Buying and holding income-producing rental property is great. It offers the potential for passive income, long-term wealth building, and tax benefits. Still, trying to manage your rental properties yourself can really create a love-hate relationship with your investments.
Here are three of the things I love about it—and three things I despise.
3 Bad Things About Being a Landlord
While rental property is a smart investment, there are some downsides to being your own property manager.
1. No Vacations
Despite all the hype and guru claims, once you get into it, managing your own properties really isn’t that passive at all. You can definitely say goodbye to the idea of turning your phone and laptop off. You have to be on call 24/7, 365 days a year. In the event you decide to outsource management, then taking vacations can be more stress-free.
2. Poor ROI on Your Time
The above means that you end up getting a poor ROI on your time. This is largely because of all the calls you have to handle and make and any repairs or issues you have to fix or coordinate yourself. Not many people get into real estate intending to barely make minimum wage, but some might make even less if they do the math. If you’ve got bigger money goals, you just can’t afford to do it like this.
As I talking about in this article on BiggerPockets, being on the frontline of property management can be risky physically, legally, and financially. For every dollar you think you are saving on property management fees, you are betting 10 more for all the things that can and do happen.
3 Good Things About Being a Landlord
You don’t really save much money by managing your own rental properties, but there are reasons you might want to try it.
1. More Control
You get direct control of all the money, how you shuffle it, who you rent to, and how you handle repairs and contractors. This allows you to have the ability to directly affect your bottom line and top line income.
2. You Can Do Better
When we don’t like the way we see other people doing things, it is easy to believe we can do better, even if we don’t understand how things are the way they are. People say nobody will manage properties like they will as the owner, though this begs the question of whether you actually have the skill set to effectively manage properties. You can always try it. Just budget in enough for a professional third party manager when you do your numbers so you can hire out if you don’t like it or aren’t getting the results you want.
3. Lower Risk of Fraudulence
If you control all your own rents and invoicing and bookkeeping, you can reduce the risk of getting fraudulent things done to you. In the big scheme of things, you might lose more in the long run due to the return on your time than if a property manager runs off with a month of rent, but some need the control to sleep at night.
Related: The Biggest Landlording Mistake I Ever Made
Investing in rental properties is great. Everyone should do it. However, the results you really get will depend a lot on how you manage it and who manages it. Make sure you know these factors and always have the option of handing it off to a third party property manager.
Being a property manager can be much better than many other jobs, yet it is typically very low paying and a role that loves to be hated on by landlords and renters alike. It may not be the job for you if what you want is more money, time freedom, and passive income.
What do you think? Anything you’d add to this list of pros and cons?