While many people see residential real estate as a good investment, they often don’t want the hassle that comes with being a landlord.
Many investors turn to companies or individuals who will manage, lease and maintain rental houses, duplexes and condos.
Called “scattered site residential management” in the real estate industry, such services represent “one of the largest growing segments,” says Scott Ghertner, president-elect of the Institute of Real Estate Management and vice president of Nashville-based Ghertner & Co.
Ghertner & Co. represents more than 150 scattered site units for 85 owners. That makes up about 20 percent of the management company’s revenues.
“It’s a full-time job that requires a lot of professional judgment,” Ghertner says. “You have to consider insurance, the liability of being a landlord and maintenance. How do you get a plumber to a house at 1 a.m.?”
Most of the companies in the scattered site residential management business offer the same services: they market, lease and maintain the properties, collect the rent and provide financial statements to the owners.
“If a toilet is overflowing in the middle of the night, we’ll get somebody out there and call the owner,” says Steve Ghertner, Scott’s brother and president of the family business.
The company also will get bids on less urgent projects, like painting and gutter-cleaning.
Because Ghertner & Co. has so much work for contractors, it usually can get handiwork done at a more economical price, Steve Ghertner says.
“It’s hard to get maintenance services in Nashville because of the tight labor market, so it makes sense to use a company like ours,” he said.
Ghertner & Co.’s management fees start at 10 percent of collected rents.
“If we put in a problem tenant and they don’t pay their rent, we don’t get paid,” Steve Ghertner says.
The company also charges one-third of the first month’s rent for a leasing fee, and monthly financial statements are provided to the property owner. The property owner pays for any advertising.
The company checks out each prospective tenant’s background and credit history to qualify him or her.
“Most people are a little leery about being a landlord and need some professional help,” says Beverly Browning of Browning-Gordon & Co. Inc., which represents more than 300 scattered site properties.
The typical scattered site owner is a professional who owns one or two rental properties. But others also use the service, such as people who have vacation homes in a city where they don’t live.
“There’s also the person who is going to be doing it for a short time because they got stuck with two homes and need to do something with one of them,” says Browning .
“When the real estate market is not so strong, owners sometimes can’t sell their property and become owners of rental property by circumstance,” she says.
Walter Timmons of Timmons Properties got into scattered site management at the request of some condo owners.
“We were managing condo associations, and someone would call and say, `I’ve been transferred, I don’t have time to sell my unit, would you mind handling the leasing of it?’ ” Timmons says.
Richard Bryan, a real estate agent with Fridrich & Clark Realty, has scattered site management clients who bought the rental properties as retirement investments.
“In 30 years or less, they’ll own something free and clear that they can either sell or get a monthly income with,” he says.
Bryan began providing scattered site management as a service to his clients when he got into real estate seven years ago.
“I had two clients who wanted to have $1 million of property accumulated by the time they were 50,” Bryan says. “We would go out every weekend looking for houses. When they bought houses or duplexes, I would manage them.”
Offering the service works well for Bryan, because it provides a steady income in addition to what he makes selling real estate. And he keeps his name in the minds of property owners for their future buying and selling needs.
Ghertner & Co. also sees scattered site management as another way to service customers.
“We have a lot of owners who may have an apartment complex, three duplexes and an office building, and they want one shop to handle all of it,” Ghertner says.
Because the scattered site properties are not concentrated in one area the way apartment complexes are, more work is involved.
“We weren’t actively seeking (scattered site residential management clients) until recently,” says Steve Ghertner. “Now, we see it as a growth area because Nashville is growing so much.”
