Anyone can manage one rental property at a time. While it’s not always easy – and there’s a bit of a learning curve associated with it – it’s certainly manageable. But things start to get a little more challenging when you add multiple properties into the mix.
Multiple properties mean multiple tenants, multiple problems, multiple rent checks, and multiple headaches. If you’re going to put yourself in a position where you’re investing in multiple rental properties at once, you need a strategy for how you’re going to manage these properties.
Otherwise, you’re going to lose both your sanity and the shirt off your back.
One of the exciting things about real estate investing is that it starts to snowball. While it may take you a while to save up the money for a down payment on your first property, the second one comes much faster. The third and fourth ones are even easier. Before you know it, you have a large portfolio of properties and the passive income starts rolling in.
Unfortunately, the idea of passive income is often very overrated by those who don’t understand what it takes to successfully manage rental properties. If you want to find success – and enjoy some of the profits – you need a plan of attack.
The following tips will help you move in the right direction.
When managing multiple properties, you can’t afford to be disorganized. Misplacing documents can lead to huge financial consequences and set you up for disaster down the road.
“From rental applications and invoices, to leases and inspection checklists, real estate investors tend to have a fair amount of paperwork to keep together for even a single property,” Kristy DeSmit writes for LawDepot. “With multiple rentals, it becomes a matter of survival to implement an organizational system for your business.”
Every landlord has a unique filing system they use to keep documents organized. Some choose to organize by property, while others prefer to file papers by tenant. Some even create a per-month-per-property filing system. Find something that works for you and stick with it.
If you have honest, cooperative, and trustworthy tenants who respect your property, pay on time, and don’t attempt to hide issues, your job as a landlord will be a breeze. If, on the other hand, you have dishonest tenants who trash your property and never pay on time, your life is going to be a living hell.
The number one piece of advice is to meticulously screen tenants and only sign lease agreements with people you feel confident in. While you won’t be able choose good tenants with 100 percent accuracy, you’ll end up with far more good tenants than bad ones when you use sound screening principles.
When you have multiple properties in your portfolio, you’ll discover that there’s tremendous value in repeatability. The more you can repeat processes from one property to the next, the more time and energy you’ll save.
Not only should you be using the same lease agreement from property to property, but you also need to have consistency in rent collection methods, screening practices, ongoing maintenance, landscaping, taxes, and other important issues. This leads to less confusion and greater profitability (both short-term and long-term).
You never want to intrude on the privacy of your tenants, but one of the best things you can do is schedule regular visits where you check in and see the property. This gives you a chance to build a relationship with your tenants and see for yourself if there are any issues or red flags. Once per quarter is a pretty good rule of thumb.
Turnover kills landlords. Not only does it increase the amount of work you have to do, but it also hurts your cash flow and forces you to throw money at things like cleaning and property marketing. By finding a way to minimize turnover, you can remove this burden from your plate.
From a very practical point of view, you should focus on fostering better relationships with your tenants. In response, your tenants are much less likely to just “up and move” whenever they feel like it.
“In addition to forming a relationship with your tenants, you can also offer incentives for lease renewal,” LandlordStation suggests. “If certain tenants have stayed for a few years, you can offer them a week or a month rent-free, for example. You can also offer a gift card (or some other form of a gift) to tenants who decide to renew their lease.”
While there are far more pros than cons, one of the downsides of being a landlord is that it’s hard to punch out. Whether it’s a Monday morning or a Saturday night, you always feel like you’re on the clock. And the more properties you have, the more this becomes true.
The key is to force yourself to turn off the phone and prioritize work-life balance. Even if it’s just a couple of hours per day, you need this time to yourself.
There’s certainly some value in managing all of your rental properties on your own. Not only does it allow you to save money, but it also gives you control over every aspect of the process. However, there comes a point in time where it simply isn’t practical any longer.
Hiring a property manager to help you out with the day-to-day responsibilities of managing multiple rentals is one of the best decisions you’ll ever make. It’ll allow you to truly experience passive income at its best.
At Green Residential, we’ve built a reputation as the most reliable and trustworthy property management company in the Houston area. Whether you have one property downtown or 50 properties spread out around the metro area, we can help you manage your investments, maximize cash flow, and maintain peace of mind.
For a free Houston property management analysis, please reach out and contact us today!
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