Here are the methods that are helping me manage 28 rental units
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When I tell people that I own and manage 28 rental units in 15 different buildings across the Twin Cities (MN), they are surprised. Actually, prior to becoming a Minnesota Realtor, I managed all those units, was Sr. Director of Information Systems for a Minnesota coffee company where I managed 18 people, and had 3 children all under the age of 5 at home. I don’t tell you these things to make me out to be a hero, it is just to demonstrate that everything is possible if you have systems, procedures, and a team in place. Here are some examples of how I manage everything:
Systems:
- Set up your accounting systems on Quickbooks. I have used everything: spreadsheets, databases, and quicken. Although Quickbooks costs about $300 and can be intimidating at first, the organization and eventual efficiencies it can bring to your world is invaluable.
- Use a tenant screening service. Many landlords try to save the $17 and do all the screening manually by going to the MN Department of Corrections and pulling credit reports. The prospective tenants are usually expecting to pay an application fee, use it to pay for the service to save you time and be consistent.
- Purchase your leases, security deposit forms, and move-in/out forms with carbons. Instead of printing the forms off your computer, filling them out, and then having to make copies when they are signed for the tenants, just fill them out, sign them, tear off the 2nd page and hand it to the tenant. Done!
- Have as many of your bills paid automatically as possible. Pay all the others via the internet. This will save you countless hours of writing checks and mailing them. It will also insure that you are never late on your payments.
Procedures:
- Show your apartments at the same time. The tenants that do show up will see there is competition for the apartment and be motivated to fill out a rental application. (see Eliminating Being Stood up at an Apartment Showing)
- Put together a rent collection time-line and follow it. You will find it will be faster and you will collect more of your rent sooner in the month.
- Pay your bills and do your accounting twice per month. If you have all of your bills paid automatically, you are just simply entering the bills into Quickbooks and confirming payments.
- Use a service to Evict Your Tenants. They often will charge a minimal fee (mine charges $88 above the Hennepin County filing fees). It will save you time and any risks associated with processing it yourself.
- Although maybe not a procedure, I work very hard to keep all of my tenants happy. I find that happy tenants stay longer, treat your building better, refer other tenants to you, and call you less often.
- When my investment property requires repairs, I make sure the fix is permanent. Many real estate investors get by with a cheap or temporary repair. Ultimately that repair will cost you more as you will be making multiple trips to fix a recurring problem or the tenants will get upset at the condition of the unit and move out.
Team:
- A mortgage broker that understands (and owns) investment property is a key member of your team. They will chart a course for you to reach your goals.
- Real Estate agents are paid by the sellers to find you property. Use their expertise and lean on them to find the best deals. They also should own investment property and be willing to teach you how to manage yours.
- Once you purchase your first investment property, your days of doing your own taxes are over. You must use an accountant that understands investment real estate. They will find you the best tax advantages and may keep you out of any IRS audit.
- A handyman can be another trusted advisor. You want someone that is going to look at the problems and property and give you an honest assessment of what to do.
Owning tens or dozens of units is very possible, even with a full-time job and family, if you put the right pieces in place. Following the above methods can get you there without all the learning (ie: mistakes) that I had to go through.
Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment property in Minnesota. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.
Great advice! I’m purchasing my first investment property and am both excited and apprehensive. I’ll be sure to learn from your lead. Who do you use for your screening and eviction services?
Thanks.
Chris »
I use http://www.mccgrp.com for my screening and landlord services for evictions.