Real Estate Investment believe it or not, is a people business and Property Management is where the rubber meets the road. The investment materials I have studied in my lifetime do not focus enough on this aspect. I can tell you that Property Management is what will make you or break you. I have friends who have jumped into Real Estate Investment only to jump back out again. They could not manage their Tenants. They could not handle the human aspect. The human aspect, your Tenant is how you generate your cash flow in a buy and hold model. The Tenant is your most valued asset. You are providing a necessary service to people who need a place to live and this generates your cash flow.
There will be people you will encounter who may not live up to your standards. For this reason Property Management requires understanding. If you are controlling without purpose and believe you can change human behavior quickly by simply demanding change, Property Management will drive you crazy. It is not easy dealing with Tenants and it requires people skills. Some Investors will use an outside Property Management Company for this reason. It’s good to know you have options. Keep in mind that an outside Property Manager will take a cut and they may not always act as quickly as you would like at times. Either way, managing your Investments and your Tenants is critical to your success.
The Tenant selection process is key. My mistakes always happen when I put money first, when I want a property occupied because I want the cash flow. I have had my share of bad tenants and evictions. In my experience, most tenants are good people, when you select good people. The lease is important; it is a legally binding agreement. Upkeep and repairs are critical but they are the simple aspect of Property Management. There is more to the subject of Property Management than I can cover in this blog entry, from the Tenant Selection Process to Executing and enforcing the Lease, to upkeep and repairs. I will be covering this in more detail through my Blog.