Owning rental properties helps investors to build wealth and positive monthly cash flow but they can also come with headaches, especially if you're managing them yourself.
In this article we will provide you with several of the hardest aspects of being a DIY landlord.
Turnovers: Where 90% of the Labor & Costs Lie
The overwhelming majority of the work and expenses involved in owning rental properties comes during turnovers.
It starts with walking through the unit with the outgoing tenant to determine if they caused any damage that should be deducted from their security deposit. You have to send them a detailed invoice, breaking down all security deposit deductions.
Then comes repainting, recarpeting, and other property updates, followed by advertising the vacant unit. And then open houses, showing the unit, collecting rental applications, and screening tenants. This includes pulling background checks, contacting references and prior landlords, and verifying income and employment. Fail to screen applicants well, and you end up with bad tenants (more on them shortly).
After going through all that, you have to collect the security deposit and initial rent, sign a lease agreement with all legally required disclosures, and come full circle by walking through the unit with the new tenants for a move-in condition inspection.
Woof. It’s enough to make you reconsider buying REITs and ETFs instead of putzing around with brick-and-mortar investments.
Chasing Down Nonpaying Tenants
There's nothing worse than chasing down deadbeat tenants who haven't the slightest interest in paying their rent on time.
They may eventually pay some back rent to prevent you from completing an eviction. And then you go back to square one, sending notices, calling them, cajoling, bribing, threatening, and eventually filing in court again. Round and round you go.
Word to the wise: avoid this cycle through aggressive tenant screening. In my experience, there are exactly two types of people when it comes to fiscal responsibility. Some people take their bills extremely seriously as a matter of personal honor and would be mortified to miss one. Others never saw a bill they wanted to pay on time in their life. And you can tell the difference instantly by looking at their payment history on their credit report.
And yes, “stuff” happens in life, and people occasionally experience a true crisis like a job loss or divorce. But you can still read it clear as day in their payment history, as a sudden stretch of late payments followed by a return to on-time monthly payments. Isolated blips serve as outliers—the exception that proves the rule that it takes a true crisis to force fundamentally responsible people to fall behind on payments.
People who regularly miss payments, however, are another breed entirely.
High-Maintenance & High-Impact Tenants
Some tenants pay their rent on time but treat you, the neighbors, and/or your property badly.
They call at 3 a.m., complaining that a light bulb went out. They blare their music or TVs late at night, driving the neighbors crazy. Perhaps they leave their dog droppings all over the communal grounds or the neighbors’ lawns.
Contact Martin Property Management
Are you tired of being a DIY landlord? We can help! To learn more about the property management services that we can offer you, contact us today by calling (617) 957-0166 or click here!