Is Managing Your Own Rental Properties a Huge Mistake
Renters Warehouse Blog
Is Managing Your Own Rental Properties a Huge Mistake
As a landlord, there's a good chance that sooner or later you may find yourself facing challenges with your rental property. Maybe you've had a crazy week, with lots of emergency repairs at the rental. Or maybe it's that time of year again, where you need to do maintenance at your rental and are struggling to fit everything in.
After a particularly challenging week, you might find yourself wondering why you decided to get into income properties in the first place -and considering whether there might be an easier way to earn a passive income!
If this sounds familiar to you, fear not! While rental management can be time-consuming and challenging, this doesn't mean that you're unqualified, or that you've made a big mistake. Instead, it's a clear sign that you've reached the turning point that all landlords arrive at eventually -you've simply reached a point where it's time to outsource some of that work!
Rental properties are an investment that can serve as a passive income; but that's only true when you're not spending all of your spare time on maintenance and management.
If you'd like to stop doing tenant sourcing and screening, maintenance, repairs, and fielding phone calls -and instead, begin focusing your time on other pursuits -like growing your investment portfolio, then this article's for you. In it, we'll answer the question of whether or not you should go the DIY route with rental management, and see when it makes sense to outsource the job.
Mistakes that First-Time Landlords Make
Big mistake? Small mistake? Whether you're an experienced landlord or new to the world of landlording, going the DIY route does increase the opportunity for you to fall into potential pitfalls.
With this in mind, here's a look at a few common mistakes that landlords can easily fall victim to. See how a professional property manager can help you to sidestep many of these common challenges.
- Not Being Familiar With Landlord-Tenant Laws
One common mistake that first-time landlords often make, is not taking the time to brush up on landlord-tenant laws up front. But neglecting to follow specific procedures or meet certain legal requirements could quickly land a landlord in hot water!
A good property manager will have extensive experience managing rentals in their local area, and will be familiar with federal, state, and local laws. They should be able to help keep you in the clear when it comes to landlord-tenant law.
- Not Screening Applicants Properly
Many first-time landlords neglect the all-important process of tenant screening. But not all applicants are created equally! Failing to screen tenants properly can result in an unqualified applicant gaining access to your property. This can often lead to major problems down the road; including late or nonpayment of rent and lease violations.
A reputable property manager will have tenant screening processes in place. They'll know what to look for in an applicant, how to verify information, and will be able to qualify applicants carefully, and in a way that's in compliance with the law.
- Delaying an Eviction
No one wants to be the bad guy. But in the world of property management, the fact is that sometimes evictions are inevitable. Not starting the eviction proceedings early enough can often prove to be a very costly mistake.
A property manager can often help to mitigate problems by issuing a formal warning to a tenant at the first sign of trouble. In the event that an eviction does become necessary, a property manager will be able to take the steps necessary to begin the proceedings as quickly as possible.
- Not Enforcing the Terms of the Lease (Or Neglecting to Make One In the First Place!)
If your lease (you do have a lease, right?) specifies no pets, make sure you uphold that policy. If it states that a late fee that will be charged for late rent, don't just let it slide. Neglecting to treat your lease seriously shows tenants that they don't have to either.
A property manager will be able to handle rent collection and work to ensure that the occupants are abiding by the terms of the lease. When it comes to long-distance property management, having a local property manager on-location to enforce the lease will prove to be invaluable.
- Treating It Like a Hobby
Finally, and perhaps most crucially, in order to be successful, it's important to treat your rental property like the business it is. This means establishing financial benchmarks, setting short and long-term goals, and setting up a system for banking, accounting, and finances.
When you're managing your properties on your own, it'll be difficult to expand your portfolio to include multiple rentals -and harder still to invest out-of-state. Utilizing the services of a property manager can help you to free up your time; making large-scale rental property investing a possibility.
Is It Worth Doing It Yourself?
While some landlords shun the idea of a property manager, fearing that their fees will cut into their profits, it's important to realize that in many cases, the benefits of a property manager far outweigh the costs.
Because they'll be able to take on every aspect of property management from property showings, to tenant sourcing and screening, to preparing the lease and arranging for maintenance; they'll not only be able to save you from a world of hassle, but also help you to save a significant amount of time. This time savings is especially valuable to professional investors -and is something that you may want to take advantage of too.
According to Realty8 founder Royden Juriansz, the value of a good property manager also becomes particularly clear when problems arise. For example, when a tenant violates the lease, is late on the rent, or when there's major repairs work that's required.
"A good property manager is very transparent and not afraid of giving the owners bad news, but also giving them a solution," says Juriansz.
Juriansz also suggests that tenants prefer dealing with property managers, as they're often perceived to be better able to deal with unexpected issues than landlords, who aren't always as contactable as a property manager would be.
And when it comes to cost?
"At the end of the day, the cost of property management is really not a lot in respect of the overall value of an investment," Juriansz says.
So what's the verdict? Is it worth hiring a property manager or is it better to go it alone? Is overseeing your own properties a huge mistake?
The short answer is: it depends!
In the end, the decision to hire a property manager comes down to three different factors -your goals, your personal preference, and your investment style.
If you own one or two properties in your own hometown, you may find that you don't mind spending some time on the weekends doing maintenance, or managing them yourself.
But if you find that you're in over your head, or realize that you'd rather spend your time on other pursuits -or if you're hoping to expand your property portfolio, then you'll want to seriously consider bringing a property manager on board.
A property manager isn't just your ticket for reclaiming your weekends; the right professional can also free you up to focus your efforts on bigger and better; enabling you to invest on a larger scale, and allowing you to expand your rental property empire.
Landlords: do you manage your own rentals or outsource? Which do you prefer?