A friend asked me to give a real estate talk recently about tips and tricks to self-manage real estate property for owner-operators. That’s always an interesting concept; a property management company owner trying to give advice and skills to make their audience less likely to use them. I recognize from my experience how hard self-management is so I’m always trying to teach and train people things I’ve learned trying to do the best job I can. The government and state will keep changing the rules making my job more valuable in the future, not less.
I started the talk by explaining that most people should not even buy real estate. There is this pervasive view right now that owning real estate is glamorous with countless meetups and people wanting to make money in real estate and gurus taking their money. It is always interesting that if the money was actually in the real estate, why are these gurus selling courses and no longer investing for themselves. I told everyone in the course the dirty little secret; there is nothing glamorous about operating real estate. I even went so far as to explain to them that slumlords do not buy real estate thinking, I’m going to be a slumlord! Slumlords occur because owners do not respond quickly when tenants reach out for an issue because they do not want to be bothered except for emergencies and they attract tenants that are okay with the owner not doing anything.
I asked each of the audience members to think of themselves and what they would do if a tenant called them at 5:00 PM at night with a power issue or a leaking roof or anything else; are you going to respond right away or are you naturally going to try to avoid it until you cannot avoid it anymore. If you are the type to want to naturally avoid, you should hire a property manager or you should not buy real estate.
I also asked the audience how many people allow rents to go month to month and never set reminders to look into raising the rent. While historically, rents do not go up much in my area, right now they are up at least 15%. If you are not actively looking at market conditions and increasing rents appropriately, you should not be self-managing property.
I also talked about the psychology of waiving late fees and how it teaches tenants that rent is not the most important bill to pay.
One person asked why I quit my job as an engineer to start a property management company and I looked right at her and told her to serve. As property managers, we serve our owner clients, our vendors, and our tenants. This job is really hard and if you do not have the heart to serve your tenants and help them to have a great place to live that they will be proud of, you are ultimately going to fail in real estate.
The talk was successful; we told horror stories about chickens in basements and ducks with an inflatable 200-gallon pool in a third-floor apartment (how can anything go wrong with that?). All said, I really enjoyed sharing and continue to enjoy sharing with anyone that has questions! Do not hesitate to reach out.