Being in the rental property management industry we get to work with a lot of different investors. It becomes quickly apparent that not all investment property owners are created equal. Some property owners are great to work with and constantly make wise decisions leading to a growing portfolio and happy residents, while others struggle and stress constantly about their investments.
Rental property owners come in all walks of life, with various personalities, backgrounds, and character traits. So how do you know if you have what it takes to be a great Redding or Chico rental property owner? Read through this list we have compiled of qualities that make up an ideal owner.
Have a long-term vision
Residential real estate investing is a long game. Someone who has a multi-year vision of success tends to do the best. These owners understand the value of nipping maintenance items in the bud before they become larger issues. Sure, maintenance costs money, but repainting the chipping fascia for $300 is so much better then replacing them three years later for $3,000 because of dry rot.
If there’s one thing I’ve learned about property management, it’s that deferred maintenance always catches up to you. A short sighted, “let’s just put some duct tape on it” view on your property will often end up biting you years later. Good rental property owners know that an ounce of prevention is worth more than a pound of cure. A long-term vision will help you make decisions that will pay dividends years down the road.
Have margin (don’t invest with a shoe string budget)
Occasionally we get those investors who are investing on a shoe string budget. Typically, things go smooth at first, but then the HVAC system goes out in the middle of Summer. It’s a terrible thing when an owner doesn’t have the funds to cover the repairs. Residents then must suffer trying to sleep through the night when it’s 94 degrees inside their house.
We politely refuse to manage property for owners who are not able or not willing to cover the cost of maintenance emergencies. When you invest in property it’s not a matter of if, but when you’ll have to repair something. When that day comes you must be able to break into your piggy bank and pull out the reserves it takes to cover the costs. If you have no margin, if there are no reserves saved up, then please wait to invest in property ownership. You’ll save yourself and your residents a lot of stress and headaches.
Don’t be a micro manager (unless you have to be)
If you have a rental property management company, let them do their job. We’ve had some investors in the past who love their property, want the exact right person to live in their investment, and want their property well taken care of. If you’re one of these, then please, don’t call your property manager every day asking if your home is rented, asking to see every application, asking to review their rental history, call their referrals, and look through their entire credit report. That’s what you pay the managers to do.
When we get investors who are like the proverbial helicopter mom, it an make our jobs so stressful. Some owners want us to ask them permission on every little decision we make. It just becomes too much and the relationship can become tense and overwhelming. Nobody likes to be micro managed, so just find a great property management company and relax a little.
Now, I will say that there may be times when you have a property manager that is struggling and can’t stay up on their work. Check out my blog about that here. In these cases you have real reason to suspect that your property manager is not taking good care of your property. If you notice your rental sits vacant for months, then you need to start to probe and ask questions – possibly even go out to bid for new management.
So what’s the bottom line? If your management company gives you a reason to micro manage, then do it, but if not, then let them do their job!
Understand the law
We manage property in a college town. I can’t tell you how many times I hear real estate investors say, “I want a nice family to move into my home. I don’t want any college students or young adults to trash my house.” I understand these Chico rental property owners have scenes of “Animal House” or “Revenge of the Nerds” running through their minds, but it’s important to remember that how you screen potential residents is closely regulated by the Fair Housing Act.
You cannot discriminate prospective residents based on age, race, sex, family status, religion, and several other protected classes. Nobody can take a bunch of 20-year-olds applying to rent a home and say, “sorry guys, you’re 20, and because you’re 20, we won’t rent to you.” That’s illegal and you’re opening yourself up to a fair housing lawsuit.
Too many real estate investors don’t understand the law, and because of that they could find themselves in some hot water. Know the law. Know what you can and cannot say. If you’re not sure what all the laws are and you don’t want to take the time necessary to understand them, then please, hire a property manager. Mitigate your legal risk by using a professional. You’ll be glad you did.
Be people smart
Lots of real estate investors have a high IQ. You have to be somewhat smart to save money and invest in real estate that cash flows and makes sense to the bottom line. Many investors understand Cap rates, ROI, NOI, gross rent multipliers, and cash on cash return. But you can’t just be book smart, you have to be people smart. After all, you’re in the people business. You can’t fly off the handle because something doesn’t go your way. You can’t yell at your residents or property manager because you’re upset about something. IQ is not enough; in order to be an ideal real estate investor you have to be good with people.
So, how do you measure up? Are you an ideal real estate investor? Do you have areas you need to work on? If you have a couple of weak areas, we would love to add our strengths to your weakness. Contact us for a free rental property management consultation today!