Property management has been hailed as a wise money making strategy. Everyone has to live somewhere and many people are not able to buy. The rental market is growing in demand and in prices making renting more costly than owning a home. Sure, as a renter you don’t have to replace those faulty water heaters or deal with the cost of turning a property. However, as an owner does it pay off in the end?
I have been in the industry for a few years now and have noticed one thing, if you don’t start with a lot of money to cover costs – you don’t usually make a lot of money as a landlord. Large companies that manage multiple properties are very profitable. If they manage the complex well, they end up having more than enough profits to enjoy. What about owners with full time jobs and a few rentals? If they play their cards right they can enjoy monthly profits. However, this is rarely the case. Property management is not for the weak. Success as a landlord depends on much more than owning multiple homes. here are a few things to keep in mind as a landlord:
Property Management is a business. In order to be successful one must be emotionally detached as is necessary for any other business. Set your boundaries on the non-negotiables, pets, smoking, occupancy standards, late fees, etc. Just because an applicant seems trustworthy and nice does not mean they are going to be a great applicant. Stick to your guns and go through the paperwork process you’ve set before meeting applicants so you don’t sway from your business plan – stick to a routine. Every time I have seen someone bend the rules for an applicant because they seemed perfect – it never ended well. If they are great in person they will be great on paper as well.
Document, Document, Document
In the world of renting to various people over the years, one ofthe best things you can do for yourself is document EVERYTHING! Every complaint, conflict, move in, move out, with dates and times. One of the ways a landlord can lose money is by failing to document the details. Not documenting a move in inspection can open you up to covering the damage done by the resident upon move out. If there is no proof that the damage wasn’t there before they moved in there is plausible deniability that the damage wasn’t their fault. They get to trash your property and not pay a dime.
Be “That” Guy
The property you are renting is your asset and no one else’s. It is important to protect that investment as firmly as possible. Do not be afraid to hover, drive by, or do inspections from time to time. The landlords that are the most successful at minimizing damage and ensuring the residents are not breaking the lease. Doing your lawn care, setting random inspections, or stopping by to ask your residents how things are going are all great ways to show them you’re available to be helpful but that you’re also keeping an eye on your home. If you’re not able to do this than hiring someone to do it for you would be a good move. Hands on landlords have the greatest success.
If you’re considering property management make sure to talk to successful property managers and get advice. Make sure you research your area and know your stuff. Protect your investment! Property management is a roller coaster ride of highs and lows – making money and loosing money. If you stay in it for the long run you’ll see the greatest reward.
Also published on Medium.