In last week’s article I talked about being real estate entrepreneurs, not investors. This is a HUGE difference in mindset and also in practice. One result of having the mindset of entrepreneur is that you should not do all of the work yourself, but instead surround yourself with an awesome team and delegate. In particular: Don’t be a PROPERTY manager; be an ASSET manager instead.
What’s the difference? If you’re the property manager, you are the manager. If you’re an asset manager, you manage the manager.
You could manage your property(s) yourself, perhaps in order to learn how it works so that you can outsource it to a property manager later. Or perhaps you want to create your own property management company.
Before you attempt to manage your own property, ask yourself these 5 questions.
5 Questions to Answer Before You Self-Manage Your Short Term Rental Property
Question #1: How valuable is your time?
Is it really the best use of your time to answer the phone at 10 o’clock at night when a tenant calls you that there is water coming through the roof and you have to rush to the property? Or to process applications, do background checks, show the property or collect the rent?
Couldn’t you delegate these activities to other professionals charging $15-$30 per hour?
Wouldn’t your time be better spent looking for more deals and raising money? What is an hour of THAT kind of activity worth? Fifty dollars, $100, $500 per hour?
Spend your time on HIGH VALUE activities and delegate everything else.
Question #2: What are your strengths and passions?
Are you good at repairing stuff? Do you love dealing with tenants and their problems? Do you love the property management business?
If you answered “yes” to these, you might want to consider starting your own property management business, which would complement the real estate business.
However, chances are you answered “no” to these questions, so why do them? Why not focus on what you’re good at and love: being a real estate entrepreneur, making deals happen, putting it all together?
Question #3: Are you relying only on yourself, or are you leveraging the strength of your team?
Do you have experience managing a property like this? If you don’t, do you really want to learn? If you have investors in the deal, how would they feel about you managing the property that you bought with THEIR money? Chances are, you don’t have property management experience, and therefore the risk of the project just skyrocketed. What should you do?
Leverage the experience of a professional property manager.
Use your manager’s resume to complement your own. This “partnership” makes you look stronger to banks and investors because instead of having no experience at all, you bring a track record to the table. You can say, “Here’s my team, look at our experience.” You’re mitigating the risk of the project by leveraging the strength of others.
Question #4: Is it consistent with your goals?
Didn’t you get into this buy and hold real estate thing because you were looking for passive income and to grow the business? Then why would you want to work IN the business versus ON the business? Why would you do something (property management) that doesn’t bring you closer to your goal of passive income and growing your portfolio?
Also, with regard to goals, you want to make money as quickly as possible, right? Why try to learn on the job and make a bunch of mistakes when you can hire a professional who will do a better job than you will?
Question #5: Are you running it like a business?
You should approach your real estate career from the perspective of an entrepreneur who wants to create and grow a business. As the CEO of this business, you’ll want to delegate those lower-value activities that you’re not good at or don’t like to do and focus on the high-value activities that actually grow the business.
Plus, real estate like apartment buildings (what I focus on) already has property management built in to its business model! It just makes sense.
Unless property management is strategic to you, it should be one of those lower-value activities that you delegate. If you do, it will free you up to do the things you’re good at and that will grow the business: looking for more deals and raising money.
Michael Blank’s passion is being an entrepreneur and helping others become (better) entrepreneurs. His focus is buying apartment buildings by raising money from private individuals. He’s been investing in residential and multifamily real estate since 2005. He is the creator of the Syndicated Deal Analyzer and the eBook “The Secret to Raising Money to Buy Your First Apartment Building”.