyone. Some veiw it as risky business. That’s why bank CDs and mutual funds were created.
However, there is a very big catch. The catch is this. Warren Buffett pointed this out in that interview. The point is this: You’ve got to have the property management handled. If you don’t have your property management handled, your real estate investments will not be financially successful. I can guarantee that.
It’s not hard to understand why. When you own rental properties, you own a mini-business. Your property management company is the operations side of this mini-business.
Every business needs systems to effectively operate. The number one reason that do-it-yourselfer property managers fail is they don’t develop effective management systems.
When I first started managing properties in Oklahoma City 17 years ago, I was a do-it-yourselfer. I’d approve the first deadbeat off the street I’d show my property to without doing any type of background check. I got my lease from a do-it-yourself landlord course. It was all down hill from there.
Your OKC property management company has to be way beyond this if you hope to make any money. After all, your property management company is your eyes and ears on your property. It is your legs on the ground. To some extent, they are your think tank to solve problems. They need to provide you three things:
• They need to provide you the right type of feedback.
• They need to provide you good advice.
• They need to deliver on their promises.
When something needs to be adjusted, they need to let you know right away. For example, if a tenant is complaining about high utility bills, the property manager needs to investigate the property and lay out some solutions like the ones I laid out above. When your rents need to be raised, you shouldn’t have to tell them. They should be telling you.
This is where your OKC property management companies’ experience comes into play. The systems they put in place will be based on their experience. What they know about the local market. Relationships they have created with contractors and vendors in that market. How they deal with maintenance issues.
If your property management company doesn’t have specific experience with the type of property that you have, it’s going to show in the results. That’s because it’s going to take extra effort for everything they have to do to service properties that are outside of the type of properties they normally deal with.
The last thing is delivering on promises. No property management company is going to be perfect. They are going to make mistakes. That’s the first thing I’ll tell you about my company, OKC Home Realty Services. But they must be fully committed to getting the job done. They need to be committed to goals that will lead to your portfolio being financially successful.
They need to be committed to helping control and limit turn over. Turn over is the biggest cash flow killer in the rental business. They need to be committed to allowing you to capture the long-term benefits of owning these investment properties.