The rental rundown: What it takes to be successful in the rental business

Monday, August 16, 2010
For rent, for lease, and for sale signs are displayed in the windows of several buildings on Main Street in Cape Girardeau. (Kristin Eberts)

Real estate can be a worthwhile investment, but when it comes to handling maintenance and tenants, it can also become a time-consuming venture. Cape Girardeau has a number of property management companies willing to handle the details for you -- and then hand you the check.

"Owners of a lot of property don't like the hassles and headaches, but they can leave it up to us to collect the rent, oversee the properties and look out for the future of their investments," says Tina McMahon, owner/property manager at McClanahan Realty and Property Management, which handles commercial, residential and multipurpose properties for clients throughout Southeast Missouri and even as far as China.

Dave Soto, broker/owner of Soto Property Management, says sending checks to his investors each month is one of the best parts of his job.

"I enjoy coming to work every day. I deal with a lot of situations, and there's always a different way to solve them. I have fun with the challenges," says Soto, who works mainly with residential properties and some commercial properties. As for the investors, "They can invest without having to be involved on a day-to-day basis," says Soto.

Soto works with investors locally and throughout the country, handling everything from screening tenants and collecting rent to showing properties and doing small maintenance jobs. He also teaches public seminars on how to invest in real estate and reap the rewards, like positive cash flow and tax advantages. "There are deals to be made as long as tenants can pay their expenses," says Soto.

Soto believes in two main keys to success: learning about the real estate business and treating your investments like a business, right down to a financial analysis of all potential properties. Too many people become emotionally involved in their property, says Soto, but it's wise to treat it like a business at all times.

McMahon got her start in real estate in the 1980s, took a break to go to college and complete other life goals, and bought McClanahan Realty from Jim and Jan McClanahan in 2004. "It's nice to help people find a place to live," says McMahon. "A lot of times people come to us when they're having a hard time finding a place to live. We sit down with them to see what their needs are. I get a good feeling when I help somebody."

And McMahon doesn't mind sharing her secret to property management success. "It's like a friend told me one time: You only get out what you put in. If you work hard and do right by people, you will do well," says McMahon. "We work hard and we treat people the way we want to be treated -- with respect. I think that's what built our business into what we are."

Jeremy Ferguson, property manager for Executive Property Management, says preparation, communication and good background checks are essential in the rental business. "That's something that we take great pride in because what we've found is that screening as we should be helps us in long run," says Ferguson. "We don't have as many problems with people not being able to pay their rent. If we find out a person's rental history and see they had previous trouble with a landlord, that clues us in that we need to be careful if we rent to them. We want good feedback from other landlords."

Property owners should also be prepared for some maintenance expenses so they can invest properly and preserve the home's value. "The No. 1 thing is to know what you're investing in," says Ferguson. "Be consistent and hold to the guidelines set out in the lease," he adds. "Communication is key. Communicate on the front line what you expect, and spell out your expectations."

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