In real estate investing, property management is important in order to keep the property in shape. However, does a landlord need to hire residential property management professionals, or can he/she do it alone?
Property management is an important aspect of real estate investment management. After all, all investment management firms aim to maximize the profit on a certain property. In this blog, we are going to focus on residential property management as well as tips on what it takes to be your own residential property manager. Keep reading
Related: All You Need to Know About Owning and Managing Residential Real Estate Properties
What is residential property management?
Residential property management is simply taking over the administration of a residential property in terms of daily operations as well as the financial situation.
When do you hire residential property management professionals?
You must hire residential property management professionals if you are:
A beginner real estate investor and you know nothing about managing your own investment property.
A part-time real estate investor who does not have the time to put towards taking care of their investment property.
An owner of multiple investment property businesses and you are struggling to have everything under control.
Finally, you should definitely hire residential property management if you are planning on renting out to family or friends! This is in order to avoid any uncomfortable situations that might happen throughout their rent term.
Related: How to Become a Real Estate Investor: Part-Time to Full-Time
When should you be your own residential property management professional?
You should be your own residential property management professional if you:
Are willing to be a full-time landlord.
Are an experienced real estate investor, and therefore you know what you are doing.
The pros of being your own residential property manager
First of all, being your own residential property manager means you are 100% in control of your property. You know everything that goes in and out and the one to make decisions. Second, it means that you are the first to know of any problems occurring. Moreover, you are the one to deal with them the way you see is right. Third, hiring residential property management services requires that you pay the fees. Therefore, if you want to reduce your properties’ expenses, you should do it yourself.
What tasks are included in residential property management?
Rent collection: Rent collection includes making sure the tenants are paying on time.
Advertising: This is one of the most important tasks of a residential property management professional. The right advertising is a key to your business’s success and that’s what a property manager is there for.
Tenant screening: In order for you to rest assured that your property is taken care of, it is important to go through tenant screening. Thus, that is exactly what a property management should do.
Inspections: Property inspections are also part of residential property management’s duties. This includes making sure the property is well maintained.
Rental arrears: Rental arrears and further legal procedures such as evictions are also part of the tasks. Most of the time, such situations occur when the tenants fall behind on a rent payment. It could happen due to damages and other issues too, though.
Tips on becoming your own residential property management expert
Turn into a legal expert: Taking a look at the laws and regulations that govern real estate investing is important. This will keep you from getting into costly, or even criminal, situations. Learn how the real estate business is regulated and what legal procedures you have to go through.
Get your investment property ready to rent: Well, here you will have to do some improvements. Take a look at your investment property and see what you can improve. You can also add some extra features that will improve your rental cash flow. However, you should not overdo it. Do not spend too much money on this process. Otherwise, you are the one losing the money.
Avoid renting to family or friends!: This one is a bit too personal, but it is not always a good idea to do so. Imagine if you had to deal with late payments. Would you feel comfortable doing so with a family member or a friend? If you still decide that you want to rent out to relatives and friends, then you better go with residential property management and avoid the embarrassment.
Make sure you are available at all times: Managing an investment property requires a lot of time. Therefore, you will have to be available at all times for your tenants.
Do regular property inspections: As a landlord and a property manager, you should inspect your property every once in a while. Just make sure you respect your tenants’ privacy.
Make sure the lease terms serve your financial goals: An investment manager is responsible for setting the lease terms in a way that profits you. In this case, you are the manager, and you are the one to set these terms. So, make sure they serve you right in terms of investment goals.
Do regular appraisal and increases in rent: In other words, you should perform real estate market analysis in order to keep track of any rise in value. Not only that, but keep up with the housing market in order to stay up-to-date with any rise in property expenses that might require a raise in rent.
Take it professionally: A business should be treated as a business. There is no place for emotions here. If you are trying to make money with real estate investing, then keep it professional. If you fail at something, do not let your emotions take over. Think of alternative plans. Be decisive and do not take matters personally.
Keep records: In order to keep track of your business, you have to keep records. Keep records of every tiny detail associated with your rental property. It does not matter whether it’s financial or only simple operations. Here, we recommend you use technology. Organize all of your records on your computer in order to have an easier access to them.
Related: Financial Planning for Real Estate Investing 101
Mashvisor: Check out Mashvisor to learn all about owning and managing an investment property.