Do you want to explore investing in real estate but you are not sure if you want to be a landlord? Well let’s just face it whether you actively manage your properties or if you hire a property manager you will be considered a landlord. What you are not sure of is if you want to manage the day to day yourself. I personally recommend first time investors with one property manage it themselves for at least the first year. I think it is important to understand your asset and your “business.” If you do not have a grasp on how and what your asset is producing, you will never really know how good of a job your property manager is doing for you when and if you hire one.
Personally, I manager all my investment properties and always have. At this stage of my life, it is my “job” and I really enjoy doing it. When I owned my catering business, I had to squeeze in time to handle my properties and it often was insanely stressful. But I like things done a certain way and like to be 100% in control of my assets and make the ultimate decisions and therefore being my own property manager works for me. It does not work for everyone. Many do not have the time and most do not have the desire.
When deciding if a property manager is a smart decision for you there are things you must ask yourself and answer honestly about your time and your personality. I have listed a few of them below.
1. Do you have customer service skills? Tenants are your customers and they deserve to be treated with respect. Being the greedy landlord who has no regard for people is not going to get you far. I have seen landlords fail very quickly when all they have is money on their mind. Tending to maintenance issues in a timely manner is super important. If you do not care if your tenant is without heat (which is illegal) or if they must put a pot on the floor to deal with a leaky roof, not only will the housing authority come after you, so will karma.
2. Are you particular about how you want things done? Trust me property managers will not drive by your property and make sure the lawn has been mowed or it is free of trash. They will handle rent collections, evictions and maintenance issues. If you are particular about your “things” and like things done a certain way, you may want to consider managing your own property.
3. How much time do you have? Real estate, whether a $113,000 home or a $340,000 home, is a huge asset. You must make the time to know how it is performing and how it is maintained. If you keep the property in good shape your goal of monthly cash flow and appreciation is just about a no brainer. If you just look for the rent each month and have no idea what your property looks like on the inside or out, you are taking a shot in the dark on the future of your investment. Some time needs to be dedicated to your asset. If you have a full-time job and do not have time to call the plumber for a leaky toilet and follow through it was handled a property manager is your best bet.
4. Do you enjoy being a boss? A hands-on landlord must have thick skin or you will get eaten alive. Tenants can be amazing, but they can also be exceedingly difficult. You must learn how to manage expectations and personalities. You must know when to put your foot down and when to pick and choose your battles. You also must learn to listen to your intuition and have hard conversations. You will often be regarded as the bad guy (girl) and for someone like me with a deep conscious it can be extremely hard not to take things personal and feel downright awful when you must make tough decisions. Remember we are all people, but unfortunately not all people have the best intentions. Leadership and quick decision-making skills are an absolute must to being a hands-on landlord.
5. Are you willing to learn and know the tenant/landlord laws? Tenant/landlord laws are governed by local and state authorities. I have learned many tenants know the law better than I do. If you are going to manage your own properties, you must know these as well as fair housing laws. If you are going to hire a property manager be certain they are familiar with all of these regulations. A good property manager knows them like the back of their hand.
Managing your own property(s) or hiring a property manager is a big decision. There are a lot of property managers in our area and some are better than others. Be sure you interview them; they will be taking care of your biggest asset. Often a property manager comes along with a tenant occupied home. Next month we will discuss the do’s and dont's of purchasing a tenant occupied home and we will dive into this deeper. Until then if there is anything in the world I can do for you, please reach out.