From the very beginning of when we began investing in rental properties, I knew I needed someone who would be responsible for managing our properties. Here is why: I have always been aware of my biggest weakness: i.e., having to deal with people, especially those who do not do what they’re supposed to get done. And real estate is a people business.
Most of my investor friends, on the other hand, manage their own properties. Not only do they do a good job of it, but they seem to genuinely enjoy the interactions with their tenants.
I’ve never regretted my decision, however. For my peace of mind, the management fee that we pay for rent collected each month is worth every penny. Never has this benefit come into a sharper focus than when the Covid-19 lockdown began in March 2020. Having to keep up with the ever-changing rules alone would have been overwhelming; for example, when we can and cannot evict non-paying tenants. Worse, having to figure out how to deal with the worst-case scenario – that is, with no rental income coming in – would have been enough to make some people give up entirely on their rental-property business.
Eviction Diversion Program
What follows is a brief review of how Michigan’s Eviction Diversion Program worked for us. By the way, North Bloomfield Properties is the property-management company that has been managing our properties since 2006.
So far, one of our tenants was impacted financially by the lockdown. Starting in August 2020, he was able to make only partial payments. Under the circumstance, we appreciated very much that (1) he was making every effort to keep up with the payments and (2) NBP stayed on top of the situation from the very beginning. While we did need to scrape funds to keep making mortgage payments for a few months, thanks to NBP having initiated pursuing funds through EDP early enough, our cashflow began to get back to normal relatively quickly.
The tenant resumed paying the full-rent amount starting with the December 2020 statement. With the January 2021 statement, we received all outstanding balances from this tenant through EDP. As usual, we paid management fees on all collected rent. EDP also covered a portion of the legal fees as well.
Talk about the legal fees, they were quite reasonable precisely because NBP manages a large pool of properties and is, therefore, able to retain an attorney on a flat-fee basis. For many mom-and-pop business entities that manage their own properties, the hourly fee charged by a typical attorney could easily kill their rental-property business.
I learned, after the fact, that EDP did not allow late fees (levied on tenants that pay late) to be recovered. Since our agreement with NBP stipulates that they keep the late fees, this had no impact on our bottom line. Despite the extra work that NBP had to do related to the lockdown, what they made was simply the usual management fee based on collected rent. I’m sincerely grateful for all the work that NBP performs, seemingly effortlessly, as if no economic calamity were happening in the external world.
Lastly, some good news for you, investor-readers, on the topic of public financial assistance for tenants.
- For those who are thinking that they might like to take advantage of Michigan’s Eviction Diversion Program, its cut-off date was extended from December 31, 2020.
- Click here to find out the details.
- There are additional programs being made available from other public entities, such as OSHA, Oakland County, Salvation Army, etc.
- Again, I found NBP to have an up-to-date understanding of which public entities offer what types of programs and the details associated with each.
Thank you, NBP, for the great work that you have been doing on our behalf all these years!
Happy investing!
