I’m smart Enough, Should I manage my own rental property?
At one time or another every real estate investor asks the same question, “Should I manage my own rental property or hire a Portland property management company?” However, perhaps this is the wrong question from the start.
So many new and experienced real estate investors ask this question and consider themselves fully capable to go it alone, and they’re right. Most people who invest in rental property are incredibly capable and intelligent and have once again proven that by making the smart choice to invest in a rental property. However many investors get sucked into the idea that by hiring a professional property management company to manage their Portland rental property, that it in some way says they are not capable. Of course you are capable! Perhaps the right question isn’t, “Should you” manage your own rental property, but, “Who should” manage their own rental property.
Who should manage their own rental.
Determining who should manage their own rental is less a question intelligence, and more a question of the investors personal situation. Here are 9 things an investor should have before they take on the Important job of managing a rental property.
- More time than money
Managing rental property, the right way, takes way more time then many investors expect. If you have an excess of time, but are low on money, then managing your own rental property might be an option. Be sure to calculate the value of your time, times the number of hours it takes to manage a property and simply compare it to the cost of hiring a property manager. Although an important question, there are other big factors to consider.
- A desire for absolute control
A need to micromanage and be in complete control of everything that happens with your rental, is a good indication that an investor will have a difficult time allowing a property manager to do it for them. Often investors come in, with an attitude of, I know more and can do it better. These relationships rarely work.
An investor may have been involved in rentals for 30 years, and the property management company only been in business for 10. However, even if the investors property turned over every 2 years, they only would have advertised, negotiated and signed 15 leases. At the same time the property manager may have negotiated thousands of leases in one third of the time.
- Interest in being involved in the process
Some investors just love being involved in the transaction. They love the “figure it out as I go,” type of problems. For them it is more about the learning process then being successful with their investment. Again, this type of investor has the time to be able to invest in figuring out how to manage rental property. They may be well off financially and are able to afford the cost of making mistakes, considering it a fair and acceptable price they are willing to pay for the experience and education.
- Enjoy managing tenants
Managing tenants is probably the most time consuming and draining part of managing rental property. There is a long and never ending list of reasons tenants give for not paying rent. Most tenants, despite how they cared for the property, feel they are entitled to receiving their deposit back. Those who are able to remain firm in their requirements of tenants may do well with managing the tenants. Domestic disputes, disagreements with neighbors, proper care for the property, etc. are all common issues that arise. Owners of rental property, who have the time and patience to deal with those issues, may be good candidates for self-management.
- Have a good working knowledge of the industry
Although many investors are certainly smart enough to manage their own rental, not all investors have the needed knowledge of the industry. Those with real estate backgrounds may be good candidates for self-management, however, real estate is still different them property management. A strong understanding of:
- How and where to advertise properties for rent
- How to screen applications
- Where and how to pull credit and criminal history
- How to draft a strong lease agreement
- Where to hold the tenants security deposit
- How to collect rent and get the tenants to pay on time
- And much more
- A desire to stay educated on the laws and regulations
Especially in Oregon, and Portland specifically investors have got to be in the know immediately as they continue to change city ordinances, state laws, and regulations that could land investors in hot water, and cost you thousands. This is one of the most crucial points of owning investment properties in Oregon right now. Even those in the industry are kept in the dark to the very last minute of law changes in most cases.
- Able to demand exact compliance
There is no wiggle room in Oregon tenant landlord law. And case study has proven again and again that an investor must do everything exact, within compliance, and no room for guessing games. The investor who is obsessive compulsive will excel in this crucial need for properly managing their rental properties.
- Basic knowledge of accounting
There is a surprising amount of accounting that goes on with investment properties. Investors will need to be detailed, organized, and keep track of every mile, every minute spent, and ensure all maintenance is done with proper documentation for tax time. Not to mention the tenant ledgers that need to be kept, the monthly profit and loss statements so that you understand your numbers, and the ability to have documentation throughout the year to ensure you have the best possible tax outcome when it comes time for filing.
- Love doing property maintenance.
An investor who loves being Mr. Fix it, at all hours of the day will never mind doing their own property maintenance. As luck always has it, maintenance issues and emergencies always arise on the weekend, or Friday night when all the vendors are about to close. Being skilled with knowledge of all maintenance to be able to handle at a moment’s notice is important to being a great investor. Otherwise investors will need to make sure they have a list of vendors that will give them top priority just in case something of habitability pops up, or they are out of town or on vacation with their family.
While you probably are more than capable of managing your own investment properties, are you willing to ensure that all the T’s are crossed, and all the I’s dotted? Most people have strengths and weaknesses, so make sure that you are utilizing your networks and getting assistance for those who are experts in the fields you may not be!
Don’t need full service management? That is ok! We offer customized management to fit your needs!
Visit our education center for more tips, resources, and tools to help you excel at being a great property owner!!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.