Regardless of whether you are a new or seasoned real estate investor, you’ve likely heard some of the horror stories of passively owning real estate. There are countless examples of residential property management companies failing to properly screen tenants or making exceptions for applicants to fill your vacancies and in turn their pockets. Then, often weeks or months later, you’re stuck wasting money on eviction fees, property damage, and holding costs while needing to fill your vacancy, again!
As a passive real estate investor, the majority of your success is tied to your residential property management company. Your profits are directly linked to their policies, their procedures, and unfortunately their mistakes. These are oversights that can end up costing you thousands of dollars and easily turn your smart investment into a bad one!
Not only that, traditional residential property management is expensive, too. It’s not uncommon for you to pay between 8-12% of your gross rental income for their services. In addition, some may charge you for setup costs, tenant placement fees, lease renewal fees, and more!
All of these costs can add up to a large amount of money and reduce your rate of return on investment. A lower ROI forces you to have to save more money, find more deals to buy, and ultimately delays the date you’ll reach financial freedom!
By hiring a property manager, you’re choosing to give up most of the authority over your investment. Often, you’re no longer able to choose who lives in your home, which vendors do maintenance on it, or the amount you charge in rent. But, that can all change when you take back control of your property!
Virtual residential property management is a custom way for you to save money on managing your rental properties. It’s tailor-made to you and your specifications. So, you get to choose the residents you’ll accept, the contractors you’ll hire, and ultimately the profitability of your investments!
Reducing rental property management fees increases your bottom line. It also gives you the ability to purchase properties you may not have been able to before.
For example, imagine you’re looking to buy a new investment property. You underwrite the deal using traditional management and discover the cash flow isn’t enough to meet your investment criteria. But, by switching to virtual residential property management your costs are lower and the deal’s more profitable. In many cases, it allows you to buy deals you otherwise wouldn’t have and can help you buy properties that most other investors would pass on, too!
Another benefit of virtual residential property management is that it’s location-independent. You can hire remote workers and use geoarbitrage to further reduce management costs, too. Not only that, but since your assistant has the ability to work from anywhere, they can help you expand into new markets as well!
At its core, virtual residential property management works like any other management company. It’s set up to manage day-to-day operations and allows you to be hands-off.
For example, imagine you have a resident that needs to submit a maintenance request. Traditionally, your residential property management company receives the call and contacts a vendor to handle the repair.
It’s a similar process with a virtual property manager, too. The resident calls in, but your virtual assistant (VA) handles the service request. They contact your vendor and ensure the repair gets completed. You can even have them follow up with your resident after the work orders complete, too. Often, this extra step also increases your resident retention and saves you added money on turnover costs!
It takes some time and money to get your policies and procedures set up. You’ll have to find the right tools, correct people, and adjust the process as you go. But once you’ve got it up and running, you’ll save money for years to come!
There are two primary tools that will make your residential property management business run smoothly. You’ll need cloud storage and a place where you can share online spreadsheets with your VA.
Google provides a great solution for both of these. You can sign up for Google Drive and Sheets at no cost or use Dropbox to help with your cloud storage needs.
Most residents communicate with their property manager by phone or email, while some prefer to text, too.
To interact with your residents, you’ll need a phone line and email address dedicated to your residential property management business. Both Skype and Google Voice have low or no cost phone options and most providers offer free email addresses.
I prefer to use Google’s products mainly because they’re FREE and I’m a tightwad. But, they’re also easy to use, mobile-friendly, and most people know how to use them already!
Collecting rent is easier than you think. You no longer have to drive around town collecting checks or wait for them to show up in the mail.
Instead, have your residents pay rent using apps like Venmo, Zelle, and Cash App. They’ll make a payment and you’ll have the receipt routed to your residential property management email account. This way your VA can track when payments get made, log them in your spreadsheet, and follow up on any remaining balances.
You can use financial automation to collect rent, too. With your resident’s authorization, Clear Now or Rent Deduct transfers money from their account to yours on a specified date. It works well and almost guarantees that rent never gets paid late again!
Typically, the primary reason residents contact their property manager is for maintenance requests and repairs. They’re experiencing an issue, contacting you to solve it, and helping to preserve your investment.
To ensure your residential property management company runs smoothly, you’ll need several vendors’ help. A few relationships that you’ll want to develop are with handymen, plumbers, electricians, HVAC techs, and roofers.
Sometimes it can be difficult to find quality and reliable work. If you’re unsure who to use, try networking with other investors. You’ll find good investor-friendly referrals at your local REIA meetings or at real estate-focused MeetUps.
Your VA is the backbone of your entire residential property management system. They’re responsible for communicating with your residents, vendors, and ensuring your operation runs without a hitch.
The VA that you hire has a big job to do. It’s important to find someone who not only understands their role, but is also someone you can trust.
A few years ago, I made the switch from traditional to virtual residential property management. Immediately, my monthly expenses dropped from a few thousand dollars to a couple of hundred dollars. This not only increased my cash flow but also allowed me the opportunity to fulfill my dream of long-term travel faster than I would have otherwise. And it can do the same for you!
In today’s competitive market, more investors are struggling to find cash-flowing rental homes. Without them, they won’t be able to grow their portfolios, increase their passive income, or reach their financial goals.
But, virtual residential property management can be a game-changer for your rental business. It gives you a competitive advantage that lowers your costs, increases your cash flow, and allows you to buy properties that others can’t!
What’s your residential property management experience been like? Comment below.
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