How to Manage Dozens of Rental Properties from Anywhere in the World
When I start talking about real estate and the fact that my wife and I own 35 rentals (32 of which are located out of state), most people don’t understand how we manage all of them, especially across thousands of miles.
Managing our portfolio comes naturally to me, but to somebody just starting out, it may seem daunting or even impossible.
And I can understand why. Managing dozens of remote investment properties requires a totally different mindset than managing just a few local rentals.
Here are the basic principles I use to manage our portfolio, that can also help you manage your properties from anywhere in the world.
Manage Your Rental Portfolio Like a Business
As I was growing my real estate portfolio, I quickly realized that owning rental properties is much more similar to running a business than investing in things like equities.
Unlike owning stocks and bonds, owning rental properties is NOT a hands-off, passive endeavor that will generate passive income without any work on your part.
In fact, it’s quite the opposite. To be profitable, rental properties require careful day-to-day management. This doesn’t mean that you have to manage them yourself, but it’s important to understand that somebody will need to be running things, just like with any successful business.
To be successful, you’ll need two things:
1. Have a Great Team
2. Train your Team to Do the Work for You
When I realized that I could use the two principles above to automate and outsource 99% of all property management tasks, I was able to grow my portfolio much quicker, while spending less and less time on it myself.
You’ll Definitely Need a Property Manager
I know some investors who manage a few rental properties quite successfully. But most of them have less than 10 units total and they’re all located around where they live.
If you want to distance yourself from your rental properties and automate management, allowing you to live anywhere, you’ll need a property manager.
The amount of day to day tasks that they’ll do are well justified by what you’ll pay them (usually around 8-10% of gross rents).
In fact, your property manager will always be the most important member of your team and play a huge role in your long-term success.
Whether you’re just starting out or own 10+ properties, I would definitely hire a property manager (if you don’t already have one). I prefer to ask other investors and get some referrals instead of blindly going with the first company I find.
Train Your Property Managers & Set Clear Expectations
Building your team (in other words – hiring a property manager) is the first step. Now you need to train them and set clear expectations to make sure they do things how you want them done.
To do this, you’ll need to set up checklists and guidelines they can follow in a variety of situations that will inevitably come up.
Here are some of the things you should document and discuss with of your managers to make sure you’re on the same page:
- Target rent. You should already know the target rent for each of your properties (if you did your due diligence and cash flow projections correctly), but it’s worth discussing this with your property manager, who will be handling the actual leasing process.
- Leasing guidelines. Your property manager should already have their basic tenant screening criteria and checks. Review this with them and add any additional requirements you have. Maybe you don’t want any pets in your properties or prefer not to deal with Section 8. Or maybe you prefer 2-year lease terms instead of 1 year.
- Move-in incentives. If you’re worried about long vacancies and lease-up times, come up with a set of move-in incentives that you pre-authorize, so your property manager can lease your units faster. Something like ½ off first month’s rent can get a tenant in your vacant units much quicker.
- Make-ready repairs. Performing cosmetic upgrades or other improvements during tenant turn-over is a great way to keep your properties in good condition. Make a list and establish a budget of pre-authorized work your property manager can do in this case. This works especially well if you own many similar or identical units.
- Collection & eviction procedures. Your property manager will likely have a standard process they follow in case of late rent payments or evictions. Review it with them to make sure you’re on board with it.
You’ll need to do a little more work with each new property manager, but it will pay off in the long run once they get more familiar with you and your properties.
Be Proactive in Identifying Potential Issues
If you’ve hired a good property manager and trained them properly, they will handle just about all day-to-day work required to lease and maintain your properties.
However, it pays to be proactive in identifying any potential issues or inefficiencies to make sure your real estate business is running smoothly.
This doesn’t mean you should be micromanaging your PMs on a daily basis, but if you notice something they’re doing (or not doing), you should discuss it with them and come up with a solution everybody agrees with.
Here are some things you can check on a regular basis:
- Are any units vacant? Vacancy eats directly into your rental income, so you obviously want to minimize it. If any of your units are vacant, check with your property manager to see how the leasing is progressing. Modify your tenant criteria or offer additional move-in incentives if necessary.
- Check your owner’s statements. Every month you’ll get a statement from your property manager listing all of the income and expenses for each of your properties. Review this document to make sure nothing looks out of place.
- Record maintenance and repair requests. To help me look for recurring maintenance issues, I like to record all major maintenance and repair requests that were completed each month. It takes just a few minutes but can give you a better picture of the condition of your properties.
- Record year-end cash flow. Calculate and record the yearly cash flow, cap rate, ROI, and IRR for each of your properties. After a few years, you’ll have a very clear picture of how each of your rental properties is performing – something you can compare with your pre-purchase projections.
- Order a walk-through inspection. If you haven’t had a tenant turnover all year, it’s a good idea to ask your property manager to inspect each of your properties and send you a written report. This will help identify any issues that were not reported by the tenants and keep your properties in good condition.
If you start treating your rental portfolio like a business and focus on training your property managers to run it for you, you’ll be able to automate most of the tedious tasks and free up your own time.
I started doing this even when I owned less than 10 properties. This helped me transition to owning 20 and eventually 30+ rentals much more smoothly.
Author Bio: Anton Ivanov is a real estate investor and entrepreneur with a 35 unit rental portfolio spread out across 4 states. He is the founder of DealCheck - the leading real estate analysis software used by 28,000+ investors and agents to quickly analyze and compare investment properties.
If you liked this article, subscribe to Rentometer's email newsletter to stay up-to-date on the latest trends in rental housing.