Property Management Kit For Dummies. Robert S. Griswold
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alt="Tip"/> The good news is that the time required to be a landlord is in your control. If you acquire sound properties and master the skills of marketing (see Chapter 7), tenant screening, and selection (see Chapter 11), you can greatly reduce the amount of time you spend managing your rental property. You also have to work smart; otherwise, you may find that your time is better spent in areas other than management, because time is money.
HOME-BUSINESS OPPORTUNITY
Many people who manage their own rental properties value being their own boss, and they often run their business from a home office. Many people are looking for an opportunity to work at home, and rental management can provide a second income with flexible hours. During the pandemic, many traditional office employees experienced the advantages and disadvantages of working from home. If you prefer working from home, owning and managing your own residential rental properties could just be the answer.
Or you may expand your real estate holdings to the point that you outgrow your home office or prefer to have a separate business location. Postal service centers and office suites can combine the best of a home office with the image of a professional operation. Also, many rental properties offer you the opportunity to have a small separate management office on-site.
Delegating management activities
As a landlord, you may look at all the tasks you have to do and get a bit overwhelmed. But dealing with some responsibilities yourself and delegating some to other people can make your job much easier. To manage your property to the best of your ability, look at your personal skill set to determine which tasks you can do and which ones you need to delegate.
Throughout this book, I tell you various ways that you can delegate certain management activities and responsibilities to a personal team of experts, composed of the following:
A property manager: Ultimately, you can delegate all the management activities to a professional property manager. Having a property manager doesn’t mean you’re totally off the hook, however. Depending on your arrangement with your property manager, you may still find yourself providing the oversight and approvals that allow you to materially participate at an ownership level — an arrangement that has income tax advantages and also gives you the peace of mind of knowing that your rental property is well managed. (See Chapter 3 for more on using a property manager.)
A maintenance professional: The skills required to manage your own rental properties are different from the skills you need to handle your own property maintenance. Most rental property owners find that using trusted and reasonably priced vendors, suppliers, and contractors is the best alternative. You may not have the requisite skills, equipment, or time to do the work properly and quickly, and you certainly will have to acquire the right parts and supplies. Although doing the work yourself may seem to be cost-effective, you’ll quickly lose any savings if the rental unit sits vacant for additional time. (See Chapter 17 for help on finding the right maintenance personnel.) A client once hired me to manage a 100-unit rental property with nearly 30 vacant units. The rental market was pretty good, and we knew that we could rent the units after they’d been painted and cleaned, and after all minor maintenance items were addressed. The owner had always managed the property personally and used only in-house maintenance personnel for all work, including painting. The owner wanted to have the in-house maintenance person paint two units per week, but it would take nearly four months for all the units to be rent-ready. I was able to demonstrate that hiring an outside contractor to paint and having the in-house maintenance folks focus on only minor maintenance and cleaning would get all 30 units rent-ready in less than a month. Even though the painting contractor was an expense the owner didn’t want to incur, hiring the contractor was the better way to go, because we were able to rent the units quickly and more than cover the additional costs. Sometimes, the cheapest way isn’t the best way to solve a problem.
An accountant: Many owners don’t have the patience or discipline to keep the accurate accounting records that are so important at tax time, so they prefer to have a bookkeeper take care of the record-keeping and help them manage their bills. See Chapter 21 for more information on accounting.
A legal expert: Some landlords may look forward to their day in court, but most find the experience to be unrewarding and problematic. Using a local attorney who specializes in landlord–tenant legal matters is an excellent idea when you have legal issues that may end up in court. A really good attorney will help you stay out of court, which should always be your goal.
A prescreened applicant source: Some owners use an online rental housing marketing source, a local rental locator service, or certain real estate brokers in your area who seem to have a steady stream of potential renters to provide prescreened rental applicants. Your level of delegation on this matter may very well depend on whether you own one or ten rental units.
Knowing that your style is unique
The most important fact to remember is that no one will ever manage your rental property like you will. Accept that fact and then determine whether you’re cut out for property management. Remember that property management isn’t just a question of style. Ultimately, it comes down to sound, responsible practices applied equally for all your tenants.
Be honest with yourself. Know your strengths and weaknesses as a property manager. You may find that you’re able to do the job but wind up with frazzled nerves and doubts. If you aren’t truly excited and challenged by handling your own property management tasks, you probably won’t have success managing your own property over the long run, and you may need to delegate (refer to “Delegating management activities” earlier in this chapter).
Being Honest with Yourself about Your Skills and Experience
One of the first steps in determining whether to manage your rental property on your own or delegate some or all of the duties is analyzing your skills and experience. Many successful property owners find that they’re better suited to deal-making than to problem-solving and endlessly interacting with people, so they leave day-to-day management to someone else.
This decision is a personal one, but you can make it more easily by thinking about some of the specifics of managing property. Property management requires basic skills, including marketing, management, accounting, and people skills. You don’t need a college degree or a lot of experience to get started, and you’re sure to pick up all kinds of ideas about how to do things better along the way.
Examine your own personality. Are you a people person? Serving as a landlord is a labor of love; you must love people, you must love working with your hands, and you must love solving problems. Most of all, you must be able to do all these things without getting much back in the way of appreciation.
Whether you’re confident that you have what it takes to be a good rental property manager or are still not sure, take stock of yourself and your abilities by answering the following questions. Interview yourself as though you were a job applicant. Ask yourself these tough questions, and (more important) answer them honestly:
Are