If you’re anything like me, you began your real estate investment journey by handling every task yourself. Blame it on my entrepreneurial spirit or simply my lack of experience. I was trying to find a rental property; handle all of the maintenance, repairs and renovations; stay on top of my accounting and tax paperwork, and find qualified tenants all without any outside help. Hiring outside help was another cost to add to the list, and I was hoping that the less money I spent upfront, the better chance I had for higher profits in the long run.
As my portfolio continued to grow over the years, I got to a point where it simply didn’t make business or financial sense for me to manage all of the day-to-day tasks of being a landlord. As your rental business expands, time becomes your most valuable asset. Your priority should be protecting your investments and planning for the future, not unclogging your tenant’s shower drain.
Adding properties to your investment portfolio diversifies your risk and can certainly lead to more passive income, but with more properties comes more challenges (and more work). If you have the time and skills to manage multiple properties on your own, more power to you. But, if you’re getting to a point where you’re struggling to balance it all, here are four specialists you should consider adding to the team so you can focus on the bigger picture.
1. Property manager
Managing the day-to-day of your rental properties is likely your most time-consuming task as a real estate investor. This is one of the easiest jobs to outsource – someone else will be responsible for the clogged shower on a Saturday afternoon or the late-night lock-out.
You have a range of options when it comes to outsourcing property management tasks. You can consider hiring a trustworthy individual to act as your property manager, or you can hire a property management company that is responsible for many different properties from many different owners. Depending on how you decide to outsource, you’ll find a variety of costs and a variety of responsibilities included. On average, monthly management fees range from 7-10% of the monthly rent collected on a property. Most professional property management companies will handle almost the entire rental process, from showing the vacant property to screening tenants, to managing maintenance requests, to the move-out process. There are also property management software solutions available that can help you streamline most of these processes.
Make sure you look for a property manager who is reliable, communicative and charges clearly defined fees. Referrals from people you trust or others in the rental industry are invaluable – if you’re ready to start delegating some (or all) of your property management operations, start asking around.
2. General contractor
As a landlord, there’s a list of vendors that you should have in your contacts, but a general contractor should be your top priority. Especially if you are actively investing in new properties, you’re likely to come across one or two that need some repairs or updating before they can hit the rental market. While many landlords have experience with renovations, home repairs can be a lot harder than they seem. Outsourcing to an experienced general contractor can save you time and money.
You might consider looking for a project manager or contract coordinator to work hand in hand with your general contractor. They can bring in other vendors as needed (plumbers, electricians, etc.) and make sure the project stays on schedule and budget. Look for a contractor team with a robust professional network and a depth of experience.
3. Real estate agent
If your priority is expanding your portfolio, the majority of your time will be spent researching new markets and new opportunities that might be a good fit for your goals. A knowledgeable local real estate agent can easily take this off of your plate and only bring the most promising properties to your attention.
An agent will understand their local markets and dynamics, which can be especially helpful if you are investing in a new area or outside of where you live. They’ll be able to provide insight on which neighborhoods are evolving, which neighborhoods to watch, and where the undervalued properties are located. If you’re buying multiple investment properties from the same agent, consider asking about a reduced commission – many agents will give you a bulk discount as part of an ongoing business relationship.
4. Real estate attorney
Every property purchase, house flip, and rental property comes with regulations and paperwork that can not only be time-consuming, but extremely difficult to navigate. To best protect your investment and yourself, you should strongly consider hiring a real estate attorney to handle the legal and regulatory aspects of your investments. Forgetting to file a permit, making a mistake on your closing paperwork, or missing a required disclosure can have serious consequences for your business.
In addition, there are many tricky laws surrounding tenant relationships once you do have the rental secured and a tenant in place. The right attorney can help you navigate these laws, which differ from state to state and ensure you stay on the right side of any mandates and regulations when it comes to evictions, inspecting your property, and other tenant-related issues.
An accountant’s time can be costly, but having someone to periodically review your finances and ledgers is crucial to saving yourself time and money. If you’re working with a property management company or software, accounting features may or may not be included in your agreement. If not, look for an accountant who has specific experience with real estate professionals who will be knowledgeable about all applicable laws, regulations, savings, and deadlines. Tax season becomes increasingly difficult the more properties in your portfolio, so having a great accountant on your team can be a huge asset.