Many people have been sold to the idea that real estate is a passive investment. However, once you dip you toes into the world of rental property, you discover how far from passive real estate is. I normally tell my clients that the work starts after construction. This work is called property management and it could make or break your investment. I have seen many beautifully built apartment blocks that are not profitable to the owner because of poor management. In managing property, you could decide to go about it in two ways:
- Either hiring a property management company
- Or doing self-management
In this blog, we are going to be discussing what it takes to manage your own property, the advantages as well as the disadvantages. After this read, you will be able to know if you have what it takes to self-manage your rental.
What Self-Management Entails
Self-management might look like a self-explanatory idea, but there is more than what meets the eye. Let me break it down so that you know what is required. In simple terms, self-management is the process of running all operations in your rental property, it doesn’t mean that you are doing all the work, but you are the one making the decisions. Some of the operations that are needed in running a piece of property include;
1. Rent Collection
Rent collection can be a bumpy experience if you are not well equipped with a clear system on how to handle it. It involves clearly capturing the rent collected, arrears, defaults and other tenant payments while tracking them for long periods of time. Many owners I have met only keep mental records which could make you lose out on a lot of income in the event you forget something.
2. Marketing Vacant Units
Your units cannot make you money if they are vacant. After your tenant leaves, the process of marketing your unit starts. Many owners will only print out a paper with the sign “TO LET” and include their phone number on it. This method does work but in my view it takes longer to get a tenant as you are only bound to the people passing by your property and calling the number. In this digital age where many people are online, marketing your property has never been easier. All you need to do is the following:
- Take clear pictures of the vacant unit
- Go to your local area Facebook page e.g., “Kasarani Area Members” or “Buruburu Residents network”
- Post the photos and a caption with the features of the unit such as;
- Spacious Bedsitter
- Fitted kitchen
- Prepaid electricity
- Private balcony
- Include your contact or the caretaker’s contact for anyone who wants to view the property.
3. Cleaning & Maintenance
If your unit is always dirty and un-kept, chances are that you could lose your current tenants or even scare off potential ones. Another important yet overlooked operation is cleaning the apartment block and handling maintenance requests. For this, you could agree with your caretaker on the frequency of cleaning, for example 3-times a week.
Handling maintenance requests is another headache for self-managing property owners. You could be busy at work or on holiday and get a phone call from your tenant that their shower is not working. To easily handle this challenge, get a good plumber and electrician who is local to the area. Whenever something breaks-down, call them and ask them to take a look before giving you a quote. They must also be trustworthy, or else they might end up overcharging you if you are not careful.
4. Handling Evictions
Some tenants might either be unable to pay or are just problematic and don’t keep house rules. Getting rid of such tenants is what we call evictions. Handling this can be tricky as it is heavily covered within the law and one mistake could land you in court. So here is how to handle an eviction legally and in a humane manner;
- Issue a 30-day notice in written format
- File a case in the local court
- Obtain a court order
- Enforce the court order through police or court bailiffs
In my experience, most tenants will leave if you talk with them nicely. The court route might take your about 3-months to evict them which is 3-months of lost rent. Negotiations in my view work better, make it clear to them that you want to handle this in the best interest of both parties. Show them how leaving could be in their own-interest. Hardly do tenants want to go to court, unless you meet a problematic one.
5. Communication
Passing along information might appear to be easy if you are dealing with a few people. However, when the number increases, you begin seeing how difficult it might be. Communication is often overlooked, yet it is what good management depends on. You will need to communicate things like; rent payment details, deadlines, when a maintenance request will be handled etc.,
For you to be effective in communication, make it fast and always take action on what you agree to do. If a tenant informs you of a blocked sink, get it fixed ASAP. If it is something that can’t be handled there and then, just tell them that. Many tenants will prefer quick communication over NO communication, so communicate.
6. Record Keeping
Many landlords tend to keep “mental records” or scanty paper work that can’t be of use to anyone when needed. Keeping good records will help you manage your property more effectively. It doesn’t have to be complicated, you can simply buy a hardcover book to be recording rent payments and tenant details. You can also buy a Box-file to store written documents like; tenant agreements, utility bills etc.,
Advantages of self-Management
- Self-managing rental properties allows landlords to save money by avoiding property management fees, which in Kenya can amount to up to 10% of the monthly rent collected.
- Personally handling property operations gives landlords direct involvement in maintenance and tenant matters, which can be fulfilling and productive, especially for retirees or individuals with flexible schedules.
- Self-management gives landlords complete control over decisions concerning tenants, maintenance, finances, and the overall running of the property.
- Maintaining direct and professional communication with tenants helps build trust, improves tenant satisfaction, and can encourage tenants to stay longer.
- Self-managing landlords have the ability to personally choose tenants and supervise the quality of services and maintenance provided on the property.
Disadvantages of Self-Management
- Self-managing rental properties can be very time-consuming, especially for landlords who have other jobs, businesses, or live far from the property.
- Handling rent collection, tenant disputes, evictions, and maintenance issues can become stressful and emotionally demanding for landlords.
- Marketing vacant units and managing tenant onboarding can be difficult for new landlords who may lack the experience and skills needed to effectively run property operations.
