When I tell people that I own and manage 28 rental units in 15
different buildings across the Twin Cities (MN), they are amazed.
Actually, prior to becoming a MN Realtor,
I managed all those units, was Sr. Director of Information Systems for
a Minnesota coffee company (where I managed a department of 18 people), and had 3
children all under the age of 5 at home. This isn't my hero story, it is just to demonstrate that everything
is possible if you have procedures, systems, and a team in place. Here
are some examples of how I manage everything:
- Pay your bills twice per month. If you have all of your bills paid automatically, you are just simply entering the bills into Quickbooks and confirming payments.
- Show your apartments at the same time. The tenants that do show up will see there will be motivated to sign an application as they believe there is competition for the unit. (see Eliminating Being Stood up at an Apartment Showing)
- Put together and follow a rent collection time-line. You will will be paid faster and you will collect more of your rent earlier in the month.
- When my investment properties require repairs, I make sure the fixes are permanent. I see so many real estate investors try to get by with a cheap or temporary repair. Ultimately that fix 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.
- Use a service to Evict Your Tenants. Often the fee is really minimal compared to your time (the one I use in Minneapolis charges $88 above the Hennepin County filing fees). It will also eliminate any risks associated with processing it yourself.
- Although this may not be a procedure, I work very hard to keep all of my tenants happy. When tenants are happy they stay longer, treat your building better, refer other tenants to you, and call you less often.
- I have used everything: spreadsheets, databases, and quicken. Set up your accounting systems on Quickbooks. Although Quickbooks costs about $325 and can be intimidating at first, the organization and eventual efficiencies it can bring to your world is invaluable. It will also make life very simple at tax time!
- Find a good tenant screening service. Many landlords try to save the $20 and do all the screening manually by going to the MN Department of Corrections and pulling credit reports. Because the prospective tenants are expecting to pay an application fee, use it to pay for the service to save you time and be consistent.
- Purchase your leases and other forms with carbons. Instead of printing the forms off your computer, filling them out, signing them and then having to make copies for the tenants, just fill them out, sign them, tear off the 2nd page and hand it to the tenant. You're all done!
- Set up your bills to be paid automatically, whenever possible. Pay any others via the Internet. This will save you countless hours of writing checks and mailing them. This should also insure you never have any late payments.
- Once you purchase your first investment property, stop doing your own taxes. You must find an accountant that understands investment real estate. S/he will find you the best tax opportunities and may keep you out of any IRS audit.
- A handyman should be another trusted advisor on your team. You will want someone that is going to look at the problems and property and give you an honest assessment of what to do.
- Find a mortgage broker that understands (and owns) investment property. He should chart a course for you to reach your short and long term goals.
- Remember that real estate agents are paid by the sellers to help you. Use their expertise to find the best deals. They also should own investment property and be willing to teach you how to manage yours.
Following the above methods can help you be successful without all the learning (ie: mistakes) that I had to go through. Owning tens or dozens of units is very possible, even with a full-time job and family, if you put the right procedures, systems, and team members in place.
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.