Chicago Property Management Tips

Buying your first investment property can be exciting. The thought of being your own boss, retiring young enough to really enjoy it, and of course making money are all thoughts that come to mind. But we cannot forget that to achieve this level of success in buy and hold real estate, we must also do the work. This why Chicago Property Management Tips are so important to your investment. Just because you purchased an asset that is supposed to return 10% cash on cash doesn’t mean that it will actually do so – not without effort on your part. That is why you must consider the following Chicago Property Management Tips.

Tenant Relations

• Screen your tenants. Do a background check, credit check, criminal history, proof of identity, proof of income and check references. Best way to have good tenant relations is to find good tenants. Save 90% of your problems up front.
• Maintain the building. Mow the lawn, shovel the snow, tend the gardens, pick up debris and trash, clean the common areas. If the grounds aren’t kept, the tenants may treat you and your property similarly.
• Be prompt. Address tenant questions or concerns as soon as possible. Delays could cause them to make your life miserable.
• Check in periodically, ask how things are going, care.
• Give a small gift once or twice a year. A little goes a long way. Maybe when they move in you leave a bottle of wine in the fridge with a nice note. Maybe on the holidays you send a small gift card. Then when they move out, perhaps they won’t put a hole in the wall.
• Cash for keys. Sometimes it’s just better to offer a small sum of money to get a bad seed out of your building. It will cost a lot less than lost rent or court costs.

Maintenance

• HVAC – Get the heating systems serviced at least once per year. Better yet, once before Winter. This will extend the life of your HVAC and prevent it from shutting down dead of winter. Saves you money and hassle!
• Gutters – Have them cleaned at least once per year. This will keep water away from your foundation and out of your exterior walls.
• Masonry/Siding – Have this checked at least once per year. Fill any missing mortar in masonry, replace any holes or peeling panels in siding to avoid water penetration.
• Lawn Care – Cut the lawn periodically and remove weeds. Curb appeal will allow you to achieve higher rents.
• Snow Removal – This is a major safety concern. You don’t want any slip and fall lawsuits so make sure to clear the snow from your property when applicable.
• Roof – Check the roof at least once per year. Make sure there are no missing or loose shingles. If you have a flat roof, make sure the protective membrane coating isn’t cracking from exposure to the sun. Check the parapet walls for cracks or holes where water can get in. Check the chimney and repair missing mortar or concrete as needed.
• Windows – Check the seals of the windows and caulk as needed. This will keep heating costs down and prevent moisture from getting in. Repaint any areas of wood framing that are exposed to prolong the life of the windows.
• Handy Man – Find someone affordable to do the little jobs that you don’t want to do. Give them access to a lockbox on the property so that when you’re on the beach you can relax.
• Contractor List – Prepare a list of contractors for each trade including generalists. You’ll want about 3 of each. These are who you can call when you have issues in your building.

Budgeting

• 5 Year Capital Plan – Look at the components of your home and their useful lives and create a 5 year capital plan to save for repairs or replacement.
• Capture all Expenses – Make sure when you are making repairs or incurring expenses that they are all properly coming out of your business bank account. Any missed expenses when filing taxes means more tax liability. Consult a CPA to make sure you’re not missing anything.
• Rainy Day Fund – All that cash flow is great, until it rains. And when it rains, it pours as they say. You never know when life is going to take a negative financial turn, but if/when it does, make sure you’re prepared. Don’t take all of the profit every year from your investment and either reinvest it or spend it. Leave some behind in your business account or personal account for those random occurrences that could cost you a lot of money. That way, when those things do happen, you don’t have to sell your building if you don’t want to.

With a combination of tenant relations, maintenance and budgeting you should be on your way to achieving that 10% cash on cash return your realtor told you about. The better the manager you are, the less capital expenditures you’ll have, the lower tenant turnover rate you’ll have and the more cash flow you’ll receive.

Learn how to invest in Chicago at www.chicagoREinvestment.com.