What is the hardest part of DIY management?

[Nathan Gesner]

There are pros and cons to self-management. Some landlords are very successful. Some lose their shirts, destroy their health, and even ruin relationships. Most land somewhere in the middle.

If you have experience as a DIY landlord, what has been most challenging about it? What hard lessons did you learn that you could share with readers?

[Bjorn Ahlblad]

The most important part is not the hardest. Just stick to the process, if you are not committed to diligently screening your tenants, and not allowing exceptions you will not succeed or be happy. Treat your deserving tenants with respect and you may get some back!

[Nathan Gesner]

Quote from @Bjorn Ahlblad:

The most important part is not the hardest. Just stick to the process...

Yes, but most landlords take a long time, if ever, to develop processes. 

i have taken over management of so many houses that were self managed, and they sometimes went for decades without developing a screening process, studying the market, dealing with lease violations, or even updating their lease!

If you have a process, you are ahead of the game.

[Mike Dymski]

Sourcing and maintaining reliable and affordable contractors without scale (although my 3rd party PMs have the same issue).

[Lynn McGeein]

@Nathan Gesner 1) if you’re investing with a spouse make sure both are on board for self management or it will harm the relationship. 2) it’s a business, not a charity, so if you’re susceptible to hard luck stories from applicants/tenants, don’t self manage. 3) water heaters, heat and a/c, plumbing only seems to break down when you’re finally on vacation, so have good contractors in place who will go on your call and let you pay them from out of town.

[Nathan Gesner]

@Lynn McGeein and @Mike Dymski those are good points!

[Sam Yin]

@Nathan Gesner

Set parameters early on. Create a rough list of what you will respond to right away, and what can wait. Response time should be reasonable, but not immediate. Train the tenants to understand that you have a life as well, or else you be taking on another job.

The biggest one... Limit the DIY. find a way to transition it to contractors/handyman. You can still self manage, but repairs should be hired out if possible. I did a lot of work myself earlier on... I mean just about EVERYTHING, minus brazing in new copper lines. It was not worth my time. DIY, but don't DE(verything)Y.

I made many mistakes early on. I got to know tenants and was way to accommodating. I responded to things that I could have made them wait until it was convenient for me. I did not have standards to hold them to. These are all lessons learned early on.

Create standard templates early so you save time when similar issues repeat themselves. Rehearse your approach and conversation so you know when to guide the conversation to a predictable outcome.

[Jill F.]

Learning to make decisions first and foremost based on what is going to help me meet my (clear, written) business goals. I actually had to get enough units where I could offer tenants multiple housing options when I purchased properties rented at way under market rates and then (an embarassing number of times) personally watch tenants that would "suffer" from a rent increase turn down smaller (but nicer places) or  nicer places in a less prestigious zip code (sometimes only minutes away) before I realized that I was hampering my ability to earn a living in order to subsidize the lifestyle choices made by a some random stranger that happened to live in a property I bought. I did FINALLY get it.

[Nathan Gesner]

Quote from @Jill F.:

That's a tough lesson to learn!

[Charles Perkins]

As a long time DIY landlord,  I have learned the hard way how to do most any remodeling or repairs on my properties.  My investment approach required fixers with good value add potential.  

My wife and I made plenty of mistakes.  Probably one of the greatest challenges is letting some of the work go to others, today.  While I'm retired my real estate has become nearly a full time job.  Lately I have found some excellent small business contractors that do great work without the high overhead.  

One example I upgraded a 100 amp panel to a 200 amp panel.  I wanted to have someone do it at first.  Twenty years ago they were charging 2,000 to 2,500 for this work.  This was more than I wanted to pay at the time.  So working with an experienced electrician, I purchased for around $500  the materials required and permit.  After maybe 8 hrs of work with a helper, we had the new mast, two ground rods and wiring hooked up.  So today, when contractors tell me bigger numbers for work that I know l can do it is hard to let it go.

It was also a process building a good screening process and staying on top of legal changes that effected leases and other processes.  

Another challenge, was working full time and working properties many hours as well.  After nearly 30 years,  my wife and I are happy to know we can fully retire anytime.  The last 10 years I have been full time working real estate and can take time off when I want to.

There have been many good and bad stories on the way.

[Vasudev Kirs]

Quote from @Sam Yin:

@Nathan Gesner

Set parameters early on. Create a rough list of what you will respond to right away, and what can wait. Response time should be reasonable, but not immediate. Train the tenants to understand that you have a life as well, or else you be taking on another job.

The biggest one... Limit the DIY. find a way to transition it to contractors/handyman. You can still self manage, but repairs should be hired out if possible. I did a lot of work myself earlier on... I mean just about EVERYTHING, minus brazing in new copper lines. It was not worth my time. DIY, but don't DE(verything)Y.

I made many mistakes early on. I got to know tenants and was way to accommodating. I responded to things that I could have made them wait until it was convenient for me. I did not have standards to hold them to. These are all lessons learned early on.

Create standard templates early so you save time when similar issues repeat themselves. Rehearse your approach and conversation so you know when to guide the conversation to a predictable outcome.

 Great suggestions! I am interested more about:

1. Setting parameters (i.e., what will be responded immediately, what can wait.) Do you have any examples? Did you include them in your lease?

2. Standard templates. Could you please elaborate?

I will be closing my very first property next week so looking forward to all the suggestions and pointers I can get!

[Henry T.]

What I hated most is being caught off guard and hurried. You need a buffer zone. Whether its an answering service or a business only phone, or even email.  Take time, evaluate the issue, and then an appropriate response, in the next day or two.

[Karl B.]

Biggest con is the tenants will likely figure out you're the owner. I know some landlords who can make the separation and claim the tenants merely think they work for the 'owner' but I don't like to lie. Most tenants appreciate I upkeep my places and I am friendly with them but do hold them accountable when it comes to a tenant following the rules of the lease. And if there's a legitimate repair needed I typically have it repaired quickly. 

I feel I do a better job than any local property management company and I'm much better at hiring tradespeople, making certain they do a great job and by being the decision-maker I'm responsible with my money and am learning A LOT about every facet of the industry. 

I also learned I'm good at managing my properties. And since this is my main income source I don't mind spending some time on it every week. Though once I have a property rehabbed (whether SF or MF) it's amazing how little time I commit to it on a weekly basis. 

The hard lessons are mainly learning experiences. I had an Amish roofer remove the chimneys without first checking to see if they were vented (they were). It was on him and he ended up fixing the issue on his dime but now I know to make certain a roofer knows what's vented and what isn't. This example is a microcosm of self-management - the hard lessons are often lessons we learn, fix and make certain the problem isn't repeated in the future. 

[JD Martin]

My biggest problem has been the same as @Mike Dymski - not being large enough to have handymen, HVAC, plumbers etc that work just for me. Having to share means working around other big jobs, etc and doing more stuff myself than I would care to do for lack of help.

[Justin Brickman]

Delegating work as you scale. It's hard to hand off work or certain tasks because it's hard to trust others, but most times you can find help from people that are better than you and more efficient.

[Gaetano Ciambriello]

The hardest part is it is a lot of work!

[Nathan Gesner]

A lot of landlords do their own cleaning and maintenance to save money or to increase their knowledge/experience. The key is knowing when it makes sense and when you are in over your head.

A cardiologist making $600,000 a year shouldn't waste time replacing a toilet, cleaning an oven, or painting a house. At $300 an hour, one hour of cardiologist work can pay for three hours of plumbing, six hours of painting, or ten hours of cleaning.

I've seen many landlords attempt their own repairs and they don't do it very well. When the work is done poorly, it makes the home less attractive, less functional, and may require hiring a professional to come in and fix it.

[Nathan Gesner]

Quote from @Vasudev Kirs:

I hope to publish my book this summer and it will explain all this in detail!

I tell all my renters that we work 9-4, Monday - Friday. If tenants want to speak with us, we are available by phone or text. If they email us, we will respond during our business hours. I also provide an emergency line so they can reach us if they require an immediate response. We will only respond if their situation threatens the safety of others or the property (i.e., fire, flood, blood). If the toilet runs, they can use the shut-off valve until Monday. If the water heater is leaking one cup a minute and going down the drain, they can shut it off or monitor it until Monday. If water is dripping through the ceiling, we will respond immediately. Make sense?

Anything you do repeatedly can be set up as a process. You want to send move-out instructions when a tenant gives notice? Type it up once, save it, and use it again for the next tenant. Tenant wants to add a pet? Type up your policy, create the application form, and design a pet addendum for the tenant to agree to. I have template emails, letters, and forms for anything my staff does so our responses are fast and standardized.

[Adam Bartomeo]

I self-managed for years before opening my own brokerage and hiring my PM company to manage them for me. One of the hardest things is having the knowledge. I used to be a veracious reader and read every book I could find about real estate but it wasn't enough. Having a hands-on education of how to deal with tenants and the situations that come up is far more valuable than reading books and watching YouTube videos but and takes a long time to learn. After 12 years I felt that I knew enough to open my PM. Now, with almost 20 years of PM experience you would think that we know everything but that is far from the truth, my team and I are still learning how to deal with certain situations. 

The other difficult part is the time you have to invest in order to have a thriving portfolio. When I started I was a FT manager at Home Depot, had a 2nd job, a wife, 3 young kids, and was managing a small portfolio. When you are that busy it is easy to put the portfolio to the side - rent collections, showings, maintenance, etc. We decided to have my wife stay home and manage the rentals. If it wasn't for that I would have never been able to grow while self-managing. Once we got to 10 she didn't want to handle it anymore because it was taking too much time away from the family. Due to the time it takes to self-manage I left a job making over $100k to focus on RE full time.

[Charles Perkins]

Quote from @Nathan Gesner:

A lot of landlords do their own cleaning and maintenance to save money or to increase their knowledge/experience. The key is knowing when it makes sense and when you are in over your head.

A cardiologist making $600,000 a year shouldn't waste time replacing a toilet, cleaning an oven, or painting a house. At $300 an hour, one hour of cardiologist work can pay for three hours of plumbing, six hours of painting, or ten hours of cleaning.

I've seen many landlords attempt their own repairs and they don't do it very well. When the work is done poorly, it makes the home less attractive, less functional, and may require hiring a professional to come in and fix it.

 Like any business it is good to assess one's skill sets.  Getting help with and/or developing skills one lacks.  

One thing I have learned over the years is that there is no generic answer to how to invest in real estate or what one should do when getting started.  As individuals we come with our own skills, life experiences, strengths and weaknesses.  Learning how to use what you have and seeking advice and/or help with what you lack.  Learning what you are good at is an important step towards success, not learning this is why some have difficulty.

[Jim K.]

@Nathan Gesner

For years, I thought that anyone could do DIY property rental management like us, it wasn't particularly difficult to learn how to self-manage. I was wrong.

[Joe S.]

screening properly.

I turned all of my rentals over except one to Property Manager now. They are still having evictions even with people they place, but at least I’m not having to deal with sad sack stories personally.

There’s a saying that says, “give the devil an inch and he will take a mile. “

When it comes to tenants if you listen to a sad story about why they don’t have the money to pay their rent they take the Goodwill offered and stretch it a mile.

[Colleen F.]

@Nathan Gesner  

Pro's:  I see the tenants and can set screening criteria.  I learned to recognize tenants who will likely stay.  I have taken new renters who meet my minimum financial criteria over higher score person "looking for a house" or someone who says they are staying but really is just looking for short term. (how many times did they ask about the lease break clause?). Was the last job seasonal? (We are in a seasonal area with year round units being less available). A new to the area 20 something with a strong local employer may be a more long term occupant. I know that isn't something a PM will pay attention to.  Also I can pick shorter term tenants if I have plans to reno a unit. 

Hard lessons:

-unexpected things will happen at the worst time. starting a vacation in the BVIs and you get that dreaded tenant call. the window fell out or there is a heat issue. 

--Issue lease violations- tenants will do things you can't think of. Hanging a large boat motor from a tree. Using a bedroom as a workroom.  burning pallets in a firepit so you have 9000 nails to dig up when they leave. 

Be proactive****  Fix it the first time. If the sewer backed up there is a reason. I wished I knew about scoping a sewer line before I bought my first property, I would have done it with the septic inspection.  Even if you have 2 backups 3 years apart it is likely there is something wrong with the line. Put in a no dig cleanout for the septic because problems won't happen in daylight. Septic filters are a PIA.  If that vent on the furnace failed before or a zone valve failed it will fail again, have a service contract or have a spare part on hand. 

Be prepared to lose vendors and recognize when a vendor is too small for a job. Our oil company suddenly wouldn't service if they don't deliver so we had to find a new 24 hour service. And if your electric contractor is one man, he likely can't put the 40 foot service line back on the building.

If the tenants are on a downward spiral they won't get out of it even if they rationally can. If they can't pay now eventually they won't be able to pay and they will take forever to get out. It doesn't matter  how old or sick they are or if you like them.  

If a tenant is causing too much stress for you don't offer them a new lease. I had one guy who complained about the upstairs tenant walking loud, he just wasnt' suited to the building. No complaints for a bit, I offered him a new lease and two weeks later he is at it again. I went to his door and said this is the way it is, here is your happy clause, you stay, no more noise complaints or you can just go now, no penalty. He went.

Always go over the lease in detail and explain policies like repair access to tenants. The medical pot growing tenants didn't want anyone in their house when they weren't there. After that I always cover that tenants will have to work with vendors for repairs and if they can't accept someone in their absence they have to arrange their schedule to meet the vendors, not the other way around.  

[Steve Harlow]

I've been doing the Do it yourself for 30 years now for most of my properties in state. You need to understand your personality.  Some people like me are better at investing than managing.

1. Key things especially after Covid. Get a good set of contractor and handyman types. this may happen through trial and error. You will have a few bad ones.

2. manage tenant expectations. 

3. Have a VERY DETAILED repair list. It will save you time. Don't count on your contractor to find problems.  

4. Educate yourself on the building trades.

[Allan C.]

@Mike Dymski I double-vote this one as well. I always find them eventually, but it takes some trial and error. And single-owner trades-people don’t work forever, so I’ve had to find new folks a number of times after a trusted sub retires. I can always go with a larger outfit, but that’s more overhead that come at higher costs.

I self-manage in 3 different markets so it seems I’m always looking for a new sub every couple of year.

[Nathan Gesner]

Quote from @Jim K.:

@Nathan Gesner

For years, I thought that anyone could do DIY property rental management like us, it wasn't particularly difficult to learn how to self-manage. I was wrong.

Not everyone is cut out for managing their own rentals. However, everyone can make huge improvements by educating themselves. I hope to help with that in the near future!