You can manage your own rental property. In fact, 79.8% of rental properties with individual landlords are owner-managed.
Should I Manage My Own Rental Property?
Determining whether to manage your own rental property is a big decision. Here are a few factors to consider:
- Level of experience – Do you know how to effectively screen and manage tenants? Can you handle maintenance tasks or know someone who can?
- Number of properties – The more properties you own, the more difficult they are to manage on your own. If you own one or two properties the level of difficulty is much less than for managing five properties.
- Geographic logistics – If you live near your property, you may be able to manage it easily even if you have another job. However, if you live an hour from your rental, you are at least a 2-hour drive to simply check on things.
- Profit – If you can’t afford to hire a property management company, then the decision becomes much easier.
Benefits and Drawbacks of Managing Your Rental Property
Managing your own rental property does offer some great perks. However, many real estate investors opt to hire a property manager. Check out the table below to help determine if managing your own rental property is right for you.
| Benefits | Drawbacks |
| Keep all profit | Less free time |
| Control of day-to-day tasks and procedures | Dealing with difficult tenants |
| Maintain high-quality tenant screening procedures | Handling rent collection and potentially the eviction process |
| Develop positive relationships with tenants | Must be available to tenants to handle emergencies |
| Gain valuable experience as a property manager | Limited investment opportunities due to geographic constraints |
Benefits of Managing Your Own Rental Property
- Keep all profit – Aside from the expenses of maintaining the property and paying taxes, the profit is all yours. If you hired a property manager you would have to pay them a sizable fee.
- Control of day-to-day tasks and procedures – If you are running the business yourself, you can ensure all operations are handled as you see fit. For example, you can determine how rent is collected and how and when property maintenance is handled.
- Maintain high-quality tenant screening procedures – Some property managers are focused on filling the unit rather than the quality of the renter. A high-quality screening procedure helps you avoid tenant drama and the cost of eviction.
- Develop positive relationships with tenants – As a property manager, you have an opportunity to develop a positive professional relationship with your tenants. This is a great way to keep your unit filled and have someone speak positively on your behalf.
- Gain valuable experience as a property manager – Every day as a property manager is a new adventure. If you decide to increase your real estate portfolio your experiences as a landlord/property manager will continuously help you to succeed.
Drawbacks of Managing Your Own Rental Property
- Less free time – Property management can take up a lot of time depending on your property and the tenant.
- Dealing with difficult tenants – Even with the best tenant screening process, some tenants can be difficult. Handling a difficult or needy tenant can be exhausting .
- Handling rent collection and potentially the eviction process – Trying to track down a tenant to get your rent payment or filing for eviction can be time-consuming and difficult. Besides ensuring you are handling everything legally, you will have to attend court, send notices, and more.
- Must be available to tenants to handle emergencies – If a tenant has an emergency in the middle of the night, you are the person who has to handle the call.
- Limited investment opportunities due to geographic constraints – Managing your own rental properties means you are limited to as far as you can drive. Realistically, having a property a few hours away may not be the best plan.
How to Manage Your Own Rental Property
When you manage your own rental property, you will take on tasks like:
1. Tenant Management
Finding and keeping great tenants is the most profitable activity a property owner can do. You will be looking for someone who will pay rent on time and in full, every time. They should also care for your property as if it were their own.
Unfortunately, many landlords face difficult tenants who pay rent late or not at all. Some tenants may also damage your property or are slow to report problems inside the home. However, there are steps you can take to help avoid these issues.
Tenant Screening
The #1 way to avoid tenant issues is with a thorough screening process. You can work to ensure your tenant is highly qualified by taking a few measures including:
- Asking the right questions on the application – Questions like “Have you ever been evicted?”, “Do you smoke?”, and “How much is your gross monthly income?”, can help you weed out unqualified applicants.
- Gather credit history – Pulling a full credit history will allow you to see a much more in-depth picture of the applicants’ financial management rather than just a credit score.
- Gather criminal history – Ensuring your applicant has no serious criminal background can help you avoid missed payments due to jail time and prevent criminal activity on your property.
- Contact all references including previous landlords – Contacting professional references and previous landlords will help you determine if the applicant is as qualified as they seem on paper. Be sure to utilize online searches to find the office phone number for their employer rather than a cell phone number so you can be sure you are talking to the right person.
Managing your own rental property requires you to understand and follow all applicable laws during the tenant screening process. This includes the Fair Housing Act and the Fair Credit Reporting Act as well as receiving written permission to pull any credit or background information.
Writing an Airtight Lease
Creating a solid lease helps protect you and your property. Your lease should include:
- Name of the tenants and landlord
- Length of the lease
- Rent price and how and when to pay it
- Rental deposit and fees
- House rules and policies (e.g., pet policy and smoking policy)
- Normal wear and tear guidelines and expectations
There are several lease templates available to property managers online.
Meet with your attorney to ensure you have everything needed for a solid and legal lease. Once you have the format down, you can easily change the basic information as needed for years to come.
Resolving Tenant Issues
Property managers also spend a good chunk of time resolving tenant issues. This can range from a leaky faucet to a disagreement with a neighbor to removing a tenant after an eviction.
Depending on the situation, it is generally important to help keep tenants happy, especially if they are considered a good tenant. Happy tenants are inclined to stay at the property long-term, leave good reviews, or recommend the rental to an equally qualified friend.
As a property manager, you want as much positive buzz around your rental properties and you as a landlord as possible.
2. Property Maintenance
It is also essential for you to care for the property while the tenant is occupying the home and while the property is vacant. This may include:
- Yard maintenance like watering plants, mowing the lawn, and trimming trees
- Ensuring the home is free of pests or vermin and maintaining pest treatment services
- Fixing cracks, leaks, or property damage
- Garbage clean-up left behind by tenants or people on the road
- Cleaning up leaves or debris from a change in weather
- Making sure that tenants park their cars in the appropriate spots and don’t have more than the allotted amount (if applicable)
- Scheduling necessary home inspections
- Hiring and managing a maintenance company to handle this
There is no limit to the services that may be needed for property maintenance. However, properly maintaining the home helps you avoid emergency situations and can save you money in the long run.
3. Financial Management
As with any small business, managing your own rental property also requires financial management. You will need to legally hold the security deposit, track income and expenses, and file the appropriate taxes.
While many real estate investors use a tax professional or hire a property manager just for the financial part of the business, you can do it yourself.
Can You Afford a Property Manager?
The biggest reason to manage your own rental property is the cost of property management services. Property managers typically charge 8% – 12% of the monthly rent. However, each property management company offers different services, added fees, and payment methods.
If you are considering hiring a property manager, it is a good idea to call a few local property managers to get a better idea of the cost and services offered.
Can I Hire a Part-Time Property Manager?
You can hire a property manager to handle certain tasks. Many property management companies offer a la carte services so you only pay for what you need.
You can inquire with a property management company to handle property maintenance while you handle rent collection, tenant issues, and tenant screening.
