Guest Blog by Kathleen Gaspari
Kathleen Gaspari is a recent graduate of Advanta IRA University (Advanta U), where she earned the designation of self-directed IRA specialist. She works for Berkshire Hathaway Home Services and is incredibly experienced in the investment property realm. We believe the knowledge she provides below will be helpful to those of you who hold these assets.
Choosing Wisely: The Importance of Finding the Right Property Manager for Your Investment
Using your IRA to invest in real estate is not a new idea but it is starting to become more common. As a realtor and property manager I became aware of this investment strategy a few years ago. To a professional that specializes in the management of residential investment properties it is a dream come true—owners buying solid rental units and treating them like a real business.
One of the rules of purchasing rental property with your IRA is that you are not allowed to be compensated for self-managing the property. You must be very careful to insure that all income and expenses flow in and out of the IRA and to do not come into your personal possession. To avoid any potential issues, this could mean choosing a trusted professional to manage the property and be your eyes and ears for the protection of your investment.
My career has been devoted to leasing and property management. My days consist of serving owners and caring for tenant needs. This takes not only knowledge of landlord tenant law, but a thorough understanding of the cycle of property management and the experience that has grown out of working “in the weeds” every day to solve the challenges associated with residential leasing activities.
The potential success of any investment depends on selecting the right investments. The same holds true for choosing the right property manager. You are hiring an individual to act on your behalf and as such you should establish criteria that your prospective manager should meet.
1. Are they a full time residential property manager? Sales agents that occasionally “do a rental” or take a rental listing “as a favor” are not the proper fit for a serious investment. There are risks associated with leasing property that require skill and education.
2. Is your prospective manager part of a professional association such as The National Association of Residential Property Managers (NARPM®)? This organization is devoted to education and professionalism. Limiting the liability on any investment begins with a solid educational foundation.
3. Has your agent earned professional designations, or has the company earned a company-wide designation such as those offered by NARPM®? My company is extremely proud of our Certified Residential Management Company Designation (CRMC®). Professional development such as earning this prestigious designation demonstrates our dedication to our clients and their needs.
4. Is your prospective manager knowledgeable on trending topics, committed to continuing education, and do they keep up with changing laws? New legislation is passed regularly and it is critical to be aware of it, understand it, and take proactive steps to comply with it. This is essential when you are dealing with tenants and owners and a variety of legal issues that may arise.
5. Is your manager available when you need them? Are they someone you wouldn’t mind having a cup of coffee with? Remember, this is a long-term relationship. If your initial impression is not favorable, it probably won’t get better as difficulties arise. Compatibility, mutual respect, and trust should form the basis for this relationship. It takes a certain temperament to always be in the middle of people’s differing wants and needs. You need someone who can serve an owner professionally while still maintaining a positive attitude with tenants. A manager who is condescending and harsh with tenants puts your investment at risk. Those of us in this business like to compare these relationships to a marriage. Do you want the marriage that is failing and barely tolerable? Or would you prefer a happy marriage where the parties involved still communicate openly, smile, and accomplish great things?
Your wish list for a residential asset manager should also include a professional that values teamwork and understands the importance of working well with others. Someone who is committed to excellence and integrity in all that they do, and has a passion for the path they have chosen. When you decide to purchase that investment property, either with your IRA or conventionally, consider these tips and you will find a professional property manager that you not only trust and like, but someone that can help minimize your risk and maximize your investment potential.
If you have questions regarding this article, please contact our guest blogger, Kathleen Gaspari. As a graduate of Advanta U, she has knowledge of how self-directed IRAs can invest in rental properties and can answer many of your questions regarding the points she wrote above in her area of expertise.
Berkshire Hathaway Home Services
Serving Pinellas, Pasco, Hillsborough, Hernando, Polk and Highlands Counties
Asset Portfolio Management and Leasing
Commercial Sales and Leasing