People often express interest when we tell them about our vision to build a large rental portfolio. We all can think of millions of uses for that extra rental income each month (hire a housekeeper, pay someone to weed and mow, extra vacation, nice dinners, a boat, Legos, chocolate croissants everyday…)
But they look hesitant. There is inertia of course, or lack of belief they can really make it happen to them. Or they don’t know where to buy, what to buy, how to buy, don’t have the down payment. But another common reason is because they are afraid of the hassle; they’ve heard from family and friends the horror stories of getting calls in the middle of the night and becoming slaves to the rental properties and demanding tenants.
A great alternative worth considering is hiring a property manager. These are professionals who specialize in taking care of the properties, screening and managing the tenants. They arrange for repairs and makeovers. They could even help you orchestrate a renovation. This is really an option whether your rental property is a single family home one block from your own home, or a 50-unit apartment in another state. Really!
There are hands-on real estate owners who self-manage the properties. They make the repairs; they do all the yard work, clean, paint and install new carpet when tenants move out; they drive to the property to let tenants in when tenants lock themselves out. Some owners love this. Others do it because they see it as the only way to own it. We can go on about some of the benefits of self-managing but please do yourself and your family a favor and consider professional management if
- the hassle or fear of managing a rental is keeping you from owning a rental and getting all the benefits
- it is taking so much time from something else that you do much better. For us here at Millan, that is building the portfolio and find more real estate projects to work on, for ourselves or with investors and partners
- you are going to have to pass up an awesome opportunity in another state or another country even, because you yourself are too far away to manage it.
Admittedly right now, we are self-managing 4 single family rentals about 35 miles away in the port city of Tacoma. We are doing this because we want to have some perspective into what effective property management requires. We’ve read books on property management; we’ve heard experts talk about it; we’ve compared notes with other investors. But we want some real-world experience. It helps us understand how to better work with our property managers we hire. It allows us to understand the landlord-tenant law better and know what to be aware of. And we are curious if our careful homework upfront in tenant screening and our management philosophy could pay off with longer term tenants. In the long run, we will probably turn these over to a manager so we can go do other things – more work or more fun.
The key to using professional management is to do your homework upfront by interviewing the property manager, just like interviewing and checking out any employee you would hire for your own business or bring onto your team at work. Hire the right one and start reaping the rewards of real estate investing.