Yeah — passive income sounds like a dream come true alright, but we’ve all had people try to sell us on this\u00a0before.<\/p>\n
Back when I was a new investor, I heard the same sales pitch about\u00a0all kinds of new business opportunities, investment funds, real estate courses and multi-level marketing schemes. Everyone talked about it like they had the “keys to the cash flow kingdom,” but when you hear this much hype about something, it\u2019s easy to grow a thick layer of skepticism toward the idea. Obviously it sounds great, but come on,\u00a0is this really possible?<\/em><\/p>\n Most of us have a hard time believing in things like passive income. We understand it conceptually, but when you’ve never seen it or experienced it firsthand, it\u2019s just hard to know whether this stuff is a myth or a reality. It definitely looks good on paper, but is it really that simple? Can anyone actually show me the money?<\/p>\n When I was in college, I was fascinated by the idea of buying rental properties. Like most of us, I had read all the Rich Dad Poor Dad<\/em> books, seen all the late-night infomercials and spent hours scouring the internet for answers. All the books made it sound like the smartest thing you could do with your money, and everyone on TV made it look like candyland\u2026 but whenever I talked to the REAL landlords I knew in my life, I heard quite a different story.<\/p>\n You’ve probably heard some of the horror stories too, am I right? Maybe you\u2019ve even experienced some of them yourself. Perhaps you know exactly<\/em> what it\u2019s like to deal with irresponsible renters, exploding toilets, bug infestations, leaking pipes and evicting the \u201ctenants from hell.\u201d<\/p>\n When I heard these kinds of stories, rental properties\u00a0sounded more like a nightmare than a dream come true. It always left me wondering, why are\u00a0so many landlords willing take this kind of abuse? <\/em>If passive income is\u00a0really attainable from real estate, why does everyone have such a hard time finding it?<\/p>\n Related:<\/strong> Hiring a Property Manager vs. Self Managing: What\u2019s Better?<\/a><\/em><\/p>\n Nevertheless, I remained cautiously optimistic that I would find what I was looking for.<\/p>\n When the day finally came for me to take the plunge and buy my first rental property, I was pleasantly surprised to find that passive income really did\u00a0exist<\/strong>. It’s wasn’t just\u00a0a sham after all! I was able to find\u00a0some for myself, and there’s no reason you can’t do the same.<\/p>\n The truth is, there was\u00a0only one reason\u00a0I ever got to experience this phenomenon\u00a0firsthand. It happened because I found the right property management company.<\/p>\n Without question, my property manager has had a MASSIVE\u00a0impact on the success of my rental properties. If I didn’t have a good, competent property management company running the show, I never would have survived in this business.\u00a0It’s just that simple.<\/p>\n As I eventually learned from my conversations with other rental property owners, I apparently\u00a0got lucky with my property manager\u00a0because they’re not all created equal. Even though some of them are EXPERTS who are very good at what they do, others are quite the opposite\u00a0<\/em>and represent all that is wrong with the industry.<\/p>\n Finding the right rental property manager is a big deal!<\/strong> After all, these people are going to be your eyes, ears, hands and feet on the street. Their actions will have a major impact on whether you own a profitable and efficient portfolio of rental properties or a business that is constantly struggling to keep its head above water.<\/p>\n If you decide to hire a property management company, you need to understand who you\u2019re working with BEFORE you give them the keys to your property.\u00a0When I went shopping for property managers on my first duplex, I used a series of questions that helped reveal just how experienced and\u00a0competent each candidate was and whether it made sense for them to manage\u00a0my specific property.<\/p>\n The questions worked astoundingly well. In about 30 minutes,\u00a0I was able to\u00a0establish a reasonable level of trust (which was a lot better than gambling with my life\u2019s work just to \u201ctest them out\u201d in the real world).<\/p>\n Here\u2019s what I asked them\u2026<\/p>\n While I was\u00a0at it, I made sure to check out their website and drive by a couple of the properties they were already managing. This gave me a good idea as to whether their properties fell in line with my overall expectations and whether they were going to be a good fit with the types of properties I was planning to buy in the future.<\/p>\n I realize this list of questions is quite thorough, and in some cases you may run across a property manager who is just too busy to sit down and answer them for you.<\/p>\n I understand that property managers are busy people (I am too, believe me), but I also know that if they have any desire to grow their business and bring on new clients, they will set aside a few minutes and\u00a0answer them for you.<\/p>\n Some property managers will be pretty obvious about the fact that that they don\u2019t have time for this silly little interview (and that\u2019s their prerogative). If you’re getting this vibe from a potential property manager, you can take this as their way of saying:<\/p>\n \u201cWe don\u2019t have time for your business. Get lost.\u201d <\/em><\/p><\/blockquote>\n If a property manager doesn’t have time to answer your very simple<\/strong> questions in this interview, do you really want to put them in the driver’s seat? Do you think they\u2019ll treat you any better\u00a0after they\u2019re controlling the fate of your business? Just speaking for myself, it\u2019s not something I\u2019d want to leave up to chance.<\/p>\n There\u2019s one more dilemma that many of us have to wrestle with. It\u2019s called micromanaging<\/strong>.<\/p>\n This challenge seems to be particularly difficult for those of us who have already been managing our own properties for years, but are trying to get out from under the burden of\u00a0it.<\/p>\n If you\u2019re well-versed in the management of your own properties, you probably know exactly\u00a0how you like things to be done – right? You know how your properties ought to look, you know what kinds of tenants you want in each one, and to be fair,\u00a0you\u00a0probably do know what you’re doing —<\/em>\u00a0so there is some validity to your thought process.<\/p>\n The problem is, the whole point of hiring a property manager is to make your life easier, and part of this transition\u00a0process\u00a0involves\u00a0you letting go.<\/em><\/p>\n I don’t always like to admit it, but sometimes I’m a downright control freak. I remember when I bought\u00a0my first rental property, every dollar mattered, and I spent every waking moment watching my property manager like a hawk. I was constantly on the lookout for things that weren’t being handled the way I wanted them handled. It was an ongoing internal battle to keep from harassing them with questions like:<\/p>\n It\u2019s true\u2026 even with my fantastic property manager (who I still love to this day), I remember a brief window of time that left me wondering whether these guys knew what they were doing and whether I could do it better myself.<\/p>\n If you\u2019re passing your keys off to a property manager, there\u2019s a good chance you’ll have to deal with your own paranoia issues at\u00a0some point too, so I want you to remember this quote from Tim Ferriss<\/a>:<\/p>\n “Develop the habit of letting small bad things happen<\/em>. If you don\u2019t, you\u2019ll never find time for the life-changing big things, whether important tasks or true peak experiences.”<\/p><\/blockquote>\n I\u2019m telling you right now, there will be the occasional moments of inefficiency<\/strong>. It’s gonna happen no matter who your property manager is, so just plan for it.<\/p>\n You might lose a few weeks of rent here and there, there\u2019s a good chance they won\u2019t baby the property like you would and there may be some minor maintenance issues that get neglected for a few days longer than you would’ve let them go.<\/p>\nDealing With Reality<\/h2>\n
![\"businessman](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/01\/businessman-question-205x300.jpg\" "\\"\\"")
Most of them would tell me how difficult it was to deal with tenants, describing\u00a0one horror story after another. It seemed like they were constantly feeling burnt out and disillusioned with the foolish dreams they once had of being a landlord. If I didn’t know any better, I would’ve thought they were miserable!<\/p>\nThe Dream Becomes Reality<\/h2>\n
Get to Know Your Rental Property Manger<\/h2>\n
Regarding Their Experience:<\/h3>\n
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Regarding My\u00a0Properties:<\/h3>\n
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Management Related:<\/h3>\n
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Other Things to Consider:<\/h3>\n
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They Will Make Time for You<\/h2>\n
Pass the Torch (and Stop Micromanaging)<\/h2>\n
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![\"keep-calm-and-carry-on-8044\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/01\/keep-calm-and-carry-on-8044-257x300.png\" "\\"\\"")
Of course, if there comes a time when you\u2019re getting repeat cases of terrible tenants, maintenance issues that are NEVER getting resolved and you\u2019re losing a noticeable amount of money, you’ve probably got another issue on your hands. At the same time, keep an open mind to the possibility that you may be suffering from the same case of\u00a0perfectionism that many of us have.<\/p>\n