You can easily get caught between two solutions for property management:
- Hire a full service property manager
- Do everything yourself
If you are similar to me, then you do not find either option attractive. The first is not very transparent and can be expensive. The second is time-intensive and downright frustrating. Since when did real estate investors have to perform so many administrative tasks, such as scheduling showings and calling plumbers?
Here are the 5 steps to get affordable management. Follow these steps and you will be able to focus more time on strategic real estate investments.
#1: Find a good virtual assistant
You will find that a remote property manager may offer you with benefits that you did not realize you could get. Here are some benefits:
- 24/7 service: Some remote agencies will be able to support your needs, 24 hours a day. If there is an emergency when you are sleeping, then they will be able to take the initial steps towards resolving the issue.
- Reduced fees: If you live in a metropolitan area, then the hourly wage may cost you the same amount as a full service property manager. However, there are services that optimize on headcount to provide an affordable price without reducing quality of its agents.
- Consolidation of your portfolio: If you invest in multiple cities, where you are diversifying your property management, then you will find that these remote agents can work with your entire portfolio.
#2: Use software
It is worth every penny. Paying someone, regardless of whether they are remote or local, is more than the $50 you spend on software to automate the task. The price is basically three hours of their time, and software will do more than three hours of work. The last thing that you want is to pay someone to manually confirm rent has been collected or to post your property on the various websites.
#3: Build relationships with local agents
I have never been an advocate of using unlicensed support. You may have one instance that turns into a liability nightmare. Whenever possible, find licensed real estate agents and property managers to show your rental property and perform inspections. They understand fair housing and know how to sell the property.
In addition, these local agents will begin to know your property and your tenants. They are incentivized to build positive relationships with prospective tenants, since tenants may eventually become home buyers. And, you receive your Saturdays back while the agent shows your rental property.
#4: Document everything
An angry tenant may argue that you did not communicate well enough or your maintenance request response time was too slow. These claims often arise when you are deducting money from the security deposit or tenants fall behind on rent payments. If you document everything in a consolidated system, then you have evidence (timestamps and details) that you were not negligent.
In addition, documentation helps with administrative tasks. The same questions get asked constantly:
- Where is the breaker panel (aka breaker box)?
- Who is responsible for mowing the lawn?
- Who are the service providers in my area? When am I expected to transfer service into my name?
You should have intelligent software that documents these questions and then sends the notifications to tenants and service professionals when needed (during move-in or for service calls).
#5: Act professional
A common mistake is becoming friends with your tenants. Do-it-yourself landlords with no systems often find themselves in a predicament - tenants to not take them seriously. The landlord has merged business and personal life. Amateur mistakes, such as friending your tenant on Facebook or giving them your personal email, can often lead to a tenant taking advantage of you. They may ask for an extension on the rent deadline or leave the move out condition in a state of array.
There is a time and place to find friends, but in real estate investing, you need to set boundaries.
Property management does not need to negatively impact your profits. It should be an expense item that is reasonable, meaning it is affordable and has mitigated risks associated with owning a rental property. When you explore property management for your long-term rentals, use the above five steps as a guide to mitigate your risk and save time and money in your management.