The 3 Things New Landlords Need to Manage

The 3 Things New Landlords Need to Manage

2 min read
Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. Marcus has been named the “Equity King” for his impressive ability to find real estate opportunities with massive amounts of equity.

Experience
Marcus, a high school dropout, went from G.E.D. to M.B.A. Although his education has a major impact on his investment philosophy, the real impact came from his upbringing.

Marcus thrives on completing successful transactions. As a young kid, his parents and grandparents faced many challenges; as a result, it made him think of ways he could help. His mother and grandmother were avid investors—not in the market but in people. Marcus was a recipient of those investments. And his early years were hard work growing up on a farm.

Marcus was a strategist at an early age. To relieve the burden of his family buying him clothes when it was time to return to school, he decided to make a small investment that paid big dividends. Marcus decided to purchase a small piglet at the beginning of summer, feed it until it became fat, and then sell it to a local farmers’ auction before the school year started. This was one of his first transactions and the beginning of his adventure of finding equity in every opportunity.

Marcus’ hard work continues today: He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. Although wholesaling provides great money, he saw the opportunity to buy some of the deals he found and convert them into cash flowing rentals.

Marcus currently holds seven rentals, two of which are commercial units. He’s also done the unimaginable and purchased a school, which was converted to a daycare center. Again, he turns what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to increase his portfolio without any money out of pocket.

Marcus has been featured on numerous podcasts, such as the Louisville Gal Podcast, the Best Real Estate Investing Advice Ever podcast, FlippingJunkie, and many others. He’s currently a featured blogger for BiggerPockets, the largest community of real estate investors in the world.

Along with completing transactions and working to build his portfolio, he provides mentorship to aspiring investors. This is done through one-on-one interactions and through his successful YouTube channel and blog.

Marcus does utilize his M.B.A. for more than real estate. As a consultant for a successful non-profit institution south of Chicago, he uses his expertise in the development of human capital. His philanthropic efforts help existing stakeholders develop in their capacity to serve those in need of assistance.

Education
Marcus completed his M.B.A. in 2011 from Olivet Nazarene University.

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Acquiring rental property for passive income is a great way to long term wealth, but there is more work required than it appears on the surface.

Aspiring landlords are misinformed about how much work is required to build a successful stream of passive income. It’s more than hiring the right property management company, and making the right acquisitions.

In a recent conversation with an aspiring landlord I was reminded of how misleading mainstream media portray the ins and outs of real estate investing.

The conversation started by discussing the returns that can be made a month from a small rental portfolio. I began to introduce some of the numbers and concepts such as cash on cash return, NOI, vacancy rates, and cap rate to name a few. All of which he had limited knowledge on.

The biggest misconception that was presented is as long as you have a good property management company then you will have minimal problems. I provided him with some information and resources such as Bigger Pockets to learn from. I figured if he was misinformed about the management of rental property then there are others.

Here are 3 Things New Landlord Need to Manage:

The following are the 3 reasons new investors need to manage their own properties. It teaches you so much valuable information that you really shouldn’t miss the opportunity!

1) Financial Responsibilities

Understanding the financial responsibilities of a rental property is extremely important.

It is great to have an accountant on your team but in the beginning this may not be feasible. I suggest becoming familiar with monthly financial reconciliation.

You don’t have to have an advanced degree in finance, but by using quick-books anyone can set up an account and reconcile the monthly income and expenditures for each rental property. Any investment should go through rigorous financial analysis prior to the acquisition but afterwards, monthly report reconciliation will present a clear picture of how the unit is actually performing.

Related: How to Automate Your Real Estate Bookkeeping

2) Trade/Repair Management

Trade management is equally important.

Some investors leave this duty to the property management company, but it is great to have your own resources in the event the property management company may be limited in a certain area. If you have a great property manager you will not have to be as concerned or may not utilize your resources as much but its good to have trades in your tool chest when needed.

It is important to have an independent plumber, electrician, or carpenter on hand. Not to criticize property managers, but in this profession it is always good to have a back up trades. The reason for this is because you may have relationships where you can be billed for services performed after hours or paying invoices at net 30 or 60 versus immediately, this is depending upon your liquidity of course.

3) Tenant Screening/Rapport Building

Tenant rapport building is great when you are starting out.

Again, this is for a smaller portfolio of units or maybe 1 unit. Learning the tendencies of tenants will teach a new landlord what makes a good tenant and what are some characteristics of a terrible tenant. By understanding these tendencies will assist you in ensuring you have the right tenant in your property.

Related: Tenant Screening: The Ultimate Guide

Conclusion

Having a great property manager is critical to expand your business when you are ready, but when starting out these 3 things are best learned through hands-on experience.

Do not leave these 3 simple but important pieces to a property manager when starting out as a landlord.  I would recommend managing your own property for a couple of years to learn the nuances of being a landlord before hiring a property manager.

If you know of any other areas a new landlord should manage in the beginning please share your thoughts!

Be sure to leave your comments below!