Are You Ready to DIY Your Property Management?
8 Must-Knows Before Committing
I LOVE working as a property manager and I get excited whenever I hear about someone who bought a rental property and wants to manage it themselves. Owning and managing your rental property can be fun and exciting and I highly recommend it! Managing your rental property can save you money on management fees and maintenance markups, but I’ll also admit that DIY property management is not for everyone, there are some facts you must know before jumping head-first into it. So, if you think you might try managing your property, grab a seat, and let’s dive into the dynamic world of DIY Property Management, one step at a time.
You must think and act like a business owner.
Operating your rental property is akin to operating a small business; to be successful, you must generate income, manage finances, and adhere to legal responsibilities -much like any other business owner.
As a rental property owner, you must also focus on customer relations with your tenants yet have the ability to make strategic decisions to maximize returns, mirroring the operational aspects of a business.
You’re now a business owner, so although you might want to paint the rooms of the rental unit with this year’s “color of the year,” update the kitchen with butcher block countertops, or add a cozy wood-burning fireplace to the living room, but would doing any of these things be a smart business decision? Will spending the money to do these things increase the amount of rent you can charge? Will installing the trendy countertops be a good investment for your 10-year property plan? Will they even last 10 years? Will prospective tenants like them in 10 years?
You’ll be most successful if all of your property decisions are based on your short- AND long-term goals for the property. You cannot make decisions based on how you want to live or how you feel, you must make decisions based on what is good for your business.
Please do not misinterpret this to mean that money is your only consideration. Making a solid business decision means considering the legalities, tenant satisfaction, building condition, finances, etc...
2. You must be prepared to do and hear it all.
Be prepared to be contacted when a toilet is clogged, the heat isn’t working, the resident is moving out, the lawn hasn’t been mowed, the rental unit needs to be shown, or the loud neighbor is throwing disturbing parties every Friday night.
Will you find some aspects of property management annoying? Probably.
The question you have to ask yourself is if there’s enough reward in the rest of it to make it worthwhile for you. DIY property management means you must be willing and prepared to respond to a variety of issues.
3. You must have the ability to provide quality customer service.
Do you enjoy working with a variety of people, do you enjoy hearing their sometimes-long-winded life stories?
Are you able to relate to a variety of people who may be tenants in your building or professionals working on your building? Are you patient enough to listen to tenants when they report a problem?
Are you able to set expectations?
Will you be able to follow up with people when expectations are not met?
What will you do when rent isn’t paid on time? What will you do when your plumber doesn’t show up when they said they would?
Having strong customer service skills will help to reduce the risk of disputes and property damage and will help to increase the likelihood of timely rent payments and low turnover rates.
Providing quality customer service ultimately safeguards your investment.
4. Legal know-how might not sound exciting, but for a DIY property manager, it’s a necessity.
Having a basic understanding of the law is like having a shield against costly legal hassles and disputes because you will have done things properly from the start.
Not fully understanding the fair housing laws could mean getting sued for denying a prospect’s application based on information you shouldn’t be considering. A poorly written lease agreement could leave you open to tenant challenges or difficult enforcement.
Legal know-how is your backstage pass to navigating tenant rights, fair housing rules, lease agreements, and even tricky evictions with confidence, keeping your property game strong while playing by the rules.
And even if you think you know all the legalities, there are certain issues that will arise where a good real estate lawyer is highly recommended -be sure to have a lawyer review your lease agreement and application approval requirements. Bring in a good lawyer to assist you with an eviction or particularly difficult tenant issues.
5. You must be tech savvy, or at least be prepared to act like you’re tech savvy.
Tenants want to pay rent online and they want to communicate electronically. Prospective tenants want to find your rental listing from their laptop or phone and they’d ideally like to take their first tour of your rental unit while sitting in their living room.
The good news is that there’s a wide variety of products (some that are FREE) that will help you meet these demands, you just have to embrace technology.
Using technology will also allow you to have property data and analytics available no matter where you are so can make sure you’re always headed in the right direction in the real estate world.
6. Have a solid plan (for everything).
DIY property management requires an understanding that lots of things will go wrong and the unexpected will happen.
You might have a tenant who doesn’t pay rent, you might get a call in the middle of the night from a tenant telling you the roof caved in, or how about a call on New Year’s Day when the heat isn’t working? Even the best of tenants may move out unexpectedly or a tenant’s dog may bite the neighbor across the hall. Yes, I’ve actually received all of these calls!
Your goal should be to have plans in place that not only help prevent the unexpected but also help you resolve issues as quickly and painlessly as possible.
Set up an easy-to-use rent collection system, inspect the building systems of your property regularly, and negotiate service contracts for everything from your heating system to pest control to handyman services, to landscaping and snow removal. In short, you want to think through all the issues that could arise and set up a plan for each of those issues.
With well-thought-out plans in place, you’ll be prepared to handle the variety of scenarios and issues that will arise, making property management a breeze. Just kidding, DIY property management won’t be a breeze, but a solid plan will make it much more predictable and manageable. And you may even find you have fun with most of it!
7. You must have a basic understanding of finances.
Having basic financial knowledge provides you with a compass. Understanding the basics of the property finances empowers you to create realistic annual budgets, create short- and long-term maintenance plans, track income, and generally manage expenses more effectively.
Understanding the finances of your property allows you to determine when or if you’ll upgrade a kitchen or a bathroom, when you’ll replace the boiler, or when to refinance the mortgage.
In short, understanding the finances gives you a ticket to financial stability, ensuring that your rental property remains a lucrative investment rather than becoming a financial headache.
8. You must have a solid list of contacts.
Call it your little black book, your Rolodex, or a digital contact list, however you store your contacts, they will be your most valuable resource.
You must be able to put together an extensive list of professionals you can call on to help you resolve issues. When you DIY your property management you have to be prepared to resolve or prevent a wide variety of issues. Your list should include lawyers, plumbers, general maintenance technicians, electricians, painters, remediation experts, roofers, accountants, etc.…
Whatever you do, don’t go into DIY property management thinking you will be able to fix all of the issues that arise. You must go into property management with a long list of professionals who can be relied upon to help you resolve each issue that comes before you.
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