Being a landlord has always meant being the "jack of all trades." You are basically running a business that provides housing, handles leasing and marketing, manages people and vendors, and maintains assets. But by being a "jack of all trades", you will invariably end up as "master of none".
In my years as a landlord, I've donned many hats. Many of those years were spent in the "jack of all trades" mentality. The problem with the "master of none" modality is that it is easy to get lost. Because so many things can come at you as a landlord, you just get into the "buck stops at me" and I have to get it done, period, end of story. You stop taking stock in what you are naturally good at.
The danger here is that you don't really know where your skills lie and which skills you should hone. If you don't know where your skills afford you the most leverage, you can't decide which skills to hone and which ones to pass. It's like a ship in the sea without bearings. If you don't know where you are, you can't possibly know where you are going.
You might say: "But who cares, it's just an investment property or two ..." Let me be frank, the fate of a real estate investor's portfolio depends on his knowing his bearings. If the investor is really handy and, more importantly, enjoys home improvement projects, he should invest in a fixer-upper and leverage his skills to force appreciation on the property. Maybe he doesn't enjoy dealing with people problems, he should avoid college town properties where tenants like to throw keg parties (plus, his home improvement skills would be wasted).
So how does a "jack of all trades" person get his bearings? I've donned many hats as a real estate investor. And after a long while, it occurred to me that there are only 4 categories of skills that every real estate investor should seek to master. These four indispensable hats are: real estate investor, marketer, property manager, and DIY handyman/contractor.
The reason why they are indispensable is that each of these four hats in particular, work in a synergistic way. Each of these four naturally informs and augments the other hats. In the end, they make the sum of the whole much larger than the sum of each individual skill.
What I mean is that you'll most likely fail at being a good real estate investor if you are a poor marketer and have never held a drill. On the other hand, if you are skilled at marketing rental units and have some knowledge of house repairs, you will clearly see where the property is currently and where you can take it in the short, medium, and long term.
Knowing what is required to renovate ABC informs the marketer what it would take to achieve a rent of $123. Being handy informs the property manager what policies to set, and being a good marketer informs the handyman what to renovate and, just as importantly, what not to touch. And knowing all of those informs the real estate investor of the intrinsic value of the property. Gaining a solid grasp of these hats makes a landlord more resilient and leads to much more informed decision-making.
First, the investor hat. This hat has a long-term outlook and is sensitive to market opportunities. Like a general in an army, the investor is looking to win the war. For an investor, winning the war is securing long-term wealth. He uses the data gathered from the other hats to stay informed about market realities. It's the reality that points him to prepare for future challenges and, more importantly, capitalize on potential opportunities. For example, by identifying a trend of metro-dependent tenants through his marketing efforts, he gains the insight to target future acquisitions near major transport hubs.
The investor's job is not all outwardly focused. Like any good CEO, he also factors in the internal production capacity. When the DIY handyman sees a trend of increasing cost of contractor labor and/or increasing difficulty scheduling work, he may decide that learning some basic handyman skills will cut costs significantly in the long term. In my experience, I learned this one quite naturally when a tenant called me on the second of July one year and told me the kitchen faucet was leaking. I informed the tenant that I would get someone in as soon as possible but being that it was July 2nd and there were 30+ skyscrapers in the city's skyline, the earliest time I could get someone to take a look at the faucet was 2-3 weeks out. To make a long story short, I learned that installing a faucet just isn't that hard. Over the last ten years, I probably saved myself thousands of dollars and avoided mind-boggling frustration just from learning that one simple skill.
Next, the marketer. Yes, landlords must be marketers, and let me tell you, it pays dividends to be a good marketer. Marketers are called "market - ers" because they pay attention to the market. Being the ears of your business, the marketer figures out how much rent to charge, and equally important, what to charge. When I purchased my first rental, I only thought about rent. Now, my marketing mindset thinks of NOI (net operating income) concoctions.
Before: one number... rent.
After: rent, deposit, water (first person $x, additional people $y), sewage, garbage, parking (first spot free, additional spots $z), optional storage closet ($w).
NOI concoctions are imperative in getting competitive rental listings and factors in the real income a unit produces.
More importantly, listening to the market reveals what makes your unit truly desirable, allowing you to position your rental listing in a way that amplifies its unique strengths. Knowing this guides future renovations by highlighting which upgrades deliver the strongest return on investment. It also helps the investor make more informed decisions when evaluating other properties.
Next is the property manager role. The property manager's job is to keep everything at the property as boring as humanly possible. Maintenance and upkeep prevent surprises and allow for long-term planning of expenses. Inspections, screening, and repairs run on tight systems that keep good tenants happy and bad tenants out. Good property management frees up mindshare for the other hats to actually improve the property. A handy investor that low turnover will have energy to improve the property over time. That property will enjoy the benefits of forced appreciation - a very powerful concept for the hands-on landlord.
Finally, there is the handyman hat. This hat significantly broadens the real estate investor's sphere of influence. While the investor maintains the greatest sphere of influence before a purchase, the contractor dominates that sphere once the property is acquired. So long as the handyman is in sync with the other hats, he will be able to force appreciation in the most strategic and profitable methods. If he listens to the marketer and property manager hats, he can pick off the highest ROI projects to work on and has the power to choose when. By doing so, he will increase cash flow through higher rents in the short run and increase asset valuation in the long run. Even if this is the weakest hat for a real estate investor, I would encourage the investor to get comfortable with materials and methods for home improvement. You don't necessarily need to be able to tile or floor a kitchen or install a new countertop. But you should be familiar with the options for materials for flooring a kitchen and the options for installing a countertop. If you know the "what" and the "how", you will be able to make decisions that boost your profits when working with the contractors who do work. Mastering the "what" and the "how" allows an investor to act as their own General Contractor. This level of oversight saves thousands in markups and ensures the project is executed to maximize cash flow and forced appreciation.
For the modern landlord, understanding the four hats is critical to their success as an investor. Knowing which hats one excels in and which ones could use some improvement allows an investor to shape his portfolio and control his destiny. Mastering these four hats sets the modern landlord on a course to become a super landlord.
Build durable rental wealth.
— Matthew Ma, Author of The Super Landlord