Manage Me!!!!!!!

Last week I discussed the trait that we share with Nobel Prize winning economists - we don't manage our money all that well. Even if we have gotten good results due to a rising market, most people admit to me that they don't spend nearly enough time at managing their 401(k) or wherever their bulk of their funds are located.

Before leaving that topic, I do encourage you to set up some kind of schedule, like the first Monday of the month or whatever to check your portfolio's progress. It is so easy today. My bank actually will allow me to specify other accounts, like a stock brokerage account, and when I go to check my bank account, bingo, there are all the other assets listed as well.

I am also a believer in getting professional help, like from a financial planner or stockbroker, someone who is in a position to offer you advice. If you have been following the advice, "YOU CAN DO THIS!" but find out that you really can't, now's a good time to make a change. If you talk with friends and people at work, I'm sure you'll get a recommendation to someone talented and honest.

There is another type of investment that will simply not allow you NOT to manage it; investment real estate. This is an investment that practically yells out, "Manage me!" The good news is that most of the time, in most parts of the country, a well-managed investment property can out-perform other investments.

Let's assume that you have already bought your property. Even if you have a real estate agent working to find a tenant, the primary responsibility of approving the tenant still rests with you. I do not advise delegating that to your agent. Get a credit report and ask for a reference on the last place they rented. It's not that it's that important to get the right tenant. What's important is to avoid the wrong one!

I don't want to bore you with horror stories, but there are a lot of them. If you want to hear some, just ask anyone who owns rental properties. And when you find that you have a bad tenant, you just can't stop dancing. They won't let you! They may stop paying their rent, but you can't fire them. Usually you have to go through a formal eviction process, which is time-consuming, expensive, and gut-wrenching.

And it may still not be over. In their parting act, they may well decide to trash your property. It can easily cost a couple of thousand dollars to get a property back to rentable condition. And don't bother suing for damages. Even if you win a judgment, you already know they don't have any money.

It is important to check the condition of the property occasionally too. You have a legal right to inspect the property at reasonable hours given a little advance notice. I'm talking about small things here because presumably you determined the condition of big things, like the roof, before you purchased the property.

Deciding how much to charge for rent is another management decision. When you bought the property, you almost certainly should have paid for and received a Rental Survey done by the appraiser. That will give you a starting point. You can do your own research too by looking at ads in the paper. Take time to look at those homes and compare them with the desirability of your home.

When tenants have been in your home and proved themselves to be desirable, what do you do when rental rates in your area move up? Most landlords seem averse to raising the rents once they have found a good tenant. I have seen situations where a tenant of five years standing is paying several hundred dollars a month less than current market. That amounts to thousands of dollars every year! That's your profit! I agree that you certainly ought to incentivize a good tenant to stay, but if you raise the rent to market, what are they going to do? They'd have to pay market rent at the next place! Why not pay it at yours.

In summary, a rental property can be a terrific investment for you, provided you manage it. And one final word of advice to prospective landlords from a friend who is a professional:

"Any act of kindness will be viewed as a sign of weakness."