So, someone has convinced you to self-manage your rental properties. Glad you found me. I will not try to persuade you that managing your properties is a bad idea, but I hope that after you read this article, you will fully grasp how much work it is getting started. Feel free to learn from my mistakes.
Pro-Tip: Train until you cannot get it wrong.
One of the greatest football coaches of all time, Vince Lombardi, once said, “We are going to practice not until we get it right, but until we can not get it wrong.” Apply this principle to as much as possible in life but especially landlording. Do not go into property management with the expectation that it will be passive. Property management is very active but you can make your job easier if you properly train your tenants. Every time a unit turns over and you place new tenants, you begin the training cycle over again. Each new tenant will bring a new challenge. If you go into each transaction with the expectation that it will be hard and take work, you will not be disappointed or discouraged when you encounter difficulties. In the beginning, you have to expect that your tenants will try and get away with things or come up with excuses for why they cannot pay rent on time. Our first tenants said that they cannot pay rent on the 1st of each month because they don’t get paid until the 13th. Once the tenants try and get away with something non-standard (and trust me, most will) you must nip it in the bud right away. Make your expectations clear and do not waiver on the payment timeline. If you budge, your tenants will know that if they come up with a crafty excuse, they won’t have to pay on time. Similar to training puppies or kids (no offense to my current tenants if you ever read this), if you give them an inch, they will take a mile.
Pro-Tip: Be the manager, not the owner.
Your tenants will treat you differently if they think you are the manager versus the owner. That being said, don't sacrifice your integrity for an easier life and lie to your tenants. If they directly ask you if you are the owner, tell them the truth. But, if there is a way to keep that personal boundary in place, I recommend it. If they know that you are the owner, they will try to get away with much more. For them, tenant-owner versus tenant-manager makes it feel less like a business relationship and more personal.
Pro-Tip: Use it from the start!
When we first started managing our properties, we were too cheap to pay for any management software. Instead of opting for a user-friendly, all in one software, I chose to try and do everything myself. For the first few months, it was not terrible. I was in the honeymoon phase of real estate investing. The tenants were paying on time, we did not have any maintenance or repair issues, and I was skipping my way to the bank every month. But as soon as we acquired two more properties, our first rental suddenly needed plumbing and electrical repairs. I vividly remember sitting at my desk at home covered with receipts, utility bills, emails from contractors, mortgage statements, rent checks, and new insurance policies. Companies like Buildium and Tenant Cloud help DIY landlords systematize everything and make the process much easier. Tenant Cloud is free and Buildium is only $40 a month. Money well spent.
Pro-Tip: Be the best property manager your tenants have ever had.
Most of you have rented properties before and have dealt with less-than-stellar landlords. In my opinion, the property management business lacks competence. Property management companies can get away with being average because the bar is set so low! Manage your properties better than the competition so that you can gain your tenants' loyalty. Go into it with a systematic attitude and build processes for each new challenge you encounter. Be responsive and reasonable, fix things that need to be fixed, and don’t take shortcuts. Honestly, it is simple but it will take work. Keep your eye on the prize and build a reputation that others can’t ignore. No matter how proficient and competent you are as a property manager, you will experience tenant turnover. But know that if you are so good that your tenants trust that you have their best interests at heart, they will not want to leave.
Pro-Tip: Get connected with a property management mentor early.
When my wife and I were first starting, several situations came up that we had no idea how to handle. It would have been fantastic to have a trusted friend or mentor to call and ask for advice. It doesn’t have to be a mentor, it can be a friend who is trying to do the same thing. Here is a list of my top three places to ask landlord questions that I do not know the answer to:
Remember in this day and age, it is easy to get connected with like-minded entrepreneurs over the internet. I encourage you to still seek out a mentor that you can call or meet with in-person to discuss landlord struggles. Personal relationship building will take you far in this business.
Sean McDonnell, a real estate agent and investor in Wilmington, NC discusses some very important lessons if you are wanting to start investing and managing your own rental properties. Here is a picture of Sean with his amazing wife, Christina, and son, Jameson at a Navy football game in Annapolis, MD.