After months of getting your investment property prepared, you are now ready to reap the riches of rental ownership. Wisely, you have decided to use self-management. Self-management is just what it sounds like. Think the FSBO (for sale by owner) of rental properties. For all the same reasons, owners of properties make a decision to DIY (do-it-yourself). After all, nobody knows as much about the property as you! Why would you want to pay somebody to do what you can easily do yourself? It is crazy how much it costs to hire professionals to do what you can do by self-management, isn’t it? It is really nothing more than a two-step process that anyone can handle.
First Step In Self-Management- Leasing
The first call comes right as you sit down with your family for dinner. You are not sure who is calling, but from now on every unrecognized number may be a tenant…a source of revenue to offset the payment and expenses you have incurred.
Fielding Inquiries
You ask your family to excuse you as you slip off into another room. Sure enough, it is somebody calling to find out about the three bedroom home for rent. As your heart skips a beat, you describe all the personal touches, along with the not so personal touches. All the fresh paint, and efficient windows, and the extra storage. The caller sounds nice enough and now they ask if they can see the property!
“This is going to be easy” that little voice in your head tells you. The caller says they are free after work tomorrow. You say great, forgetting for the moment that tomorrow is Jimmy’s playoff soccer game. Remember, you need to get this home rented. After confirming the time, you hang up and realize that you do not have the caller’s number. Maybe it is on caller ID…but no…they must have used a blocked number. You return to dinner as the table is being cleared.
That night your wife reminds you about Jimmy’s soccer game tomorrow night. Immediately, you realize the conflict and wonder how you can find these callers to reschedule. That fails, so you hope your best buddy can show it to them tomorrow. He has plans. So, you are stuck. Maybe a quick showing and race across town and still catch the second half.
The thought hits you, maybe you really should have budgeted for help with this hobby.
Showing Your Rental
The showing time arrives. You bring two rental applications found on line, just in case. Not sure how you will get the background checks or credit pulled but you will figure that out once you have the applications completed.
At the agreed time…no prospective tenant. Fifteen minutes late, they pull up in a 20 year old van falling apart and very dirty. It is exhuming exhaust. The prospects both grind out their cigarettes on the driveway as they get out. Both possible tenants begin to unload children from the rear. First one, then two, then three and finally four and five. Lets see, 7 occupants in a 3 bedroom 1000 square foot home. Your heart sinks a little.
You show off your pride and joy and learn that there are some mysterious circumstances about where these people currently live. A reference to how nice it will be to actually live in a home instead of the van by one of the kids catches your attention. At that moment, you decide to ask what they do for a living. One is unemployed, the other just got a job after months of unemployment. The job involves selling magazines and appears to not really be as an employee but as a contractor.
Of course, they love the house and request the applications. You hand them out and ask them to fax or email them back as you really need to run. They do not have fax or email and want to fill them out now. You are screwed. Jimmy scores the winning goal..you miss it. You waste an hour with a family that you are not even sure how to screen to officially reject.
Lessons Learned
Mistakes you learn by and the next time you will be smarter. No answering the phone during dinner…but what if? More pre-screening on the phone…but what if they call during dinner and you are in a hurry? At least get a phone number…that one you can do every time! How many more summer evenings meeting tenants before you find one?
Second Step In Self-Management- Managing
One of the really special parts of self-management is making sure your tenants can get hold of you. You want to make sure they can reach you in case of an emergency. So, give them your cell phone number.
Learning that tenants believe almost everything is an emergency is a lesson that becomes apparent quickly when the tenant possesses their owner’s cell phone number. Getting calls at 10pm about a mouse in the attic? Hey, that is what self-management is about. A small price to pay for the savings you are enjoying. Remember those savings when the oven does not work on Thanksgiving. Or the air conditioner stops cooling on the hottest weekend of the summer while you are on vacation with your family.
With self-management, you have the opportunity to save and increase the return on your hobby. You get to service the leaky faucets and collect late fees when rent is late. Plus hear all the excuses about why rent is late.
The best part about a tenant knowing how to reach you? When you figure out how to file all the paperwork to evict them. You spend a few hours down at the court completing the eviction filing. Then a few days later, the tenant gets served, and will want to discuss this action with you. For some reason, at this point, it may be a good idea to change your number.
Reality- Is Self-Management Worth The Hassle and Savings?
Leasing and property management sure sound like fun when you have a life and a career, right? Most people actually have to enjoy experiences like this to decide that they understand why management and leasing companies exist.
Why is it again that you are considering doing this yourself? You likely own rentals to create a lifestyle. Decide how that lifestyle is going to look and feel and if self-management makes sense for you.
While self-serving, our advice: save yourself the headaches. Get out of the loop except to collect your distributions and review your financials.
