It's Not the Right Time to Become a DIY Landlord. It's a Perfect TimeFebruary 24, 2020
Being a landlord was never easy. And it’ll never be a piece of cake. But renting property has always been a lucrative business and a great way to learn the ropes of investing. At first, it’s the perfect opportunity to generate passive income and after that it allows you to develop an entrepreneur mindset. But I’m not just talking about the money aspect of investing in real estate- property management also reshapes your attitude towards business interactions.
On the surface it might seem like managing properties is simple. You move in a tenant, accept monthly rent payments, and find a new tenant after the lease expires. But it’s only easy at first glance. The rental business is full of challenges: urgent maintenance issues, difficult tenants, and an unsteady housing market are just a couple of factors that can affect your performance (and inner peace) as a landlord. But there are also tools that make life as a DIY landlord easier and the industry more attractive for potential landlords.
Some of them self-manage their properties, while others hire a property manager (or at least utilize a property management software system).
According to Joseph Egdar, CEO of TenantCloud, thanks to new rental platforms and the arrival of technology tools, the number of do-it-yourself landlords has increased by 30% since 2008. And the number is growing.
Even though people are still trying to buy a home of their own, it’s not an affordable option for most and the demand for rentals is still high. Why not take advantage of that and start investing in rental properties?
Let’s take a look at the benefits of being a DIY landlord (whether you’re an accidental or professional one):
- Flexible schedule: You’re probably going to work a lot, especially if you’re a first time landlord, but landlording is not a 9-5 job. You can manage your time according to your lifestyle. Want to go to the gym at 1 p.m. on Thursday? Easy! Feel like taking a day off on Monday? You’re welcome to. Yes, you’ll need to handle unexpected home repairs and deal with late rent payments. But doing regular rental inspections and moving in trustworthy tenants can help prevent that.
- Sense of responsibility: If you enjoy taking responsibility for your own actions and self managing your daily tasks, DIY landlording is for you. You’ll need to rely mostly on yourself and make business decisions without the approval of others.
- Regular cash flow: Growing your rental business is possible with positive cash flow and the mortgage paid off. Due to recurring rent payments, you’ll get closer to financial independence.
- Tax benefits: You can claim a lot of deductions as the real estate rental category is eligible to write off more expenses than other categories.
Bonus for extroverts: A lot of COMMUNICATION
No matter what your favorite method of communication is, you’ll need to be pretty good at it (even if you prefer owl postal service). Along with that, take a look at a couple of qualities a landlord should have in order to succeed in the competitive property management industry.
Is it worth it?
It’s always nice to get insights from the people out there doing it. What’s so special about being a DIY landlord? What are the challenges?
Vitaliy, a do-it-yourself landlord from Chicago:
- What are the main challenges of being a DIY landlord?
It’s difficult to be a full-time landlord. The challenge starts from the very beginning when you have to find a tenant. It takes a lot of time to list your property on all the existing listing websites. It’s very hard to monitor all of them. When someone is contacting you, it's a challenge to schedule all showings. You have to disclose your information like phone numbers or emails to the people you don't know. Well, I don't feel comfortable doing it. Sometimes you have 10 different potential tenants so you have to remember all of the information about them and it is a high risk that some of them are hiding something from you. Even when you choose someone, the process of signing the lease is tough. Or the move out process could be a nightmare if you don't have all documents and history properly organized.
When you don't want to mess with all of that, you're always able to call the agent and they will do your job but it's not so easy to find an agent you can trust.
- Are there any epic stories regarding dealing with difficult tenants?
In my homeowner association, we have a policy that doesn’t allow smoking in the building or an apartment. I had a tenant who smokes but always denies it. So it was very hard to communicate with this person and it was a nightmare for me. I received a lot of complaints from other people living in this building and they're asking me to do something about that. So, it was kind of a dilemma because I cannot catch him smoking. And the worst part was that it wasn’t just regular cigarettes, it was weed.
- Do you think it’s the right time to become a DIY landlord?
I think it's a good long-term as well as short-term investment. The values of the property are always growing. When you have a good organized landlording process, you always get extra income that is very important for families like mine.
For property managers, the picture might seem a bit different. We asked Tasha, a former property manager from Austin, TX, a few questions about her experience and here’s what she said:
- What are the main challenges of being a property manager?
Some of the main challenges of a property manager is to keep 100% occupancy and their units and turning a unit can be costly keeping up with maintenance and tenant disputes.
- Are there any epic stories regarding dealing with difficult tenants/landlords/owners?
I had a tenant who stopped paying their rent and abandoned the property. They left the apartment a disaster. It stunk and there was trash everywhere. I found piles of dog poop in various locations and, to my surprise, I also found a snake that was slithering loose in the rental.
- Do you think it’s the right time to become a property manager?
There is no better time to become a Property Manager. The economy is thriving, rentals are in high demand and let’s face it, the Property Management business is recession proof! Sounds like a win to me.
Get a free sample of eBook to know what works best for your rentals: managing them yourself with the help of digital tools or hiring a property manager.
Do you believe that you can easily generate wealth by being a DIY landlord? Is it worth the time and effort?