# Entrepreneur of the Week Yaron Feldberg # Post 4
Mazel Tov! After many searches, you have purchased an investment property. Now the hard part begins. Remember you rented an apartment? You gave checks ahead, a guarantee deposit or even a guarantee or 2, and only then did you enter the apartment. How many times have you not paid rent? How many people do you know who have been in courts because of the property? Maybe you're still renting or renting.
Now forget everything you know about tenants in Israel. The culture, laws, conditions and conduct are different from Israel. The process becomes more complicated when the property is in a lower socio-economic area. On the face of it this sounds logical. But investors like high returns, 10%, 15% maybe even 50%? Low-priced properties that receive high returns, are usually in an area where the risk of getting involved with a tenant is high.
There are full of ways to deal with unpaid tenants, and there are full of ways to prevent unpaid tenants. It is very important to know the rules of the area. What a property should look like, what is acceptable to give, how much is acceptable to take, what taxes should be paid when and how much, what are the rights and obligations of the tenant and what are the rights and obligations of the LANDLORD (owner), local, neighborhood regulations, etc. Lots of locals run their own properties. Especially that it is one property or 2. When they have more they will prefer to take an asset management company or leave their workplace to mess with the assets. But an owner who owns a property in Pennsylvania, to manage it he must live close to the property up to 45 miles from the property. This means that if you live in Israel you are 225 times far from the required distance and therefore you will need a management company.
So what does a management company do?
She searches, checks and puts in the tenant after the contract is signed. It then takes care of the collection of the lease and enforcement of the contract rules. In addition, it takes care of repairs and maintenance of the property. Management companies prefer assets that are easy to manage, rather than assets that are going to fall apart every moment and require employment every Monday and Thursday. They prefer a property that will be easy to find good tenants, because problematic tenants is also preoccupation, telephones, quarrels, discomfort on all sides. In short a problematic asset is not profitable for a management company to manage, and if you want good service on your assets it will cost you money.
What does a management company not do? Usually does not pay taxes, insurance, water, gas and electricity bills. They will not pay you the mortgage or your friends (will transfer funds to the 3rd party) and they are not their bookkeeping. Management companies are companies that provide service on tenant management. Every management company has its own ways in which it manages the property. Every management has its advantages. It's at the operational level.
Other things that a good management company gives, advice on how to manage the assets strategically. Future thinking of property management, presentation of profitability of the property, etc.
Some tips that I think a good investor is starting to know:
· Get recommendations on the management company
· Make sure what service they provide, for example, what they pay and what not.
· Listen to the management company. Only if their collaboration can you get quality management. They know better than you how to deal with a tenant.
· Do not expect the management company to do magic for you at home. If you need to renovate do not save money. A property, like your home, requires constant maintenance.
Cheap and old homes will have high maintenance. Unless you replace everything (plumbing, electricity, roof, windows, doors, heating systems, kitchen, bathroom, etc.) new - minus problems (almost minus).
A good management company does not need you, you need them. They do not owe you anything other than what is written in the agreement.
Trust is an important thing, so check carefully who the company that is going to manage your property is.
Keep in mind that every state has different laws and regulations, so I'm talking mostly about Pennsylvania. It could be that the name is different. So always check and pay, make a list of questions and email them.
Because most of my clients are Israeli, I have developed a method to prevent certain problems. I give a lot of services that local customers do not need. For example, that the mail reaches me, so I have control over the mail (in the US I like letters, I get over 50 letters a week) if a problem arises, it is dealt with immediately. This way we save fines that may be incurred because an investor received a letter he did not understand, threw away and after a few months discover that there is a pile of fines, arrest warrants against the owner because he did not mow the lawn and is now high or a lawsuit (LIEN) against the house that could go to auction. .
With asset management being a business, I have a lot of clients who have become good friends, and the start has not always been easy. Patience and a phase change for an investor's thinking have made the process simpler and more productive.