HMW #101: Make Your Real Estate Passive Today

Read Time: 4.75 minutes

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How do you make real estate investing as passive as possible? And why is this important?

Well for most, each passing day makes having a multi-income stream environment more and more necessary in order to make ends meet.

But there are only so many hours in the day one can dedicate to making money.  That can change however with some tasty and delicious keep-your-hands-completely-clean American passive income.

Are you open to:

• Putting in 30 minutes a week to manage your real estate portfolio?
• Focusing on acquiring properties rather than managing them?
• Never having a tenant know your name or contact info?

Damn, ok.  Easy on the attitude.  Just wanted to make sure.

You may think it's obvious, but unfortunately majority of landlords never get to the passive step. 

They end up complaining about every repair, ignoring new tenant requests, and starting to think that real estate is just the biggest burden in the world.

Come on now, real estate investing should be fun! But the cold hard fact is this:

Most investors don't trust in building a passive process.

But I know the exact reasons why you may never turn the corner on passivity:

• Your pressing tenant priorities eat up all your time
• You don't trust a process or team to be better than you
• You know it takes active work to make something passive
  
• You don't know the steps needed to make real estate passive

Dude, chill.  I'm not calling you out personally.

Ok, maybe I am.  But I'm allowed to, cause I've been there too.

And I have found ways to turn that corner. And actually turning that corner freed up my time to focus on buying more real estate!

It sounds counter-intuitive, but I've found the more properties I buy the more passive it becomes.

So put your lipstick-hands back in your pocket and follow my lead.

Step 1: Hire a great third-party property manager

Hiring a dedicated full-time property manager is the easiest way to move forward. But everyone wants to save money and do property management themselves. 

It seems easy, but let's be honest, every issue is your first time dealing with that issue. And then you have to source the right NEW person each time. And you don't really want to be doing this work, so you give everyone an attitude like you are giving me.

Yes, I know finding a good property manager may take some upfront work, but once you are rocking and rolling with a new PM, you'll mock your old way of doing things and ask what the hell to do with all your extra free time.

And then you'll say, "Dang, I should have done this earlier!" And then maybe send a shout out on social media telling the world Alan's a genius and you want to rename your pets after him, even the dead ones.  All this to say that things might get really weird when you suddenly have idle hands.

To find a great property manager you have to do the following:

• Find ones with bad reviews online. I mean really bad. The worse the better. And read those reviews because they are all written by tenants, not by landlords. If the complaints are all 1-star and say "would not let me break lease" or "fined me for running an axe-throwing after-party brothel in my spare bedroom", then yeah, thats a good property manager. And maybe one you want to use as well. But if they say "won't return calls" or "I haven't had a front door in 6-weeks." Well, maybe pass on those.
• Find investors in the same zip code. Facebook groups, online real estate forums like BiggerPockets, and in-person REIA meetings are teaming with local investors and they love to give out recommendations. Leverage their network as they have probably trialed-and-errored a few PM companies already.
• Ask the biggest realtor, lender, or closing attorney in town. They know all the major players that do high volume business with investors. Reach out and be part of their network and see your passive-income finally take shape.

Step 2: Manage yourself, but use top of line software

Self-managing over email, text, and Excel is not how it's done anymore. This may be how you were taught off an AOL CD-ROM course, but hey, we had to say goodbye to yellow phone books being used as booster seats too. This "how my parents did it" way of property management too must pass.

And let's be frank. You are cheap. That's why you are self-managing. But you also believe "you get what you pay for." So, cut me some slack and get robust property management software. I'm trying to make you successful here, after all.

My favorite is my sponsor Hemlane. They help with tenant screening, lease tracking, rent collection, repair coordinating, and everything else that makes your blood boil. It's worth the money. And you are worth having your time back. Would you invest $100 a month to have more passive income? I think so. 

Hemlane specializes in fewer than 20 properties too. So they are most likely the best fit for you. 

But if you want to be cheap there are plenty of free software tools that make all tenants communicate through a portal (and you vice versa.) This keeps you from those random dick pics landlords love to send their tenants "on accident." Umm, I mean tenants sending these to landlords. You know what, never mind, just know this doesn't happen either direction with good software.

Switching to a property management software will take you an hour tops. And then save you hundreds of hours of time, effort, and stress moving forward.

Step 3: Be hard-headed and self-manage with systems

Fine, this if for the folks that ignored my first two points and insist on self-managing because you are soooooo great at it. 

It's ok, we can take baby-steps to passive income if you prefer. But I'm telling you, the faster you implement something the more implementing you'll want to do. So get started ASAP with one of these options below.

When I was a cherubic young-faced self-manager in my naive days as a newbie investor, I found the following step really freed my time and kept me out of trouble at my day job.

• Create a list of every possible vendor that I trust and have vetted. This includes a plumber, electrician, pest control, landscaper, handyman, roofer, etc. And I build a relationship with the vendor to go ahead and fix anything under $250 and call me for approval on anything else above that. And then I give this list to the tenant to call and manage their own issues directly with my preferred contacts. I'm now removed from the scheduling, coordinating, and quote approval process. 
• Find a real estate agent to manage just the leasing and screening of tenants in exchange for a flat fee. Nothing more frustrating than being ghosted by a ton of prospective tenants who said they wanted to rent an apartment as soon as possible. Put this task instead on a new Gen Z leasing agent that speaks ghosting and isn't offended by it like boomers are.
• Give tenants responsibilities for reduced rent. Work in the lease $50 off a month for handling landscaping and trash. And have them provide their own tools, lawnmower, and systems for coordinating. If you provide, you are now going to be fixing these things and not saving time or money. A tenant will take better care of tools they bought with their own money.

So what do you think?

Ok, I can work with that. 

Summary

• You are not the best property manager in the world.
• Passive management is your friend, if you let it.
• Property management software is king.
• Having systems is the best backup.