How to successfully manage your rental property involves 9 steps. Managing your real estate rentals directly requires lots of work. But, reaps great rewards. Follow these 9 steps to successfully manage your rental property yourself.
1. How to Buy and Repair Rental Properties
Step one requires buying a suitable property and making repairs. Luckily, many online guides exist to help you with buying and repairing rental properties, like:
- Choosing a Rental Property;
- How to Increase the Value of a Rental Property; and
- How to Add Flooring in a Rental Property.
2. Setting Prices and Expectations on Your Rental Properties
After purchasing and repairing your rental property do this next step before looking for tenants.
Market Research the Neighborhood – You probably already did some market research before finding your rental property purchase. But, looking at a property from a buyer’s perspective differs from the landlord’s perspective. You need to determine these facts to successfully manage your rental property:
- The average income in the neighborhood;
- Average family size in the neighborhood;
- Average rental price in the neighborhood; and
- The extra special benefits this neighborhood provides (walk to the subway station or bus stop; off-street parking, easy highway access, etc.).
List Your Tenant Requirements – You need to determine what type of tenant you want. Keep in mind that discrimination is illegal. But, these characteristics of your ideal tenant helps to find the best ones for your rental:
- Smoking or no smoking;
- Minimum income;
- Credit score minimum;
- Employment requirement;
- Number of required references; and
- Past rental history.
3. Renting Your Property
Now, find your new tenant.
Advertising – You need to advertise your rental. Advertise in as many places to gain greater exposure. City and local newspaper classified ads, local online forums, Craigslist, community magazines, and local post-it boards (supermarkets, local community boards, etc.).
Find a Good Tenant – Just any tenant who applies first won’t work for you. You need “good” tenants who pay the rent promptly, respect your property, and don’t cause you problems. Interviewing prospective tenants requires unique skills. Start with a written rental questionnaire and keep to the script to help you find the right fit. Strict laws about discrimination prevent asking the wrong questions. Such as disabilities, race, family size, or sexual identity. You must follow federal and state Fair Housing Laws. After you interview prospects, do the following:
- Call their references;
- Do a credit and background check; and
- Call their former landlords.
4. Write and Review Rental Contracts
After finding the ideal tenant it’s time to sign the rental contract. Good examples of rental contracts exist online. Or, hire a local real estate attorney to write a contract covering:
- All the laws;
- Rental payment deadline;
- Late payment penalties;
- Maintenance details;
- Home rules; and
- Eviction process.
Reviewing the Contract – You need to review the entire rental contract with the tenant before signing. Encourage your tenant to ask questions to clarify what the contract means.
Do a Walk-Through – A final walk-through with your tenant should include a list of property details like:
- What’s included and their condition, and
- The conditions of the fixtures, windows, doors, furnace, water heater, A/C, plumbing, electrical panel, front and back yard, fences, roof, gutters, etc.
Make the tenant sign and date the list and provide a copy soon afterward. When the tenant moves out this list proves the condition of every item in case of loss, damage, or poor conditions.
5. Checking and Maintaining Your Rental Property
After your tenant moves in your role becomes passive. Yet, your responsibilities continue. As the landlord, your tenant must contact you if problems occur. Your availability to help your tenants solve problems or issues speedily and thoroughly.
Visit Your Rental – Check-in with your tenants at the property periodically to ensure everything works or needs maintenance or repairs. Your rental contract should include a clause allowing for periodical walk-throughs to see if any maintenance or repairs become necessary. Knowing you will conduct a walk-through every six months usually keeps tenant damages at a minimum.
Regular Maintenance – Every property needs maintenance. Furnace and A/C filters need changing. Water heater pipes may leak. Light fixture replacements or simple plumbing repairs often come up. To help with your maintenance or emergency repairs, prepare these in advance:
- List of good local contractors;
- Create a maintenance fund;
- Schedule regular checkups of appliances (water heater, furnace, A/C units, etc.); and
- List of basic repairs you can fix yourself and keep parts on hand.
Large Repairs – Always prepare yourself for major repairs. Anything from the roof collapsing, large water pipe bursting, or storms causing damages may happen. Significant repairs forcing your tenant to move out for short periods may require providing temporary housing for the time they already paid for. Long-term repairs require talking to your tenant about ending the lease agreement early. Letting your tenant walk while you handle long-lasting repairs happens.
6. Collecting Rent
Your business thrives or dies by collecting rent fully and promptly every month. Some landlords wait for checks to arrive by mail. Others pick up checks individually. Or, many prefer electronic rent collection methods like credit or debit cards, PayPal, or online rent payment services. Fits Small Businesses put together a list of their “6 Best Online Rent Payment Service Companies for 2019”. If you use one of these services don’t forget to add their fees to your rent.
Raising Rent – As costs increase in your area raising the rent becomes a necessity. This may jeopardize keeping good long-term tenants after their lease expires. Talk to your tenants about the possibility of raising the rent soon. They might choose to remain. If not, you get advance warning about looking for a new tenant.
Late Fees – You must always enforce late fee penalties. Otherwise, tenants take advantage of you. A one-time emergency may require an exception for a good tenant. But, don’t let it become a habit. Late paying tenants mean they no longer can afford the rent. Your rental contract must lay out the rent payment deadlines and penalties. You must enforce them.
7. Eviction Tips
Landlords never want to evict tenants. But, the possibility always exists. Research local laws about how to evict a bad tenant to ensure you follow the rules. Never attempt to physically evict a tenant yourself (cutting electricity, changing locks, or using goons). In many states, this becomes a criminal offense. Evicting a bad tenant yourself takes time and money.
8. Accounting for Rental Properties
You must establish a good accounting system to keep track of all income, expenses, and taxes.
Pay Your Taxes – Every landlord must pay local, state, and federal taxes on their income. Knowing what tax deductions to take saves you money. Landlords enjoy unique tax deductions such as depreciation. Maintaining proper accounting records and receipts also helps reduce taxes.
9. Educate Yourself About Becoming a Landlord
Our blog contains many useful guides, tips, and suggestions for landlords including: How To Get Started As A Landlord; Property Tips for Rental Owners; Rental Investors Share Their Secrets; How To Get Better Real Estate Deals (Tips From The Pros); How To Invest In Rental Property With Little Money; Why Real Estate Rental Investors Fail; Biggest Landlord Mistakes; How (And When) To Raise Rents; How To Become A Successful Landlord; Common Landlord Mistakes That Limit Profits; Important Tax Deductions For Rental Property Investors 2019; and How To Make Millions With Rental Properties.
Hire a Good Property Manager
If all these steps become too much of a burden rest assured that a good professional property management company takes all the time, stress, and unnecessary costs off your shoulders.
WeLease San Diego performs all the above-mentioned steps for you whether you maintain one rental, a duplex, multiple rental units, or an apartment building.
Contact Us to learn how we manage your rentals in a professional, expedient, and cost-saving ways to reduce stress and maximize your profits.
Steven Rich, MBA – Guest Blogger
We hope you liked “How to Successfully Manage Your Rental Property”. To learn more about managing your real estate properties and the property management industry check out one of our many Blog Pages.
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