Why Northern Virginia Homeowners and Investors Should Hire A Professional Property Manager
Are you a Northern Virginia homeowner or real estate investor that needs to hire a professional property management company?
If you are a Northern Virginia homeowner or real estate investor interested in hiring a great professional property management company, NOVA NARPM is one of your best resources because we simplify your online search by only listing accredited and qualified firms. Maybe you own a home and are looking to rent your property for the first time. Or perhaps you are relocating overseas soon and need to find a property manager quickly. Or perhaps you are a savvy investor who recognizes that the Washington D.C. metro area is a lucrative rental market. Whatever the case, let us help you become more educated about professional property management. To help Northern Virginia homeowners and real estate investors find the information they need, and as part of NOVA NARPM’s informational spotlight series, we recently interviewed Lee Wilkinson, Patrick Fogarty and Don Pett of Wilkinson Property Management in Alexandria Virginia. Our mission is to help Northern Virginia property owners and real estate investors become better educated about how to find a qualified and professional property management company in Northern Virginia.
Wilkinson PM’s advice to Northern Virginia property owners and real estate investors is a great resource because they have been providing residential property management solutions to the Northern Virginia market for 30 years. In fact 2018 marks their 30th year in business! A multi-generational family company, Lee, Patrick and Don are active NARPM members who hold themselves to a higher standard than typical property managers. Wilkinson PM has an honest and kindhearted approach to doing business with a passion for developing great rapport with clients. They maintain a core value centered on problem-solving in that, “if a mistake does happen, they strive to determine what caused the mistake, and fix it so it won’t happen again.” Having seen just about every scenario imaginable in property management, their realistic and expert approach is a great resource for homeowners and investors because their knowledge provides the needed information to make an educated decision when choosing a local property management company. In their recent interview with NOVA NARPM, they offers tips about the cost benefits of hiring a professional firm, reasons why an owner should think twice about managing a property themselves, examples of real life tenant situations, what to look for in a great firm and much more.
Expert Advice From Wilkinson PM
NOVA NARPM: Let’s get right to it. It’s probably tempting for property owners or investors to think they can and should manage their own rental property? Should they? Lee Wilkinson: Well, we often tell owners, ‘you don’t know what you don’t know.’ For example, I know a lot about property management, yet I use a property management company to manage my properties because I understand what can happen. Much of the ‘you don’t know what you don’t know’ concept has to do with all the regulations that owners are not aware of or the fact that the regulations change often. Things change every year and it’s very difficult to keep up-to-date with all the changes. So those self-managing owners are really putting themselves in danger, particularly with Fair Housing violations. Patrick Fogarty: That right. That’s definitely one of the things that they ‘don’t know.’ There are a lot of Fair Housing rules and regulations, Virginia laws, federal laws and Fair Housing laws–and sometimes they’re different based on jurisdiction, city or the county, and we’re professionals that are dealing with those every day, plus we get current training in our business. We are always on top of those laws and the reality is there’s just a lot of things that owners may not know about. It’s quite comprehensive. LW: That’s exactly right. PF: Additionally, what helps in this situation is we’re in the middle of this too and we can usually make the right choice based on our experience. For example, the owner comes into the house and it’s destroyed, and they may try to charge the tenant for things that they don’t have any right to. They may end up in court because of that, whereas we understand the fine line of what we can charge for–and if we do go to court we can still win. If the landlord is doing it themselves a lot of times they’re going to go overboard and then the judge is going to rule against them. Having a professional to help keep them out of court is pretty critical. LW: One other thing is some owners don’t know that there are some great tax benefits to owning a rental property, and a professional property manager knows a lot more about the tax benefits and can help guide owners.
NOVA NARPM: Homeowners and investors probably think it’s expensive to hire a property management firm. Do you think this is one of the main reasons why they’re uncertain about hiring a professional firm? LW: Absolutely, I’m sure that’s what they say, however, we feel–and NARPM feels–that by using a professional property manager you can actually increase your income while decreasing expenses to your property. PF: In addition to maximizing the rent–a lot of landlords are afraid to increase their rent because they’re afraid they’ll lose their tenant, but a great property management firm will get the best rent we can based on the market. Another factor to consider is the amount of time that an owner spends taking caring of the property and is that time worth the money. If you add in the amount of time you spend, even if it’s minimal, it still would be cheaper to hire a professional property management firm. LW: Our goal is to maintain the income stream and we have practices in place to minimize vacancies for the owner. So, for example, the individual owner might not know that they can put the house on the market for rent the final couple months of a lease. An individual owner might not know how to get the tenant’s decision and get the tenant’s decision in writing so that you can market the property or else renew the lease for the tenant. We strongly feel that lost income due to vacancy is the biggest expense an investor will have and by using a property manager, the property is in better condition and is marketed in a timelier manner. So lost rent due to vacancy is now decreased. PF: It’s funny, I read a recent interview with a different property management firm and they pointed out that in other countries like 90% of people hire professional management companies, but in the US it’s only like 7-12% or something like that. Those folks in other countries do that for a reason because for example, if you were managing your own property and it’s not what you do for a living, it would be like me trying master social media or something like that (laughing). I probably wouldn’t do a great job. So why try do something that you’re not doing every day and you’re not good at. LW: Yes (chuckling). It’s like a plumber who charges a certain amount to go and fix something and he has to charge Harry Homeowner more because he tried to do it himself and made things worse. PF: Yes, actually believe it or not, it saves you money to hire us.
NOVA NARPM: What are some of the most common issues that landlords face when managing a rental property? LW: Setting the correct rental price! That’s the number one issue for anybody that has a rental property. A professional property management company can help establish the correct market rent for the property, and has more resources available if rent isn’t being paid on time to either get rent paid or get the tenant out soon so that a tenant that will pay rent can get in as soon as possible. We also know how to minimize damages to the property by instructing the tenants at lease signing on how to do certain things like change filters, winterize faucets, that sort of thing. And if there is some kind of tenant damage, the property management company knows better how to document that damage and properly remove that money from the security deposit. And I can tell you one other thing that is a real benefit to hiring a property management company as opposed to an individual owner managing it themselves is we tend to know an awful lot more vendors and we’ve got business relationship with vendors. So usually a repair done to a professionally managed property will be less expensive and done better than an individual owner just calling somebody from the Yellow Pages or a Google search. Don Pett: Also, usually when owners have a self-managed a property, the biggest issues that we see them encounter are typically either the tenant that’s in there is a problem or has been a problem and they either didn’t have a proper move-in report or documentation of the conditions of the property when the tenant moved in, so when it comes time for them to leave they’re kind of stuck because they don’t really know what they can do. Honestly, in some cases they can’t do anything because they didn’t document anything. And that’s a big part of having a professional company handle the property.
NOVA NARPM: Wilkinson PM has been in this business for a long time and you have probably seen it all. Can you recall a story or scenario where a landlord was facing some serious problems and realized they needed a professional property manager—and hired you—and then you helped resolve the problem(s)? LW: Well, yes. One of the benefits of being in this industry so long is that we’re large enough and have been around long enough that we have seen just about anything that could happen. Easily once a year, there’s an owner that’s contacting us is in a desperate situation because they have a tenant who hasn’t paid rent in months, there’s been damages, they don’t know how to get the tenant out as quickly as possible, they don’t know how to go after the tenant for charges, or how to get the house back on the market as soon as possible. PF: We have one going on like that right now–the owner/landlord is renting to his friend–and then you hear later that the property is in pretty bad shape– probably no longer a friend–but coming to us because they don’t know what to do next or what the next steps are.
NOVA NARPM: Tenants are seemingly the most complicated aspect of property management due to the need to thoroughly screen tenants, Fair Housing laws, special accommodations, Virginia laws and so forth. Can you talk about managing tenants and why a professional property management company is better equipped to handle these matters? LW: Well, we think we do a better job of screening tenants than any individual owner could do. We also know how to follow Fair Housing laws and like we said earlier, housing laws are the number one violation in rental properties. A property management company is an affirmative defense because we’re all licensed realtors here. We all go through realtor Fair Housing and also NARPM Fair Housing and ethics laws so it’s not uncommon for us to have Fair Housing issues discussed at every single office meeting that we have. And we have a policies and procedures manual in place talking about how we process applications so if there was a question of a Fair Housing violation we can show them that, prove “no, we don’t do that sort of thing,” and here’s our history of not doing that sort of thing. An individual owner will have none of that and they almost always lose in court because of that. PF: On top of that, residential property managers have excellent resources. If we somehow don’t have the correct answers, we have 5,000 phone numbers for other professionals that we can call talk to and find out what their opinion is because they’ve all dealt with things too, and collectively I’m sure we’ve dealt with every situation many times over, so together we have the best solutions.
NOVA NARPM: If an owner or investor does decide to hire a property management firm, what are their typical responsibilities and obligations? What does that look like? LW: Well, for us we try to have every owner be an active participant in the management of their property, and there are tax advantages to active participation. We can tell them how they can classify to be an active participant with the management of their property, which will maximize the number of tax deductions they can take. And that option has a more favorable tax depreciation schedule than a passive investor in real estate. PF: So once all the paperwork is filled out to be an active participant you’re good. If an owner wants to do as little as possible, there are only three things that they have to do and that is to approve all leases, approve all lease renewals, and approve repairs over a certain amount of money depending on what the agreement says. LW: And they also have to receive regular information about their investment. PF: Yes, so it’s almost completely hands-free, except for the paperwork. The paperwork is the most important part, you know, they have to know everything about that house and sometimes people come to us and their plane is flying out tomorrow and they’re like ‘hey I forgot to mail this out,’ so it really is the very beginning part that takes the most time. A lot of times we’re left without sufficient paperwork to get the job done well. So that would be the advice I would give is in the beginning get the property managers everything they need so they can get the job done well.
NOVA NARPM: What about the monthly management fee? PF: Of course an owner is going to be responsible for a monthly management fee. With a rental property, if you’re the type of people that don’t save much money, you’re going to have to start because if you own a rental property, you’re going to have to expect at least one month a year of lost income due to vacancy or repairs, at least. So, you want to have at least one month in the bank so you’re not depending on every single month as it comes in to pay the mortgage or whatever else you use the funds for. LW: And just to follow up on what Patrick said there about having a cushion of one month’s rent… I feel we’ve been around long enough that we’ve seen some strange things happen in Northern Virginia, and one of them was a sequestration that happened a couple years ago. And if you don’t remember that, basically the federal government said they were going to stop paying certain people, and defense contractors were big ones. Their pay was frozen. Of course there’s all kinds of defense contractors around here, not just in Northern Virginia but in Maryland and D.C. as well. When those tenants couldn’t pay their rent due to sequestration, unfortunately, there were many owners who then couldn’t pay their mortgage because they were dependent on that rent coming in. So, by not saving, a property owner could actually be endangering not just their investment property but their residents as well.
NOVA NARPM: If an owner or investor does decide they want to hire a property management firm, what should they look for? How can they find the best company in Northern Virginia to fit their needs? LW: Having a good rapport with your property management company is very important! I think that’s more important than rates or years of experience or anything else. Of course those factors would be incorporated into your relationship with your property manager but I would definitely recommend that an owner contact two or three property managers and interview them all and see who they think they can have the best relationship with. Remember, hopefully this will be a very long-term relationship and so you want to be able to get along with each other very well. PF: Price is not the most important thing. They say ‘you get what you pay for’ and that is almost always true. There are a lot of different variations of property management companies in terms of structure. Companies have different fees that they charge and some of those fees aren’t apparent right off the bat. So look for someone whose fees are very transparent and has an agreement that is based on the Northern Virginia Association of Realtors. You want an agreement that is very open and transparent as far as what you’re going to be charged, what you won’t be charged and what’s included in the management fee. I’d also like to add that you should look for a NARPM member and not necessarily just someone that has paid their dues, but someone that is active in NARPM. Look for designations that show that they’re not just going to occasional meetings but that they’re active in what NARPM does.
NOVA NARPM: An owner is probably going to read online reviews too, right? PF: Yes, absolutely. But the thing with property management reviews is they’re not like restaurant reviews for example. With restaurants, it’s pretty easy to find out if the reviews are right on or a little bit off. In property management, firms have the clients they represent, but then they have tenants too who are basically our customers. Tenants are usually the ones that leave negative reviews but you have to read through and see why they’re angry. Usually an angry tenant review is based on losing their security deposit. Our company, and I think most NARPM members would say this too, is not trying to take a tenants security deposit at all. That is not our goal. It actually makes our life easier when we don’t have to charge any money at all. Usually there is a very good reason why they lost their security deposit. LW: We’ve actually had new owners happy to see a few negative reviews because it meant we’re not pushovers. We pay attention to the property. PF: Unfortunately a negative tenant review can cause a potential new tenant to say something like “I was going to use this company but then I saw these reviews and decided not to.” So that can happen. But reviews are important. And you should always see responses to the reviews. If it’s a negative review the owner needs to respond with their side of what actually happened.
Wilkinson Property Management has been serving the Northern Virginia market for 30 years and has three locations including Alexandria, Fredericksburg, and Solomons Maryland. To learn more about them visit www.wilkinsonpm.com and find them on Facebook at @wilkinsonpm. To connect with NOVA NARPM on Facebook, find us at @NOVANARPM