Not everyone is cut out to be a teacher, lawyer, or doctor. Similarly, not everyone has what it takes to be a property manager.
There are tenants to screen, references to check, properties to maintain, checks to collect, property tax and mortgage loan payments to mail, and many other tasks to cover on a regular basis for each property. It takes a certain person to handle all of these tasks. In this property management blog, we’ll look at the skills, aptitude, and attitude that are necessary in order to be a successful property manager.
To Run a Rental Property
First, let’s take a detailed look at what it takes to run a rental property. You will need certain resources, qualities, contacts, and preparations to succeed at making money on your property without running yourself ragged. One basic rule to keep in mind is that every task or aspect of property managing will either cost you time, effort, or money out of your pocket.
IMPORTANT TIP: You can take the time to do your own accounting or you can hire a professional bookkeeper to do it for you. If you do not have the skills for a task, or if you cannot afford the time, consider hiring outside help.
That’s right. Being a property manager requires a time commitment.
At a minimum, you need to run your rental business, even if that means just giving other people orders to carry out the work. But it is likely that as a new owner, you will be doing all the work yourself. If you hold a full-time job, make sure you are ready to devote some of your off hours to your property management duties. If you own just a few rental properties, you should be able to do what needs to be done in the evenings and on weekends. If you are working with a spouse or partner, this will be even easier. And if your full-time job offers flexible hours, that too will help. Nevertheless, most professional property managers utilize some form of property management software.
Property Manager Quiz
A good starting point for property managers is the same place that new business owners across all industries should use to launch their ideas: taking an entrepreneurial quiz.
Here are 11 key questions to ask yourself right now:
- Like most successful entrepreneurs, am I an optimist and a risk taker?
- Do I have the self-starter determination to get this business going and the discipline to keep it on track?
- Do I work hard?
- Can I take responsibility for my own actions?
- Am I a good problem solver?
- Am I organized?
- Do I have the physical stamina to work long hours?
- Am I willing to work weekends and evenings, if necessary?
- Can I finance this business myself if my properties are vacant for any period of time?
- Will my family be supportive of my entrepreneurial efforts?
- Do I have the basic skills required to start and successfully me though the critical early stages?
If you answered yes to more than half of the questions, consider yourself a good candidate for property manager of the year. If you answered no to five or more questions, don’t despair. You may simply need to change your approach to work; your mindset; and your way of managing tasks, challenges, and problems.
“It’s easy to handle everything myself, especially because all my properties are in the same area. I have more flexibility With my [work) hours than most people, so I can make appointments m the middle of the day.” —Mark Berlinski, owner of rental properties in Chicago, Illinois
Not counting the scouting and purchase of new rental properties, your time as a property manager will be spent on the following tasks:
- Advertising and showing property
- Screening potential tenants
- Moving in tenants (organizing rental agreement, keys, house rules, etc.)
- Collecting/depositing rents, paying bills, and other accounting tasks
- General maintenance and cleaning of the exterior of property
- Maintenance and repairs on each unit
- Tenant communications, as necessary
- Renewing leases or starting over with advertising property
- Staying informed on property management laws, policies, rents, and advice
Just how much time each of these tasks will take depends on the state of your property and how efficient you are. But you can see from this list that most of these tasks can be handled on weekends or in the evenings. And you can shave time off most of these duties with the advice in this property management blog. For starters, here are a few tips on how to reduce the number of hours you spend on your regular property management duties:
- Have tenants mail rent or set up a direct debit to your tenants’ checking accounts or credit cards. Do not waste time collecting checks in person.
- Schedule a time once a month when you sit down and pay all your bills and settle your accounts. Make this date about a week after rents are due so you can see immediately if a check is late. Accounting for property management can be difficult if done manually. Use cloud based property management software to save yourself time.
- Batch as many property management-related phone calls as you can and make them in one sitting.
- Set up a weekly and/or monthly maintenance schedule so you can batch small repair jobs to avoid multiple trips—your time is money!
- Bring something to do while you are waiting to show a unit or meet a repairman. If the person you are meeting is late or does not show, you will not have wasted time. Make phone calls, do paperwork, or check out the unit or building for necessary repairs and/or improvements.
Successful property managers treat their rental business like a business, not a hobby. One of the most basic steps you can take in this direction is to set up separate accounts for your new business. Open a new checking account and deposit rent checks in this account and use it to pay any related costs. This is an easy way to keep track of your rental income and expenses. It also keeps your personal money out of the mix, as it should be.
IMPORTANT TIP: Consider setting up a separate savings account or money market account to hold security deposits. This money, which tenants turn over as part of their rental agreement, is to be held by the property manager to cover expenses such as skipped rent or damages.
Many states require property managers to keep security deposits in a separate account and, if some or all of the deposit is returned to the tenant, to provide the interest as well. Check your state law on this or check with your local landlord association or housing authority.
What Does It Take to be a Property Manager?
A successful property manager—in particular one who is the do-it-all-yourself type—needs to have certain skills and personality traits. Here’s a look at some of the key attributes of successful property managers.
- Organized and detail oriented: A property manager needs to keep track of dozens of details, including accounting, record keeping, scheduled maintenance, and so on. If you are not good at staying on top of details, find a system that shapes your schedule and your to-do list.
- Good with numbers: You will need to track several bank accounts and make sound decisions on spending and making money, including calculating how much rent you can charge and how to make a profit. Alternatively, using the best property management software available can make accounting much easier to handle.
- Good people skills and intuition: Can you tell when someone is trying to manipulate you? Are you skilled at settling arguments and deflecting anger? Property managers need to know how to read and handle current and prospective tenants.
- Handy around the house: Most maintenance issues are small—stopping a toilet from running all night or tightening doorknobs. Handling these quick fixes yourself will save you a lot of money. If you do not know how to handle basic maintenance, learn! Take a class, read some blogs, or ask a handy friend for help.
Patient… yet firm: As a property manager, you’re likely to hear some whining and complaining on the part of your tenants. It just comes with the territory. The best professionals are the ones who can listen patiently, and then come up with solutions that wind up being win-win for both parties. In other words, you don’t want to be overly accommodating, but at the same time you don’t want to isolate your tenants. It’s a fine line, and one that you’ll learn to walk successfully as you pave your way in the industry.
In The ‘Property Manager’ Corner
According to the Institute of Real Estate Management (IREM), the licensing body for Certified Property Managers (CPMs), the most valuable attributes of a property manager include the following. Yes, we know it’s a sales pitch for using CPMs, but the information can serve as a benchmark for you as you shape your own career as a property manager:
- Knowledge of the real estate industry: When a CPM manages your property, you get someone who is up to date on the latest trends in real estate. As a professional, CPM members must complete numerous hours of education to earn their designation. But learning doesn’t stop there. All CPM members must meet a continuing education requirement to retain their designation and have access to the latest industry information through educational courses, publications, and the IREM web site.
- Management expertise: Experience is one of the defining qualities of a CPM. Candidates for the designation must have a minimum of five years of effective full-time decision-making activity in real estate management before earning the designation. The average CPM member has more than 18 years of real estate management experience. CPM members manage over $879 billion in real estate assets. They manage approximately 10.2 million residential units and 8 billion net square feet of commercial space. They are entrusted with some of the most visible and valuable real estate in the world.
- Financial acumen: Having a CPM member managing your property means that you have someone who is versed in more than just fixing the plumbing and collecting the rent. The training and testing a property manager must complete to earn the designation means that your investment will be mn as an investment. CPMs are equally as comfortable justifying rent increases to your tenants as they are calculating and maximizing your return on investment.
For the Non-Do-It-Yourself Types
So, you’re not going to handle property management on your own? No problem. Put simply, you’ll want to look for a company with credentials, references, and a track record—preferably in the types of units that you’re renting out. In other words, if a firm specializes in condos, then you probably would want to think twice about using it to manage your three single-family home rentals.
IMPORTANT TIP: Membership in the local apartment/trade associations can be a good indicator of a reputable property management firm, but it doesn’t always guarantee a good choice. Check with your local real estate organizations or other licensing bodies to make sure the firm has a clean record before making your selection.
As you have read, there are certain skills and aptitudes that every property manager should have if he or she wants to succeed in the rental business. By incorporating your own strengths into the mix and augmenting them with the information you’ll learn in this blog, the valuable insights available on Apexlink.com, and other educational resources, you’ll be able to develop a plan for success.
Build a Winning Property Management Strategy, Plan, & Team
We’re not going to argue the point that some property managers prefer to learn the ropes as they go along, never taking the time to build strategies, plan ahead, or assemble support teams. Maybe they inherited the property in question and were thrown headlong into the new career, or maybe they “fell” into a windfall and needed somewhere solid to invest it. Whatever the motive these types of owners are the exception rather than the rule.
For the rest of us, there are some tried-and-tested strategies that we can rely on to achieve success as property managers, and the first one is coming up with a long-term plan for reaching your goals. One of the best ways to get a jump on your property management venture is by writing down (or keying into a computer) a business plan, regardless of how brief or light it may be right now.
You can use some of the points taught in business planning 101 to start thinking about your plan, such as:
- What service or product does your business provide and what need does it fill?
- Who are the potential customers for your product or service and why will they purchase it from you?
- How will you reach your potential customers?
- Where will you get the financial resources to start your business?
As fundamental as they may seem, these four core components are critical to your business success as a property manager. The key is to know your product or service, your customers, how to reach them, and what resources you’ll need to get there.
As a property manager:
Your product is the property and the support you provide as the owner. Your customers are your tenants. You will reach them through any number of marketing techniques. And you will fund your company either out of your own pocket, through a mortgage, or through other financing means.
The Next Step
Once you’ve taken stock of your business and personal situation, you’ll be able to start planning your success m an industry where the rewards that come from hard work and smart investments can be plentiful.
To get the most out of your planning, you’ll want to follow these basic guidelines:
- Start at square one. Begin with some business planning basics and outline your overall plan first before going back and beefing up areas of most concern for your particular situation.
- Do your homework. Put some time Into researching your market, your potential customers, and your own financial situation to come up with a realistic picture of where you are right now, where you want to be and how you’re going to get there.
- Write it down. Don’t try to commit this one to memory. Jot down notes as you think though your situation and your future goals and dreams, then use those notes to create a written business plan.
- Network, but do your own thing. You can learn a lot from existing property managers, but no single professional’s plan is going to be right for another. As you pick the brains of those around you for ideas, cull those that sound like they would be most applicable to you and discard the rest. Then, use the best of the best to develop your own plan.
- Update regularly. Like life, a business plan is a work in progress. You’ll want to review your overall plan at least yearly, if not on a quarterly basis, to make sure you’re on track. If you’ve met your goals, revise them. If you’re much further off than you thought you would be, you may want to make the goals more attainable and tangible.
- Make the time for it. The best part about business planning is that it costs little more than time.
And while it’s true that new property managers are usually time strapped, trying to start their careers, find customers, and make money, it will pay to go through this early planning exercise before you get too far into it.