Landlording and Property ManagementLandlording is a major issue for those involved in rental property investment. Should you go it alone or should you hire someone to manage your property? The answer depends on your lifestyle in addition to whether or not you want to be closely involved with tenants and their issues. This comes with huge responsibilities and obligations. Be sure to consider them when deciding. If you decide to be landlord to you property, first decide that you will provide the best environment possible for your tenants. After all, they will one day pay off your mortgages. Assemble your team. Decide if you will handle minor repairs. Determine your plumber, electrician, heating and air contractor and handyman. Make sure the tenants have a way to contact you 24 hours a day. This could be a particular mobile phone, answering service or pager. Tenants must be able to contact you, to have their needs met. If they cannot contact you when having a serious property issue, you will get into serious trouble. The city or county will undoubtedly get involved and that is a nightmare. You property then becomes a magnet for public inspectors who can make your life miserable. Treat your tenants well. The alternatives are not worth it. I have not managed a property in over 20 years. I realized early on, I did not have the temperament for it....I am too nice. Tenants with children could really take advantage of my sensibilities. I prefer property managers for a variety of reasons. But it all boils down to "letting the experts do what the experts do." It keeps my time free and I can "manage" the property management firm to handle my property in the manner I choose. Having a property management firm does not mean I am not involved with my properties. I keep track of my income and expenses in great detail. I frequently visit my property without the tenants knowing who I am. I simply tell the tenant I work for the management firm. Landlording takes a lot of time. Time I'd rather spend pursuing investment properties or enjoying the life it allows. One or two properties is probably not a big deal. But anymore than that, and I feel it actually loses significantly more money than it saves. It loses money by reducing the number of properties you could buy over the course of a year. For me, landlording as opposed to hiring a property management firm, costs me, at least two properties per year, for every ten properties I would manage myself. That is too high of a price to pay. The money I would save in the form of management fees, would amount to 20% of the cash I'd receive from one property purchase. Admittedly, I am not a fan of landlording. My advice is to buy right, so you can afford to pay a property management firm. Then manage the property management firm. This takes much less time. If there are no property management firms in your area, train someone to manage your property. The perfect candidate for that responsibility is a local handyman who does good quality work. This person would handle the minor maintenance calls anyway. If a problem exceeds their ability, they would simply contact the electrician, plumber or other support needed. Let them know your objectives. Have them get approval for any work which exceeds $250 for a single event. Or $500 for the entire month on any one property. Of course, adjust this to whatever you are comfortable with. These are simply my guidelines. I want to be sure, I know what is going on with my property. If you would prefer to manage your property, be sure to purchase some type of real estate investment software. Personally, I recommend any of the Quicken Financial products. In fact, I recommend you use Quicken whether you choose landlording or not.
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