Are you looking to grow your rental portfolio? Maybe you have 1 property and want to get to 4. Maybe you have a couple duplexes and want to get to 20 units. Managing a couple units yourself is pretty simple. Once you get above 4 you need to have some processes and systems in place. Here are some landlord tips and tricks that allow you to manage more doors with losing your mind (or all your money).
- Use an accounting software. Quickbooks is probably the most popular option for most small businesses (that is what you have by the way-a small business). There are other rental property specific tools such as RentManager, Appfolio, Propertyware, Buildium, etc. Take a look at all the options. One advantage to a rental property specific app is that it can be all-inclusive with accounting, leasing, rent collection, maintenance and even a tenant portal. It will cost more than the $29/month for Quickbooks, but if you are looking to scale past maybe 10 units, it would worth the consideration.
- Make sure you are using a tenant screening service. While you can manually screen tenants by going to the Department of Correction and pulling credit reports, this is too tedious for you to handle as you scale. Most vendors will have a $150 or so set up fee, but after that, the report are paid for by the application fee that you charge (often $30-50). Save yourself some time and use a service.
- Get your all your forms (leases, security deposit forms, pet agreements, etc) sorted out. Use the same ones each time and fill in all the fields. So often I see leases with no start date or no late fee!
- Have as many of your bills paid automatically as possible. Pay all the others via the internet. This will save you countless hours of writing checks and mailing them. It will also insure that you are never late on your payments. Most accounting software packages will have features to pay from inside the tool, thereby skipping a step.
- Sign up for an inspection app for your move-in and move-out inspections. We use SnapInspect. Fabulous tool, works on your phone, and costs about $50 per month. We take 50-100 pictures for each inspection and the tool stores all of them. No need to download and put them in a folder.
- Do open house style showings on your units. This will save you time and frustration when one or more prospective tenants no-show. The tenants that do show up will see there is competition for the apartment and be motivated to fill out a rental application. (see Eliminating Being Stood up at an Apartment Showing)
- Put together a rent collection time-line and follow it. You will find it will be faster and you will collect more of your rent sooner in the month. Do not allow yourself to be talked into giving the tenant more time.
- Pay your bills and do your accounting twice per month. If you have all of your bills paid automatically, you are just simply entering the bills into Quickbooks and confirming payments.
- Use an attorney to do your evictions. It will save you time and any risks associated with processing it yourself. Eviction court has become too complex and riddled with roadblocks for you to handle it yourself any more.
- When my investment property requires repairs, I make sure the fix is permanent. Many real estate investors get by with a cheap or temporary repair. Ultimately that repair will cost you more as you will be making multiple trips to fix a recurring problem or the tenants will get upset at the condition of the unit and move out.
- While we all like to save money on repairs, find key vendors and stick with them even if you feel like that one job may be higher. Building the relationship and being able to lean on that relationship in a crisis is necessary. We use the same heating vendor for all repairs. When we call, they squeeze us into the schedule no matter how busy they are.
- Once you purchase your first investment property, your days of doing your own taxes are over. You must use an accountant that understands investment real estate. They will find you the best tax advantages and may keep you out of any IRS audit.
- Find a competent handyman. This does not mean the cheapest guy that walked up to you on street and said he can paint. You want a handyman that will do the right work for the right amount of expense, have good judgement and good bedside manner. And this handyman needs to be reliable. I have seen too many times landlords chasing down their handyman when they have a vacant unit sitting and the handyman is MIA. This is not the $15/hour guy!
- Real Estate agents are paid by the sellers to find you property. Use their expertise and lean on them to find the best deals. This agent should also own investment property and be willing to teach you how to manage yours.
Owning tens or dozens of units is very possible, even with a full-time job and family, if you put the right pieces in place. By following the above methods can get you there without all the learning (ie: mistakes) that I had to go through.