As the old saying goes, nothing worth having comes easy. Just because you invested a great deal into your rental unit does not mean it will be smooth sailing from here on out. That is, unless you plan on managing the property yourself.
Being a landlord is like having a full-time job because you have so many assignments in the day. These include finding tenants, retaining old tenants, staying on top of maintenance duties, and knowing which contractor to contact in case of emergency repairs.
It’s easy to see why most property investors delegate the duties of being a landlord to property managers. These professionals handle all aspects of property management, so you don't have to.
With that said, it’s not impossible to manage the rental unit yourself - it’s just relatively more taxing on your resources. Remember, you only have a finite number of hours in the day - you could devote that to your day job or to your landlord duties. Pick one. Or you could try to juggle all responsibilities on an ad-hoc basis only to experience burnout.
Let’s look at some of the responsibilities of managing rental units.
The Responsibilities of a Landlord
You could break down the duties of a landlord into three separate sections:
- Managing the property
- Managing the tenants
- Managing the cash flow
You must provide your tenants with a great living experience if you want them to stay at the property. But this also requires you to take the time to properly screen tenants and select the ones who give you the highest chance of making your business a success. There are several steps involved in tenant screening, including checking references, checking renter credit, and looking at their rental history.
You are legally required by law to provide your tenants with a property that is safe and habitable. Finding and retaining good tenants is just as important if maintenance is becoming a problem. Last but not the least, it is more cost-effective to stay on top of property maintenance than dealing with major repairs now and then.
Winging property maintenance increases your risk of dealing with a major repair that could cost tens of thousands of dollars (and isn't covered under your insurance policy). This is why it is better to share this burden with a professional property manager. They most likely use specialized software or even a basic spreadsheet to keep tabs on maintenance needs and contractors.
Property maintenance also includes major and minor renovations so you can keep the rental unit profitable. You can always choose between repairing areas of the property or replacing them.
Managing tenants is at the heart of everything you do as a landlord. You have to build rapport with your tenants and work on your people skills to keep high occupancy rates.
People skills are especially important when dealing with tenant complaints. Learning about common complaints and how to proactively address them will boost your occupancy rates. Following up with a tenant after taking care of a problem, whether it is a maintenance issue or major repair, demonstrates that you care.
Even if the tenant's complaint is unwarranted, being respectful and responding promptly can successfully resolve the problem.
Did you know that you can qualify for certain tax deductions? But it is important to know which expenses are deductible, not to mention the fact that there are certain limits on how much you can deduct every year, and the amount you can deduct may depend on your actual tax returns.
An experienced property manager can help you understand these highly sensitive financial issues - and may even play a role in helping you qualify for higher tax deductions.
When You Should Hire a Property Manager
You should hire a property manager if you don't have enough time in the day to deal with the duties of being a landlord. It may also be better to work with a property manager if you don’t have good links with nearby contractors to handle repairs. Another reason to hire property managers is when you live out of town, or even out of state, and it is not feasible to maintain checks and balances because of how far you are located.
You should hire a property manager if you are not sure of tax laws in your local area, zoning ordinances, and local property rules.
For most people, it’s not always straightforward to turn their property into a residential unit. This is where it may be a better idea to turn to a professional instead of doing everything yourself.