Consider this story about a fictional couple named Peter and Sarah, who like many others, decided to make owning rental properties a part of their retirement planning. Peter and Sarah had been researching the rental real estate market in their city for almost a year before they found what they were looking for. It was a ten unit building in a reasonably good neighborhood. Eighty percent of the units were occupied, with twenty percent needing minor renovations and cosmetic repairs. After negotiating a fair price and obtaining the financing, they took possession of the property and set about fixing and renting the vacant units, doing as much of the work as they could themselves on the weekends. The work progressed quickly, and they were able to fill their remaining units without much trouble by showing the apartments after work during the evenings and on the weekends. Things were going great, just as Peter and Sarah had hoped.

Of course, the calm didnt last. Peter and Sarah began to receive tenant complaints. Most of the phone calls were about minor problems: stopped up toilets, a refrigerator or dishwasher on the blink, a lock that wasnt working properly; but as anyone who has ever managed rental property knows, the tenants wanted the problems fixed yesterday. Peter and Sarah would come home after a long day at the office to find their voice mailbox full of messages from their tenants, each more irritated than the previous one. And, of course, because both worked fulltime, they could only deal with the complaints in the evenings. Occasionally, a call would come in at 1:00 or 2:00 in the morning from a tenant complaining about a noisy neighbor. Added to the extensive bookkeeping they needed to do for taxes, as well as rental collections and routine maintenance, their property began to have a serious impact on their personal lives.

The mistake Peter and Sarah made wasnt in buying rental property; rather, it was in failing to budget properly. No, not budgeting their money but budgeting their time. Though they had plenty of drive and determination, they underestimated what it would take to manage their 10 unit building. Collecting rent, tracking maintenance and repair issues, advertising and renting vacant units, resolving tenant complaints and keeping the books it all takes time, and often far more time than many first time landlords and investors are prepared for. As one new landlord recently said, I was making some money, but it was like having a second full time job.

The news, however, is not all bad. There are a couple of things you can do that will allow you to both own rental properties and get some sleep.

Professional Property Managers Wherever rental properties exist, youll find fulltime property managers and property management companies that will handle everything from rent collection, to maintenance, to finding tenants, to bookkeeping depending on the company. The downside, of course, is that professional property managers charge a percentage and in many cases a considerable percentage of the gross monthly rent collected, significantly impacting the property owners bottom-line. Retaining the services of these companies makes sense for the passive real estate investor whos willing to sacrifice some profits and control for peace of mind.

Online Property Management Software A new and exciting innovation in rental property management is using online property management software to automate many of the functions traditionally performed by professional property managers at a fraction of the cost starting as low as $20 a month. Online property management software helps landlords and real estate investors keep maintenance and repair records, respond to tenant inquiries, advertise vacant units, track income and expenses for tax purposes and even collect rents online. Online property management software is for landlords and real estate investors who want more control over their bottom-line. Though this option requires active participation from the landlord or investor, online property management software significantly streamlines many of the most time-consuming aspects of property management, making it an attractive option for do-it-yourselfers.

Over the last century, investing in residential real estate has proven to be one of the best ways to build wealth over time, as well as providing steady income for thousands of landlords and real estate investors alike. The key to success is to treat your rental properties like a business and then to get the help you need to run it efficiently. By taking the time to consider which property management option is best for you, youll find that it is possible to profitably manage rental properties and get some sleep!