These days, real estate investors can handle services once filled by Realtors and property managers with multiple other cheaper options. There are dozens of companies that will list your house on the MLS for a nominal fee, and Zillow will list your first rental for free and charge an affordable amount for rental ads thereafter. Other investors recommend using Facebook to advertise vacant rentals—an option that is entirely free.
The point is, if you have a good setup, you won’t need a real estate agent or property manager (PM) to help out with your rental—if you know what you’re doing. So let’s dive into the things you can do in order to save yourself some cash.
DIY Landlording in 5 Straightforward Steps
First off, you need to organize your digital life. Have folders for each property that include your purchasing paperwork, all leases you’ve made/plan to make (including your master lease!), receipts for that property, etc. Make a spreadsheet to track all necessary expenses so that you can easily input them at tax time or pass them off to your tax professional.
Here’s a list of things you should have for yourself and your tenants:
- A schedule of all necessary/major events for the duration of the lease, such as:
- When a notice of renewal is due
- If annual certifications for the city need to be completed, when to schedule them
- Any regular maintenance that might need to be done
- When move-in checklist and other deliverables are due
- Inspection checklists for move-ins and move-outs
- Animal agreement, if applicable
- Lease termination/military clause paperwork, if applicable
- All addenda to lease submitted and payments made before key turnover
This is clearly not a full list of things you may want to do, but it’s a great start, and it assumes you have a solid lease and fundamental knowledge of the rental business.
Establish a Smooth Application Process
Your application process should be extremely smooth, and there’s no need to use physical papers if you have the right technology. In today’s environment, contactless and fully digital applications are best. At a minimum, you should collect from your tenant:
- Application (You can do this easily online via Zillow, Google Forms, or your own process.)
- Copy of driver’s license(s)
- Signed release for due diligence calls to prior/current landlords and employers (Adobe Reader has an easy signature process that’s fast and free for all, but DocuSign and other programs are also available.)
- Consent to conduct background/credit checks
Again, you may need or want more depending on what state/city you live in—ensure you’re asking the right questions in your application. But this is a great start to renting your own property!
Make Your Move-In Process Easy, Too!
This is honestly more simple than most people think. Your tenants should have their move-in checklist and know exactly when they need to submit it by. So, once they’re approved to move in and paid up, the last step is to give them access to the property.
What’s great is there’s no need to take off work and meet them at the property if you have a coded entry lock. Simply make a new code, put the backup keys in the property, and allow them to enter at their own convenience.
To protect yourself in this, ensure you’re taking pictures of the property at move-out from the prior tenants and at move-in before the next ones arrive. This will help you figure out what is normal wear and tear and what is not damage from prior tenants.
Check-in on tenants within the first month, as well. They can hand in their move-in checklist, and you can ask how they’re enjoying the property. Checking in once more a few weeks after is a nice touch to ensure they know you’re there for any problems that may arise.
This sounds cumbersome, but it honestly isn’t if you’re a small-time landlord (fewer than 25 units, I would estimate). At most, I had 14 units, and my heaviest time burden was perhaps a few hours a month. When a call comes in, get your contractor assigned to it. They can contact the tenant directly to schedule, and they should know to talk to you about defects/ways forward if it’s a complicated issue. (Your biggest obstacle here will be finding reliable contractors, in my humble opinion, but they’re out there!)
Another handy tip if you don’t have an international phone plan and may be traveling to places with low reception is to have your tenants either contact you via email during that time or ask your contractors if they’d be willing to answer calls on your behalf. If a call comes through during the night for any reason (and the possibility of this is extremely low), the contractor knows they’ll be paid for their time.
Refine Your Processes
My master lease changes every single year. There’s always that one instance or person that necessitates an addition to the lease. Ever wonder why that weird clause about not removing rabid raccoons yourself was in there? It’s because one person decided to try it. There are landlords who have come back to find their place remodeled—and not to their liking. Be willing and able to refine your processes as you go along.
The idea here is that there’s so much technology available to ensure we do our due diligence, know who we’re renting to (to the best of our ability, anyway), and ensure a safe, clear process is laid out to have a successful renting experience. Do you need a Realtor to do that? Not if you’re willing to learn the ropes.
It’s really not that hard to do, and it’s not that much work. My average amount of hours dedicated to turnover is approximately six, including the move-out of the prior tenant.
Let’s say you’d otherwise pay a PM $100/month to rent out your property, or $1,200/year. That’s a pretty good hourly paycheck, don’t you think? Even if you spent 20 hours on a turnover from horrible prior tenants, you’d be making $60 an hour.
My advice is to measure out your best- and worst-case hourly paychecks, and see if it’s worth it to you. To date, my self-managing has saved me nearly $10,000.
What other pros and cons of self-managing versus hiring it out can you think of?
Share in the comment section below.