The past few years I’ve been getting my hands dirty with rentals. I’m mainly a wholesaler but wanted to branch out.
While I live in the Phoenix metro area, I found I was better able to find solid deals in the Chicago market. I discovered this when doing some virtual wholesaling. The numbers on the rentals were seriously ridiculous.
Often I’d encounter motivated sellers who were willing to offload their houses for $40K to $50K—despite the fact they were bringing in $1,500 to $1,800 monthly in rent. Amazing right?! That’s the Midwest.
I just couldn’t pass up the prices and locations. These were not D and F neighborhoods. So, I took the plunge and figured I would manage the rentals from afar.
Going into it, I had minimal knowledge about being a landlord and managing tenants, especially from a distance. But I challenged myself to figure it out.
Lots of podcasts (specifically BiggerPockets’ podcasts!) I was listening to at the time talked about other long-distance landlords who were making considerable strides as investors. It sounded like they were able to do so because we live in the age of technology.
It seemed like something I could definitely do, too! And so I did.
I started with a small 2 bedroom/1 bath turn of the century raised ranch. It was not in the best condition, but I figured I could get between $675 to $750 in rent with a little sweat equity.
After a light rehab, I marketed the property. I was going back and forth to Chicago a lot while all of this was going on. That part, I didn’t like.
My aim was to create passive income, but I found myself being away from my family for weeks at a time. I knew, however, that once it was fixed up and tenanted I would accomplish my goal.
The property turned out to be a success! I managed it for years from 1,500 miles away.
Full transparency, I had one bad tenant who ended up breaking her lease, but while she was living there, she did pay her rent consistently. It still equated to success in my book.
So, I purchased more and did a seller carry back on another property. I was all in at that point, doing wholesaling in Phoenix and Chicago and earning some passive income on the side.
Everything was great—until it wasn’t. As I continued to grow my portfolio, I was traveling more and noticed my wholesaling business began to suffer.
I realized that in order for me to scale, I could not manage these properties from a distance anymore. I had to pass on “my girls” (as I affectionately referred to my properties) to a property manager.
Related: When To Hire a Property Manager
This change is taking some getting used to if I’m being honest. But between the time I was away from home and the money I was spending on travel, I know I’m actually coming out ahead. Also, I could not continue to grow being a one man show.
I know there are other investors just as hell-bent as I was on doing it themselves. When starting out, I definitely do think going about it that way is a plus. However, in order to grow—if that’s what you want to do—a great supporting cast is needed.
Yes, I once subscribed to the “save a few dollars and do it yourself” philosophy. Not anymore though.
I’m refocused on marketing and negotiating these days, the main trades of a wholesaler. And I have my rentals to thank! They taught me a very valuable lesson about the importance of establishing a team.
Don’t make the same mistakes as me! Learn to let go, and find quality help.
Do you landlord? Or use a property manager? Which do you prefer and why?
Let me know in a comment below.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.