The key to rental property management is focus.
If you’ve bought your first Raleigh-area rental property because you heard about real estate being a key builder of wealth, that’s awesome. It’s certainly true that many, many millionaires achieved their high net worth through at least some amount of real estate investing.
But it’s important to know that to be really successful in real estate, you can’t just buy property on a whim and expect to collect your rental income every month with no major work on your part. Your rental property is a business and just like your full-time job, there are some key principles that you should be putting into place if you want to make things work.
If you’re looking for guidance on how to successfully oversee your real estate investment, it might be wise to turn to Stephen Covey, the successful businessman and motivational speaker. Covey is probably most well-known for the popular self-help book The 7 Habits of Highly Effective People and no wonder. The tenets he lays out as a roadmap to success can be perfectly applied to the management of real estate investment property.
How The 7 Habits of Highly Effective People relate to rental property management:
Habit #1 – Be Proactive
Whether it’s a minor repair, dealing with a delinquent tenant, or handling HOA assessments, it’s tempting to put the task off. After all, repairs represent money out of your pocket, and that tenant will pay up eventually, right?
The fact is, North Carolina real estate investment involves plenty of details and being proactive by staying on top of them will save you money and hassle in the long run. Putting aside a portion of the rent payments to cover potential repairs, and adding preventative maintenance to your calendar is a great first step.
Think about it – finding and fixing the source of a damp spot on the floor today might cost $50. Replacing drywall, carpet, and subfloor resulting from the flood that happened when that leaking pipe burst may run you in the thousands.
Habit # 2 – Begin with the End in Mind
The reason most lenders want to see your a business plan before agreeing to extend credit to a new entrepreneur is because they want to know the idea is viable. It’s the same with real estate (and everything else)!
If your end goal is to create passive income from real estate, you should know how much you can expect to earn, and the target tenants and locations that will present the biggest bang for your buck over time.
Habit # 3 – Put First Things First
The reason it’s so hard to be proactive (Habit #1), is because we humans have a tendency to procrastinate. We get overwhelmed by the massive to-do list and struggle to prioritize. And when we can’t prioritize, things just don’t get done at all.
Try putting things into one of four categories – Important and Urgent, Important and not Urgent, Not Important and Urgent, Not Important and not Urgent. This forces you to really think about the tasks in front of you, ensuring everything gets done at the proper time.
Habits # 4 & 5 – Think Win-Win and Seek First to Understand, Then to be Understood
As a property manager, you may have occasional conflicts with your tenants. Perhaps they want to paint the interior rooms a different color, or add a pet when the lease prohibits it. It’s up to you to understand what they want and why, so you can decide whether or not to accommodate them. If they’ve been a reliable tenant you wish to keep, consider finding a compromise that presents a win-win for both of you. Some landlords, for example, are willing to amend the lease to allow pets if the tenant agrees to put down an additional security deposit.
Habit # 6 – Synergize
It’s simply not possible to accomplish everything in a vacuum. That’s why we rely on our friends, family, and business partners to get things done. If you really want to use real estate investment as a wealth building tool, but you don’t feel you have the knowledge and expertise to manage it properly, consider hiring a property management company like Oak City Properties.
Property managers act as a valuable business partner with a wealth of specialty expertise and resources to handle your business for you. They can handle everything from keeping your property rented, to finding suitable tenants, and handling paperwork, accounting, and maintenance issues, improving your work-life balance which, conveniently, is Covey’s #7 habit, making you a highly effective person!