Just Say No To DIY Property Management
The changing economy, ‘reality’ TV shows, and a generation of self-nominated online gurus may make it tempting to try to self-manage real estate investments. That could be a far bigger and more expensive mistake than most realize.
Real estate is still an incredibly important part of a strong investment portfolio, retirement strategy, and financial plan. Yet, how profitable that really turns out to be really comes down to how you execute on it.
If you’ve been tempted to acquire a couple Airbnbs, attempt to renovate a property, buy and manage a few rentals, or to fire a property manager to try to do things faster and cheaper by yourself, here are five reasons savvier investors have learned to just say no to DIY property management.
1. Avoid Jail Time
You don’t necessarily have to do something wrong to wind up in jail. More jurisdictions seem to be eager to jail individual property owners who are too slow to keep properties up to their increasingly high standards.
If you own property in your own personal name, you could be summoned across the country to housing court, and end up in jail if you are not maintaining your assets to new standards.
This doesn’t apply when you are investing through a corporate entity or fund.
2. Don’t Be An Appealing Fraud Victim
Solo owners are the juiciest and easiest targets for scammers and other criminals. They are seen as the simplest to steal property titles from, and to commit other financial fraud against.
3. You Miss Out On Having A Strong Capital Position
While highly profitable, and secured by bricks, mortar, and land, real estate investments can be highly capital intensive. That can apply to making value add improvements for sizable returns, or rebuilding after a natural disaster, and before the insurance claim gets paid.
Investing alongside a group of other sophisticated investors gives you financial strength to make sound capital investments, without stretching yourself too thin.
4. It’s A Lot More Time Intensive Than You Think
Whether it is a small multifamily building leased as annual rentals, or a luxury Airbnb property, self-managing property is far more labor and time intensive than you think it is going to be.
DIY property management is really the opposite of a passive investment. Before being tempted, remember your real financial goals.
5. It’s What You Don’t Know That Gets You
Real estate investing and property management can appear to be very simple on the surface. However, it is what you don’t know that gets you.
It’s not knowing the right timeline for delivering eviction notices that will see the court side in the tenant’s favor. It is not knowing all of the local landlord tenant laws that can cost you your entire property in a lawsuit, and more. It is failing to understand the small details in a market that can make all the difference between a big win, or deep financial loss.
It takes professionals years of doing high volumes of deals on a daily basis to master the important minutia. They don’t teach all of this in books, or online courses.
