At StageCoach Management we recommend self-managing your first few properties. This will give you a feel for what it takes and allow you to recognize a high quality property manager. You can handle about 7-8 single families before it starts consuming too much of your time. If you work a full time job, you’re going to max out probably closer to 4 doors. If your job requires significant travel, late hours, or is incredibly demanding then we recommend getting a property manager right away.
1. Pay a leasing agent to fill your vacancies
You may have to show a home 10 times before you get the right applicant. Do you have time in your day to schedule 10 different showings? And most of the time on different days! Not to mention you may live 30 minutes from your rental. We recommend finding a great leasing agent who is familiar with the neighborhood. This is typically a young and hungry agent. Be aware, the top agent in your market is not going to take you up on your offer. If you need to, call a local brokerage and they will be able to help you find an agent for the job. Offer them 50% of first month’s rent and tell them they can have all of the leads and eventually maybe help a tenant purchase a home.
2. Treat your tenants like a business
This means do not respond to them outside of normal office hours, typically 9am-5pm. When your tenants see an email from you at 10pm, they assume it’s ok for them to do the same to you. Establish expectations from the beginning and maintain those boundaries. If you are unable to send emails during that time, use an email scheduling software – even Gmail allows you to schedule emails now. You don’t want to become buddies with your tenants.
3. Create policies and procedures
As you go through this process with the first move in, write the steps down. It’s going to be the same thing for your second and third tenant, and every one thereafter. We recommend writing your processes down so when you hire a PM, you refer to what you felt was important during the process, and ask the PM how they handle the situation. Also, it’s important to have your policies written down in case you are ever sued for discrimination. Be sure to include items such as screening criteria, late fees, evictions, etc when you write your policies. Then you can show the court you follow the same procedure every time.
4. Screen your tenants
We recommend using software such as Cozy, Buildium, or Rentec to screen your tenants. Here are the steps you should take when screening applications:
1. Run a credit and background check
This is very simple. Almost all management softwares offer it for $30 or less. Don’t skip it. Read the credit check! Look for unpaid medical bills, auto loans in collections, and things of that nature. Make sure the background check also looks for previous evictions and criminal history.
2. Call their current employer and verify employment
Yes, it is very easy for tenants to download a template off of the Internet and enter their info and whatever monthly amount they choose to enter.
3. Send the previous landlord a rental verification form
This can be a simple one-page document. We recommend you put no more than 10-15 questions on there so you’re more likely to get it back. You want to ask questions such as “Has the tenant ever been late” “Were you notified 60 prior to move out” etc.
5. Collect rent legally
Do not use Zelle or collect cash of any sort to collect rent. There is lots of great software out there. Many of them are free and will allow your tenants to pay online. We recommend Cozy, Buildium, or Rentec.
You will learn a lot about your tenants and become a better investor after self-managing for a short time. I noticed I evaluate deals differently and realized just how important your property manager is by self-managing. Next to acquisition, your property manager is your most important decision as a great property manager will maximize your cash flow for years to come.