Updated: Feb 19
There are so many ways to be successful in real estate. You have people that prefer not to even deal with managing properties and others who want to be engaged. It's understandable starting off that way to save yourself the usual 10% of your rental property manager fee; you would like to manage it yourself. I advise you to do your research. There is a lot to learn before getting into managing your properties, but there are also somethings you won't understand until you go through it yourself. I want to just want to save you some the headaches and money in this blog.
1. Use A Property Management System To ensure you are keeping proper documentation of leases, notices, maintenance needed tickets, payments made, screening tenants, etc., you need a system that will help you consolidate that information. Avail and Buildium are both tools I've used to manage my properties remotely. This has allowed me to be a more independent landlord. I can send out reminder messages of rent being due as well. Buildium starts at $50 a month, and Avail is $5 per unit you add to manage. Both have their advantages, and for those of you who have the time and capability to run your rental properties, I advise using these programs or something similar to them. I've learned that no one will take care of your real estate as you will. I am not saying that it is impossible to find a reliable property manager. Still, while you are searching for the right one and don't want to hold up your real estate investment endeavors, I suggest you go the remote managing route.
2. Properly Screen Your Tenants
This is a tough one because often we get eager and just want to fill in our unit so we can hurry up and pay our mortgage. Trust me, I understand this, but having a "tenant from hell" is more costly than paying your mortgage out of pocket. Have your criteria and never deviate from it. Background checks are a must! For most landlords having a felony in their unit is a no go or if they have had a recent judgment from being evicted. If your standard is for the tenant's monthly income to be three times the rent, then stick to it. The better you screen your tenant, the more likely you will have a resident who pays on time every time for years to come. The goal is longevity and retention when keeping buy and hold real estate. Frequently, if we go for the quick fix, we usually pay for it sooner or later. I have used the Rent Like A Pro Youtube channel for several tips I currently use to manage my properties professionally and effectively.
3. Legal Services
One way I protect myself if, in this case, I need to take legal action on one of my tenants is using LegalShield. The personal plan costs $24.95 a month, and the business plan (which is what I use) is $39 a month. They provide advice and consultation, an attorney to represent you in court to defend you, review documents and contracts, along with drafting documents and contracts. Since I have a full-time job, this service comes in handy with me managing my properties. This also saves me money in paying $300-400 an hour for a lawyer in my area.
4. Handle Maintenance Issues Expeditiously
One way to push a tenant into not wanting to pay their rent or taking legal action against you is not handling maintenance issues quickly. Treat maintenance concerns as if you were living in the unit yourself. Just as much as you want your tenant to pay their rent, they want to be taken care of when repairs are needed. This is a relationship, and in relationships, trust is a must. Without the tenant's faith, you will more than likely not retain them. As soon as you receive a trouble call from your tenant, make it your business to notify the tenant that their issue is being looked into, and you will get back to them shortly. Who doesn't love excellent customer service? Be transparent on how long repairs will take. Keep in mind you may have to work with a contractor, and providing them clear guidance on what exactly needs to get done will save you time.
5. Keep Everything In Writing
Never negotiate or correspond with your tenants on topics that are held against you later on. If you and your tenant agree that due to you replacing their broken toilet a week later than it should've been, you are willing to take $50 off their next month's rent, then it should be in writing. Corresponding on an agreement or discussion in the text, email, or letter suffices. These forms of communication can always be copied or printed out for future reference. You do not want to go through the "he said , she said," routine in court because your tenant all of a sudden has amnesia from one of the verbal agreement you both made previously.
6. Think Bigger Picture
As you start to become comfortable managing your properties, and have developed a steady system, start looking at long term strategies and goals. Look at your tenant retention. What are you doing to ensure your tenants stay and renew their leases? I like to offer my tenants $200 off their first month's rent if they sign up for an 18-month lease vice 12 months. If the tenant enjoys my unit, then they planned to stay anyway, and I've just secured my cash flow for another year and a half. Think about what can be done to lessen expenditures. What are you installing in your units to lower the water or electric bill? Learn from your mistakes and only pay for them once. If you ever decide to turn over your units to a property management company, you'll know what to look for in finding a good fit for your standards. You got this!
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Below is a recommended book that can help you with your real estate investor and property manager journey: