A Complete Guide to Managing Rental Properties
As of 2019, about 36% of households in the US rent. Since almost three-quarters of landlords are individual investors, owning a rental property may be a great financial move. The first step is to buy and prepare a property.
But, once you have a rental property you’ll need to actually manage it. This involves a wide variety of aspects from finding tenants to maintenance, to navigating unforeseen issues. Here’s what you need to do to be successful at managing rental properties.
Setting and Collecting Rent
Once your property is ready to be rented, you’ll need to set a price for rent. The first step is to take a look at other rentals in the area that are similar to yours. In addition, you should look at the rest of the market. For instance, how many rental properties are available?
These figures can help you get a base rent price. But, also consider if your rental has additional benefits. If so, you should be able to charge more for them.
Once you find tenants, you’ll also need to consistently collect rent. You have a few options when it comes to collection. Some landlords prefer to receive a check. Others use electronic collection services.
Each method offers its own benefits and downsides. Consider what would be beneficial to you and work for your potential tenants. Just remember that if your collection service includes a fee you need to bake this into your rent price.
Finding Tenants
Finding good tenants is critical to avoiding issues with your rental properties. Start by advertising your property. You’ll probably have to pay, but use common rental sites and local publications to get the word out.
You should create a process for getting to know more about your potential tenants. You can start by creating a questionnaire to see if they are a good fit. Just be sure to follow all fair housing rules.
You also need to confirm their employment and income. Call their references and any former landlords. It’s also important to run a credit and background check. These can help find issues you might otherwise miss.
It’s a good idea to have an in-person conversation with potential tenants to get to know them a bit more. This can take place when you review the rental agreement with them. Make sure your tenant fully understands the rental agreement.
Before you hand over the keys, do a final walkthrough with the tenant. This can prevent disagreements later about any issues.
Maintenance
If your tenant needs help with the rental or has an issue, they will contact you. You need to be able to resolve any issues and keep maintenance up to date. Doing a walkthrough at least once a year can help spot any issues before they become problems.
In addition, staying on top of regular maintenance will go a long way. Set up regular checks for appliances and have the contacts of local reliable contractors. There will be some small issues that pop up. If your tenant notifies you of these, you may be able to perform small repairs yourself. However, make sure to set aside a maintenance fund for when you need to call in help.
If there is a major problem where the tenant must relocate for some time, it is up to you to provide them housing if they have already paid. Make sure to check the local laws regarding this, as some areas also require accommodations for upcoming times.
Navigating Issues and Changes
One of the biggest ways to prevent any issues from arising when you manage rental property is to have good communication with your tenants. Make sure you tell them anything they need to know. At the same time, be sure they know that they can come to you if there are any issues.
Over time, you may need to increase your rent process. Even if you have a long-term tenant, over time you need to keep up with changes. Make sure you disclose the fact that you might increase rent to your tenants.
Having a late fee policy is key to ensuring rent is paid regularly and on time. Make sure you disclose your policy in the rental agreement so your tenants are aware. You can work with tenants if there is a one-time issue.
However, recurring late payments can become problematic. A late fee reduces the chance your tenants will pay late multiple times.
In addition, you should have a plan in case you need to evict a tenant. Eviction is a complex legal process with the rules varying by the municipality. Be sure you can give notice and read what your local laws are. A lawyer can help you if it is confusing.
Before renting to anyone, make sure your rental contract is thorough. There are examples online, but a local lawyer can be helpful when you are starting out. A good rental agreement will give you better legal protection in case any issues arise.
Using a Property Management Company
The process of learning how to manage a rental property can be a bit daunting since there are many financial and legal factors involved. Some landlords choose to hire a property management company to make the process easier.
This is also a great option if you want a more hands-off approach. In general, they can take care of all of the steps from finding tenants to handling maintenance. In fact, some owners and investors use this as a way to build an income stream without needing to be too hands-on about the day-to-day operations.
Know the Basics of Managing Rental Properties
Rental real estate can be a great way to earn an income. Once you have the property, you also need to figure out the process of managing rental properties. Whether you do it yourself or hire a management company, you should be aware of what goes into rental management.
Contact redacted for help meeting your rental property management needs.
Photo by Jeremy Bezanger on Unsplash
