How to Manage Multiple Real Estate Properties
The jump from one property to multiple can be an exciting milestone for a real estate investor, but it also presents new challenges depending on how many properties you ultimately add to your portfolio. If you’ve recently leveled up your number of rental properties or you’re thinking about doing so in the future, this guide includes a few considerations that will help you keep your head on straight while managing this new level of responsibility.
Organization is key
Something you may already know about being a landlord: it comes along with a mountain of paper and red tape. If you’re managing more than one property, it’s doubly important that you keep up with all of your documentation, and that you come up with a system to keep yourself organized. Otherwise, you may find yourself scratching your head trying to ascertain which tenants have paid and haven’t, or you could accidentally land yourself in hot water when Uncle Sam comes for his cut during tax season.
Make multiple copies of all relevant documents, including tenant applications, background checks, receipts, payment information, identifying documents, expenses, and revenue reports and keep them somewhere safe from unauthorized access. You should also invest in some sort of filing system—it doesn’t have to reinvent the wheel, but you should know where and how to find things when you need them. Having this organizational flow figured out from the start will save you a lot of headache and hair pulling in the long run.
Ensure there is a process for tenant screening
When you only have rental property, you have the time and resources to be extremely thorough with your tenant screening process. You may even have a close relationship with tenants if you’re a DIY landlord who self-manages the property.
When you have multiple properties, however, it might be a little different. When you’re overseeing the tenant screening for multiple properties at a time, you have less time to spend going over applications with a fine tooth comb, but ensuring you have trustworthy tenants is still as important as ever.
If you start to feel that you have too many incoming applications to vet them all thoroughly yourself, it may be time to consider hiring tenant screening assistance or property management help to make sure nothing slips under the radar. After all, the cost of not doing your due diligence in tenant screening is liable to be much higher than the cost of a good screening process.
Have a good support team
No landlord is an island. Even DIY landlords need to occasionally rely on contractors and repair people to keep their properties in good shape.
When you’re operating multiple properties, however, having a good team can make or break your business. Even if you don’t have the budget to hire full-time property management help, working with a third party service provider could mean the difference between a 24/7 work week and a healthy work-life balance.
Transitioning from one property to multiple means you have to be a bit smarter with your time to achieve the same level of attention without sacrificing too much of your personal time. To help yourself manage the amount of time you spend working, try to set a schedule for checking on your properties and a regular maintenance check-list to be completed every six months to a year. Working with outside employees or companies and keeping organized are also factors that can help you manage your time between properties.
Have good communication
Communication is key. No one, including your tenants, wants to end up in court or in a lengthy dispute over the conditions of their stay on your property. Remember that for renters, the unit they live in is their home for the length of their leasing period, and they’re entitled to a certain level of consideration along with that.
Try to grant your tenants the benefit of the doubt and communicate your expectations clearly whenever disputes or other situations arise. This practice will improve your tenant relationships and help you keep a handle on both conflict and tenant turnover.
Invest in tech
Even if you’re an old school landlord who swears by paper checks each month, consider letting a little of the technological revolution into your life if you’re investing in multiple properties at once. Technology is there to streamline your work processes and help level up your efficiency so that you can spend less time working and more time enjoying the fruits of your labor.
You can also choose how much you want to rely on technology in your own management workflow. For example, with Flcrm’s online platform, they can handle answering tenant phone calls, maintenance coordination, lease assist such as scheduling showings, and online billing, all of which you can view online.
Technology represents a middle ground between hiring a full-time property manager and being a fully DIY landlord, so if you’ve ever thought about incorporating some tech into your real estate investment business, there’s never been a better time.
Be tactical in marketing
Having multiple properties unfortunately won’t mean much for your business if they all stay vacant or if they attract tenants who don’t pay rent. If you’re struggling to find a good match between tenant and unit, the problem may be in how you’re marketing your rental properties. For example, if you’re relying mainly on classified ads and yard signs, you may be missing out on the bulk of today’s prospective renters who are looking online for rentals in their area.
When you know how to market your business properly, it can take a lot of the pressure off of you to find the perfect tenants out of few applicants. In addition, having strong marketing can help you build a brand awareness that will help you do better in word of mouth conversations between renters, driving more of the right kind of tenants to your doorstep.
Work with professionals
Earlier entries have mentioned the benefits of having a good support team and technology, but there are places outside of your day-to-day wherein having good working professional relationships can be a game changer. For instance, it’s a good idea to have an attorney that you trust and who has experience in real estate. These professionals can help you ensure you’re on the up-and-up legally speaking, as well as helping you resolve any conflicts that might escalate to legal action.
Another example of a helpful professional relationship would be with a tax consultant or accountant. Real estate investing is a business just like any other, so you’re subject to the same revenue reporting and deductions. If you don’t consult a tax expert, you could be leaving money on the table—or worse, leaving yourself open to a costly failed audit. Put yourself ahead of the curve by teaming up with people who know their Ps and Qs.
Lastly, if you’re looking to keep expanding your real estate business even further, it helps to keep in the loop with contractors, builders, real estate agents, property managers, and virtually anyone else in the local real estate investment space. These people can help you find resources you need or even give you tips about finding the much-coveted off-market or “pocket” deals. At the end of the day, networking and having professional relationships you can trust is vital to surviving as a property investor.
Open an LLC
Investing always comes with a certain level of risk, but that doesn’t mean that you can’t take steps to protect yourself. Once you expand from one property to multiple, the level of risk you take on increases. By opening a limited liability company, you can protect your personal assets by separating them from your business assets.
This way, even in the worst case scenario, such as an expensive tax bill, defaulting on business debts, or encouraging a lawsuit, your personal assets won’t be up for grabs along with your real estate investments.
Owning multiple investment properties can be lucrative, but everyone has their limit of how much risk and responsibility they’re able to support. If you find yourself at the end of your rope or otherwise not able to handle the demands of owning multiple rental properties, sometimes it may be in your best interest to sell one or more properties to another interested investor. That way, you can recoup a bit of your costs and keep your rental income stream intact without sacrificing your sanity and personal life along with it.
As with any major business or investing decision, you should take thorough stock of your resources and options before you dive headfirst into owning multiple properties. If you can, talk with other real estate investors who’ve gone through this process and ask them about any challenges they faced and their recommendations for making the transition smoothly. Lastly, don’t be afraid to rely on outside help for support—whether it’s technology or your own employees or something in between, managing multiple properties doesn’t have to be difficult.