Being a hands-on landlord is not the dream gig it is made out to be. It can be hell, and it can be a lot less profitable than many real estate gurus make it out to be — especially when you factor in your time.
There are definitely many benefits to owning real estate and investing in income-producing rental property. There can be great cash flow, high returns, equity appreciation, pride of ownership, and protection against inflation. Yet, for all the reasons below, being a self-managing landlord can be more of a nightmare than a dream come true when multiple properties are involved.
Here are five reasons land lording can be a real drag.
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1. Time Commitment
If you are going to self-manage your own rental property portfolio, you can go ahead and kiss your time goodbye. Forget occasionally going on vacation, taking the weekends off, booking dates that you can stick to, or getting plenty of sleep. Be ready for the phone to ring with incoming tenant- and prospective-renter inquiries. You will have to be on call 24/7/365.
2. There Are Too Many Roles to Master
Being a property manager involves mastering a whole team of full-time job roles, including:
- Customer service representative
- Marketer, designer, and copywriter
- Leasing agent and tenant screening professional
- Property inspector
- Property manager
3. Mental Drain
Being busy is one thing. Though in this job, you’ll also have to deal with a lot of stress. It doesn’t matter how good your properties are or how nice of a landlord you are. You will eventually get some tenants who are very demanding. You’ll get tenants with drama. Everyone has a story for why they can’t pay the rent — and it can be draining.
4. You Can’t be Objective
When you are that close to selecting investments, supervising rehabs and improvements, accepting tenants and managing your properties, some emotions can come into play. When you allow your emotions to influence your decisions to buy, lease, renovate, manage, and sell, you run into risking financial results. It’s often better to just stick to looking at the numbers, without even seeing the property. One thing I always work to avoid is falling in love with a property. This can severely cloud judgement.
5. It’s Risky
From the physical dangers of being on job sites and dealing with tenants — to collecting rents and dealing with angry tenants and dogs — to the financial liability involved in being too close, being a DIY landlord is risky.
Fortunately, there are alternatives. There are ways to get all the benefits of investing in rental properties without having to be the on-call landlord yourself. These include: investing in funds, choosing turnkey rental property investments, private lending, outsourcing the management, and partnering up with others who will do all the work.
One of the biggest mistakes I made was starting out personally managing my own properties. It taught me a lot about managing a property. I’ve also found it to be way more profitable to have a professional team to handle most of the day-to-day property management. My advice? Be an investor, not a landlord.
What do you think?
Have you had headaches or success with managing multiple properties? Share your experience below!