Week 7: How to manage properties, repair properties and find contractors
Finding properties that are great deals is the fun part of real estate investing. When you are buying rental properties managing the properties well it vital, but it not always the most fund part of the business. I managed my properties until I got up to 7 rentals. At that point it was too much for my wife and I to handle and I taught my team how to manage the properties. My life got so much easier and better when I let someone else deal with the tenants.
Goals for this module:
- Learn what it takes to manage rental properties yourself
- Learn how to find a great property manager
- Decide if you would rather manage properties yourself or use a property manager
- How to repair properties and find contractors
1. What does it take to manage rental properties?
It is not as easy as it may appear to manage rental properties. The tricky thing is you may think you are doing a great job, when you are actually doing a horrible job. A really bad property manager can look really good with an awesome tenant. It is easy to get lucky with good tenants who make you look good. A good property manager shines when they have to deal with a bad tenant. A good property manager also makes sure they do everything they can to get good tenants. I learned that I could get by being a mediocre manager, but when I got a few bad tenants I learned I was not doing a good job self managing.
The first step in managing properties is finding good tenants.
The second step in managing properties is making sure those tenants take of the property and pay rent.
Here are a couple of great articles on managing properties:
For this module you need to think about self management compared to using a property manager. I can tell you that many people start out managing properties themselves and then switch to a property manager. Most people never switch back to managing themselves. It can be a real headache. Going back to module one, are you using your time to it’s fullest? Is managing properties the best use of your time?
2. How to find a great property manager
Hopefully you have come to your senses and decided to hire a property manager. How do you find a great property manager? There are many property managers out there, but some are horrible. Many complain that finding and managing a property manager is a job itself. While it can take time to find a great property manager and make sure they do a good job, it is certainly easier than managing houses yourself.
Here is a a great article on how to find a property manager: How to find a great property manager.
The first task module is to figure out if you should use a property manager. How do you do this?
- Figure out how much your time is worth
- Come up with an estimate for how much time you spend managing your properties. Or how much time you will spend managing you properties if you do not have any rentals yet.
- Figure the cost of a property manager based on 8 percent of the gross rents.
- Are you saving enough managing the properties yourself? The big question is. Are you tough enough and organized enough to make sure you mange the properties well? I am not.
3. How do you repair a rental versus a flip?
Another part of managing rental properties and flips is getting them repaired after you buy them. Most of my houses need work, because those are the houses I can get a great deal on. There are different ways to repair a rental and a flip. There are different ways you want to repair a more expensive flip or a more expensive rental. You need to know your market and what condition and upgrade buyers or tenants expect.
Here are more articles on repairing houses:
4. How to find a contractor to repair your properties
Finding contractors is one of the most important and stressful parts of investing in real estate. If you find a great contractor please take care of that relationship! There are a lot of contractors out there, but very few good ones. There are even fewer good contractors who also charge a reasonable rate. I have no problem with people making money, but as investors we can’t pay top dollar for repairs or it eats up all our profits.
Besides finding a contractor you have to make sure they do a good job. You cannot hire a contractor and then hope they do everything right without any over site. Here are some more articles on the subject:
Task: Keep a master list of contractors. People you have used, people who have been referred to you, people you see on the street. yes, I have found contractors at Home Depot, from magnet signs on cars and yard signs. Write down every name and number you find and make a note of what they do. When you need work done you can start interviewing them or start interviewing them even before hand.