Opening your own property management business? This true story from PJ’s Property Management will give you some tips on how to avoid real trouble.
The property manager never sleeps. We’re the ones who respond to the 2:00 a.m. phone calls from tenants with a flooded laundry room. It’s our job to recover lost revenue when a tenant skips out owing back-rent. And, yes, the property management agent is also required to respond to lawsuits filed by renters and service providers when they perceive negligence. Our professional service is all about the risk management.
As professional property managers with a reputation to protect, we assume certain risks and responsibilities for the property owner. These are risks associated with property maintenance (including vandalism or property damage), lease agreements (including tenant discrimination or wrongful eviction), collection of rent money and so much more. Believe me, the list is long.
Here’s an example of just one of the things that can go wrong for a property management agent. I did a final walk through of a lovely single family rental the night before the new tenants were to move in. I went in through the attached garage and I left the same way, closing the garage door by hand.
The moving company arrived on time and delivered their belongings without a hitch. All was well until the new renters awoke the next morning to a vile smell in the house. It turned out to be dangerous raccoon scat. They discovered boxes of non-perishable foods ripped open and scattered about. There was a raccoon in the kitchen! The new tenants opened the kitchen door and frantically herded the terrified raccoon out.
Then they called the property manager; me. As property management professionals, our office staff has experienced some unusual situations, and here was another example of the weird and wonderful. Sadly though, his particular situation led to a lawsuit against our property management company.
I have no idea how or when the raccoon got into the house; nobody knows. The tenants and their lawyer didn’t really care. Their belongings were damaged, their kids possibly exposed to ringworm from the scat and their home unlivable.
As the property manager, it was all falling on me. Thankfully, all I had to do was call my Errors & Omissions insurance provider. They provided an attorney to represent me which meant I didn’t have defense costs. My property management small business insurance coverage included the house clean-up and satisfactorily compensated the renters, who honored their lease and stayed.
My reputation was salvaged with both the tenant and property owner because I was able to quickly remedy the situation through my liability insurance company. You know, if there had been no insurance, those tenants could have sued me personally. I could have lost my home and my career.
Income property is an excellent investment and hedge against inflation. If you own income property in the form of apartment buildings, single family detached homes, condominiums or town homes, you’ll want a property manager, unless you want endless headaches. And, if you have a property management business, you’ll want professional liability insurance that includes errors and omissions insurance unless you want to carry the costs of a lawsuit.
ASK JOHN FOR THE BEST INSURANCE QUOTE YOU’LL GET ALL DAY!