How hard is it to manage properties?

Question

I have an opportunity to manage 2 properties for 2 friends. I’m seeking advice on how to start managing properties.

Nathan Gesner · Answer

@Jonathan Diaz I've heard good things about Brandon's book but you should also check out Every Landlord's Legal Guide by Nolo. Written by attorneys and it includes directions to state-specific laws, which are very important to know. If you really want to be good, you need to be capable of educating yourself, and preferably before a problem presents itself.

Read a couple books to get a basic understanding of what it's like to manage a property. Educate yourself on the laws with particular focus on the most common problems like security deposit disputes or handling late rent payments. I then recommend you sit down with pen and paper (or a spreadsheet) and make a list of the common problems landlords deal with. Rank them in the order that you anticipate you will deal with them, then start figuring out how you would handle each one. Study one problem, read the law, ask questions on bigger pockets, develop a plan, create your policy or forms, and then set it aside to work on the next one. If you developed one plan per week, you would have the 50 most common issues resolved in one year and be ahead of 99% of all property managers.

Tracy Streich · Answer

@Jonathan Diaz In Tx you need a RE license to manage for others. If you are asking can you manage 2 homes of your own by yourself the answer is probably yes. Can you manage for someone else is a totally different issue.

Account Closed · Answer

@Jonathan Diaz

It's all about systems, systems, systems. As others mentioned, there are books that will help. Also network with other LL's and contractors whenever possible. It's better to farm out the work whenever possible than you doing it yourself. I work a FT day job now and manage 27 doors on top of that with no <major> issues. Heck, I know other LL's who manage 200 doors.

Kevin Zolea · Answer

@Jonathan Diaz I would first read The Book on Managing Rental Properties by Brandon Turner. It has been an excellent guide for us and provided a lot of the systems we use to manage our first property.

Justin Polston · Answer

@Jonathan Diaz I'm almost positive this is everywhere. It's law in Indiana.

Ian Walsh · Answer

2 Properties shouldn't be hard. Property management done right is not easy though. You really need the machine to be well oiled and running smooth as you approach 80-100 units. Then at 200-300 units there is usually another speed bump in trying to scale. Then again at 500-700. Beyond 1000, it should be pretty ironed out.

Joe Splitrock · Answer

Not only do you need a PM license, but since you are going into business, you also want an LLC and liability insurance. Is it hard to manage properties? It can be hard, especially when you lack experience and make mistakes. Property management is a profession like any other. Is it hard to be an electrician? Ask an electrician with years of experience and they will say no. Ask a home owner that failed inspection on a DIY job and they will say yes. The trouble with two properties is you don't have enough scale to learn quickly. Not a big deal for your own properties, but it could be challenging when managing for others.

Most problems can be avoided by good tenant selection, effective processes and management style.

Also be aware that managing for friends means you are mixing personal with business. It can be done, but also be careful. If you want to run a business for profit, that will mean saying no and having difficult discussions around money. A property manager has to charge for their time and services. If you don't know what is fair, odds are good you will get taken advantage of.

Rob Hakes · Answer

@Jonathan Diaz

The properties are easy to manage. Its the people (tenants) that are a b#*!?...... bugger.

Steve Vaughan · Answer

Yep, need a license to manage what you don't own.

Couldn't pay me enough to learn all that's needed and put up with it for somebody else. Learning curve too steep starting from scratch.

Adam Campbell · Answer

Hey @Jonathan Diaz - with the right systems, managing properties is not hard. My initial thoughts are below - let me know if you have any questions. Good luck!

Benefits of managing your own or others' rental properties:

• Learning hands on

• ○ if you are new to the real estate investing game this is one of the best ways to scale your knowledge quickly
• ○ One of the first rentals I managed I was too lenient with the tenant and allowed them to get three months behind on rent (huge lesson to learn)

• Learn how screen tenants properly

• ○ Developing a formal application process will teach you what to look for in a good tenant
• ○ You'll have more data behind the types of properties and the type of tenant related to that class

• Collecting rent

• ○ Would you like to physically go to the property each month, collect rent via Zelle, collect rent via apartments.com/Cozy?
• ○ Understanding how to be efficient will naturally push you into a rent collection system which is organized
• Other items I recommend setting up before starting to manage:

• Develop a list of handymen (electrician, plumber, HVAC, painter, etc)

• ○ Go on yelp and find the top 10 in your area
• ○ Call all of them, interview them, get a general quote
• ○ Have their contact information ready to go BEFORE a problem happens

• Produce a one sheet of contact information for your tenant

• ○ Your contact information
• ○ The utilities contact information
• ○ General notes on the property
• ○ Emergency info

Two final tips:

• Make sure you have the following in writing with your 'friends'

• ○ Your management fee and how/when you will be paid
• ○ What is expected of you as the management company
• ○ What is expected of your 'friends' as the owners

• Don't let your emotions cloud your business decisions

• ○ My example above of letting someone get three months behind on rent
• ○ They were an older couple, extremely nice, and easy to get along with. I let those personality traits effect my ability to evict them quickly as being late on rent is a NO NO!

How hard is it to manage properties?

How hard is it to manage properties?

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