What You Need to Know About Property Management as a Newbie Real Estate Investor
Are you just stepping foot into the world of property management? No worries, we’ve all been there. Every single successful real estate investor started out as a rookie landlord. Property management is something that takes time to master - you have to experience the highs and lows to be able to understand what it’s like to manage multiple properties at once.
Although I teach my students to outsource as much of property management as possible (so they can focus on the investment side of things), this might not be possible at the very beginning. If you want to save money and do the property management yourself, there are a couple of things you should be aware of before you get started!
#1 Choose Your Property Location Carefully
You’re probably wondering what does property location have to do with property management? These two are closely related in the sense that your location will determine the quality of tenants you’re able to bring in. If you choose a rundown neighborhood, chances are you’re going to run into more troublesome tenants, which is not the most ideal scenario. Keep in mind that positive and well-developed neighborhoods are the right choice of location if you want to find A-level tenants that won’t make property management a nightmare for you. After all, working with tenants means dealing with different people’s belief systems and habits. You want to choose the right people for this.
#2 Study Different Personalities
As I’ve mentioned, working with tenants means working with people’s habits and daily choices, which can be frustrating when things start to go badly. As a property manager, you will have to do a lot of studying on working with different types of personalities. Knowing how to react and position yourself in different situations with different types of people can help improve your interaction with them and the result of that interaction. I recently wrote about three lessons from Dale Carnegie’s book How to Win Friends and Influence People. The same tips can be applied when working with tenants!
#3 Get the Tenants on Your Side
Having a good relationship with your tenants is crucial for the success of your rental business. Why? You don’t want your current tenants to impact the future of your rental property. By incentivizing your current tenant, you can lower the vacancy period between tenancies. All you need is a system where your current tenant agrees to put their best foot forward for showings. Make sure they agree to help keep the property clean and organized for showings so you can switch tenancies quickly and avoid vacancy. A simple conversation with a small incentive such as a discount on the last rent can help you get the tenant on your side and assist you in preparing the property for the next showing.
#4 Market Properly
Property management is not all about handling tenants’ issues and fixing clogged toilets (no worries, you won’t actually have to fix toilets once in your landlord career). However, what you will have to do is master your marketing efforts and use methods such as referrals to keep your units rented out. Not marketing your place the right way is one of the fastest paths to high vacancy rates. Hence, you want to spend some time learning how to market rentals and find the right people to avoid property management issues and conflict.
#5 Make Sure Someone is Always Available
Last but not least, you always want to have someone ready to respond to maintenance requests on site. Whether you hire a company or an independent property manager, you need someone who will do internal and external checks of the property on a regular basis. Now, you can choose to do this yourself in the beginning and save some of your budget. However, you should work toward outsourcing these tasks in the future so you can spend more time doing what matters more. Outsourcing is the key to building a sustainable and low stress business.