8 Tips for Successfully Self-Managing Rental Properties
Self-managing rental properties instead of hiring a property manager is a lot like being an entrepreneur. It can be an exciting and rewarding journey, but requires dedication, resourcefulness, and a willingness to learn.
Keep reading to learn which rental property types work best for self-managing as well as tips from real-world real estate investors who are self-managing their properties.
Identifying ideal rental properties for self-managing
When considering self-managing, assess your properties and target renters to determine if they are low-maintenance and a good fit for this approach. You can estimate the level of complexity of your rental properties by considering the following questions:
- Does the rental market your properties are in have a healthy demand?
- Is your property in a desirable location?
- Is your property zoned for good schools?
- Is your property on the newer side? Are the ages of your roof, HVAC, and most appliances less than half of their respective useful lives?
- Does your property target the mid-to-high end of the market? Can you find renters meeting the minimum requirements relatively easily?
- Are your properties free of undesirable traits, such as being too small, too noisy, or too dark?
If you can say “Yes” to four or more of the six questions above, your rental property is ideal for self-managing.
If you’ve answered “No” to four or more of those six questions, you may want to continue hiring property managers, as the intensity of managing those properties will likely be quite high. If that’s the case, then perhaps wait to self-manage after you’ve acquired properties that fit the bill.
Tips for successful self-managing rental properties
Following are best practices for real estate investors who are considering self-management versus hiring a property manager.
- Start small and learn the ropes before expanding your self-managing efforts. Take some time to learn from a property manager and fellow real estate investors you find through your own network, online research and forums, and real estate podcasts. Start by self-managing one rental property and expand only if it feels right for you.
- Be selective with which properties you choose to self-manage and which tasks you take on. You may want to only self-manage a few, but not all, of your properties. You may also want to continue outsourcing some of the tasks, such as leasing, to professionals to get the benefits of both high monthly cash flow and low workload. Be open-minded and strategic about your expertise to understand how to best spend your time.
- Spend on things that help increase ROI. Investing in work that helps your rental business — such as taking professional photos and painting the walls — makes leasing smoother and helps increase rents. So don’t hesitate to pay for these rental property expenses!
- Stay organized and compliant. Organizing the leases and receipts, understanding your local real estate laws during leasing and tenancy, as well as federal and state tax codes, documenting any mistakes such as accidentally paying for a property expense on your personal card — these are all things that will help minimize big headaches and financial losses.
- Use online tools to streamline property management processes. There are useful online tools for nearly every piece of the property management process — from listings to tenant screenings and background checks to rent estimates to rent collection, as well as accounting and bookkeeping. In fact, independent real estate investors essentially have access to the same or similar professional tools that real estate agents have, often at no or minimal cost. Make sure you’re leveraging them!
- Automate and create templates for repetitive tasks whenever possible. Using online tools can help you be more efficient than many professional property managers who often still rely on outdated systems and processes. Here are a few example of rental property management automations you can easily set up:
- The pre-rental process: Listing → pre-screening → tenant application → background check → lease signing
- Setting monthly rent payment requests and reminders
- Centralizing your communications with tenants and vendors in one platform
- Consolidating financial data and automate bookkeeping tasks like tagging expenses by property and Schedule E category
- Build a team and choose preferred partners to maximize efficiency and scalability. If you have over five properties in a single market and plan on expanding, you can consider building a part-time team that includes reliable contractors, leasing support, and an operations manager). You can also consider offshore resources (i.e., virtual assistants) who can take a lot of the administrative burden off your shoulders at a low cost.
- Make your rental properties “smart.” If you plan to do listing and remote showing yourself, digitize your properties to have the most flexibility and peace of mind. Install devices such as remotely-operated digital locks, cameras, or even motion sensors.
- Adjust your strategy as needed, based on changing priorities and market conditions. You’ll learn so much as you go, so your self-managing strategy should not be set in stone. You should make adjustments depending on your priorities, available resources, and changing market conditions. That’s the nature of running a business!
Real-world real estate investors on their self-management experience
On the Hacking Real Estate podcast, hosts Brandon Hall and Vikas Gupta interview real estate investors on how they operate their business and share tips for driving more cash flow and and more appreciation.
Here’s what some recent guests had to say about self-managing their rental properties vs. hiring a property manager:
“I have a mix in my portfolio, but I do largely self manage. A lot of property management firms will take anywhere from 10%-50% of your gross. And when there's a problem, guess what happens? You get the call — ‘Hey, we got a plumbing issue, what do you want me to do about it?’ And I just got to the point where I'm like, ‘Why do I need you?’”
– Chris Hsu, real estate investor, business leader, and co-founder of Azibo
"I just got to the point where I thought, 'Why do I need a property manager?'"
“One thing I do, that I've heard other people in real estate do, is every single property has a debit card and bank account associated with it. That just makes my accounting easier. It helps me manage my expenses coming in and out because I don't use those cards for anything else except to pay people to work on the property. It also makes it easy to export it over to my CPA, so in like two or three clicks my taxes are done for the year. I would recommend that people think about how to make this as clean as possible from an accounting standpoint up front, to save you a lot of headaches.”
– Zane Harris, real estate investor and tech product leader
Self-managing rental properties: Final thoughts
If you haven't considered self-managing yet, it might be worth exploring. Many investors are already self-managing some of their properties or taking on property management tasks without realizing it. As online tools and marketplaces become more accessible, self-managing is becoming increasingly common and more manageable.
If you’re interested in self-managing rental properties, check out Azibo which helps investors collect rent online, find quality tenants, and simplify their bookkeeping, and more.
If you're up for the challenge, self-managing might be the perfect path to take your real estate investments to the next level. Good luck!