Franklin D. Roosevelt said that real estate “is about the safest investment in the world” as long as you purchase it with “common sense.” It’s no surprise that a majority of the world’s billionaires make their money this way.
While investing in rental properties may seem like an easy, low-risk way of creating residual income, the reality of managing property can create a shock for new investors.
Managing property is both hard work and time-consuming, so it’s important to go into the new venture prepared.
In this article, you’ll learn about the biggest property management challenges. Whether you are an investor considering rental properties or thinking about going into property management as a career, this article is for you.
Top 5 Property Management Challenges
Some of the challenges of property management jobs are similar to those of any career. Others are unique to this position.
Finding Good Tenants
Those who manage residential properties use Zillow, among other methods, to find renters. Since many of the people who reach out may not be serious about renting, sifting through the responses is time-consuming.
Once you find people who are serious about renting, you need to make sure they’ll pay their rent on time and not be a liability. This is why credit and background checks are so important.
Tenant Management
After finding the right tenants, be prepared for issues to come up at all hours, like leaky roofs. Property managers can even get calls and emails in the middle of the night.
In addition to routine maintenance, you may discover property damage by the tenants when they move out. Although rare, you may even have to handle serious problems such as theft or domestic violence.
Quick, appropriate responses to tenant issues will prevent bad reviews and high tenant turnover.
Unexpected Expenses
If you’ve ever been a homeowner, you know to expect unexpected maintenance and repairs. Now imagine having many homes to manage.
Routine inspections for things like leaks will mitigate the damage and prevent you from paying even more down the road.
Staffing
If you own more than a few units, you might need to hire staff to help with the day-to-day administration. This can include answering phones, responding to emails, processing applications, and collecting fees.
Even though a high unemployment rate means a larger pool of applicants, finding the right staff can still be time-consuming.
Retention is another factor. According to a Gallup article, US businesses lose one trillion dollars per year due to employee turnover.
Time Management
The amount of time needed to manage even a small property can be a shock to new property managers. An urgent call from a tenant with flooding issues, for example, can take up a good part of your day.
Handling applications, collecting rent, and responding to tenant complaints and demands can be time-consuming, especially if you own multiple units or have another job.
Eyes Wide Open
Now that you understand the property management challenges you’ll face, be honest with yourself. Do you want to be both an investor and a property manager? Do you have the time to handle it all?
If you have a full-time job, own a large complex, or simply don’t have the time for the numerous issues that regularly come up, it might be wise to consider hiring a property management company.
Read this article to learn about how to find a property management company you can trust.