Four Advantages to Self-managing Passive Rentals

I'm a huge proponent of the 80-20 rule wherein 80% of the tasks / projects must be outsourced or eliminated and only the most important 20% must be performed by entrepreneur. Even if the owner is in the same general vicinity, property management is one aspect that seems to fall under the 80% for a lot of investors. Over the course of the past few years, I've come to realize that managing one's own properties isn't just to save money, it has other advantages as well. With process streamlining and outsourcing key elements of property management, the tenant landlord relationship can be some thing an investor can maintain without a lot of time commitment. Here are the four key advantages that aren't always apparent.

1. Providing High Quality Service

The amount of money one can save by not hiring a property management company (5-10% of the rent) can be used to make both the tenant's and the landlord's life easier which helps provide high quality service. Time and again, my tenants tell me that getting a quick response and a quick turn-around for maintenance issues was their biggest reason for renewing their lease. A property owner can choose to pay a premium to vendors with the money saved and provide the tenants with quality service - this makes the tenant's life easier. Additionally, one can choose to outsource many tasks like book-keeping or if there are enough properties in the picture, hiring an assistant with the amount of money saved - this makes the landlord's life easier in addition to providing tenants with high quality service.

2. Ease of Negotiation

When it comes to negotiating, having one more party added in the middle makes it difficult at times. It is much easier to create win-win situations with tenants when managing properties yourself. There have been multiple instances where my tenants have chosen to upgrade the rental properties as a thank you (after obtaining my permission) because of a perk I have provided to them.

3. Lower Vacancy Rates

Each time a tenant leaves, turn around time is between one and two months and higher during certain times of the year. Loss of that rent can be equivalent to profits for the entire year at times. If this cycle continues each year, it becomes difficult to justify the investment.

When tenants feel like they're treated well and their issues have been taken care of in a timely fashion, they tend to stay longer. It is an obvious and simple way to ensure lower vacancy rates. 

4. Fulfillment

In entrepreneurship, which is still a male dominated field, having a heartfelt "connection" isn't given the importance it deserves in a business relationship. After all, it should be all about the numbers. Right? What if I told you that you can feel fulfilled at the end of the day, while making money! Establishing and maintaining a tenant landlord relationship can be a very rewarding experience considering the property owner is providing housing for someone and helping them build their life. Granted there are exceptions, but overall, most tenants want to feel safe, comfortable and be heard. 

That said, if you dread late night calls about an overflowing toilet and have found a property manager that is trustworthy, it might be the best option to outsource the property management. But if you think you might enjoy the tenant-landlord relationship and are able to build processes around property management, perhaps it is worthwhile to give self-managing your passive rentals a try.


50% Complete


Sign up for our newsletter for tips and advice on Real Estate Investing!