If you’re planning to have a rental property as an income generating investment, you probably might have browsed how it requires a minimal labor to earn and maintain. It is often included to mostly generate passive income since the earner (property owner) in this business activity does not essentially be mandated to participate.
However, rental property management is not as simple as you visualize. There are many tasks involved in terms of making the business a successful financial venture.
To keep the business afloat, you need to work with few areas involving property management; that include the tenants, the property, and finances plus legalization.
When managing a property, you can be hands-on or hire a property manager to help you. Whether you consider managing your own property yourself, or decide to completely go outsource, here are some strategies on how to smoothly manage your rental business - the longer term.
RENTAL PROPERTY MANAGEMENT
Have you asked yourself questions like “Should I manage my own rental property?” or “What are the things I should focus on if I sign up for rental property managers”. Worry not, we have gathered an essential guide for you to lean on. From the tenant turnover process, types of rental homes to know (single-family homes,multi-family homes etc.) we’ve got it all covered!
Let’s start with managing tenants;
This most prominent task of managing rental homes is the most immediate and most obvious. However, apart from just the common rent collection, there’s a lot more to manage for you to become a successful Landlord. Such as follows;
- Rent Collection: Setting due dates. Collecting rent each week or month. Establishing late fees and grace periods. Dealing with unpaid rent.
- Tenant Screening: Advertising vacancy. Setting up appointments. Verifying information on applications. You may also determine if certain tenants are a good fit.
- Lease Agreements: Verifying that lease includes all legal terms required by your state’s landlord tenant law. Making sure the lease is up to date with the most recent version of law. Managing lease start and end date of all tenants.
- Move-In: Signing lease agreements. Going over rules, requirements and regulations. Collecting security deposit and first month’s rent. Walking through and noting the current condition of the rental unit.
- Move-Out: Verifying that the lease term is actually over. Checking the condition of the rental unit for any damage. Beginning the process to find a new tenant for an apartment.
- Tenant Complaints: Fielding complaints. Setting up a game plan to fix the problem.
- Repair Requests: Responding to requests quickly. Prioritizing the importance of repair. Doing the repair yourself or hiring someone to do it.
- Tenant Evictions: Sending tenant legally required notices before eviction. Filing for eviction with the court. Preparing your evidence which supports the reason for eviction.
Managing Property Maintenance and Inspections
The second main part of rental property management is the property itself. The physical structure needs to be maintained for the health and safety of the tenants. Your insurance company may also require certain parts of the structure, such as the roof, to meet certain standards or they will refuse to insure the property.
- Maintenance: Cutting the grass. Picking up leaves. Shovelling snow. Taking out the garbage. Keeping all common areas clean. Making sure tenants have access to running water at all times and heat in the winter. Fixing roof leaks, plumbing leaks, cracked tiles, loose handrails, faulty door or window locks.
- You will have to deal with inspections from the town and even from your lender and insurance company. The town inspections are to make sure your property is following certain health and safety codes. The lender and insurance company inspect the property to make sure the property is worth the amount they are lending or the amount they are insuring it for.
Managing finances is also a main task that you’ll have to deal with when owning a rental property. You need to understand your expenses vs. your profit. It won’t be as easy as getting the collection and splurge it thinking it's your overall net amount. Identify how much money is coming in each month and how much digits you have cashed out. To aid you managing your finances, create answers following these:
- Rent Payments: How much you collect in rent each month.
- Mortgage Payment: What you pay each month on your mortgage.
- Insurance: How much you pay to insure your property.
- Taxes: What your yearly property taxes are.
- Utilities: If tenants are not responsible for paying for utilities, how much the water, gas and electric bills are each month for the property.
- Fees/Fines: Fees you may have to pay for property inspections or court costs. Unexpected fines for maintenance issues at the property.
MANAGING RENTAL HOME APPROACHES
You may have understood various areas on how to successfully manage a rental property, and since this guide aims to aid questions surrounding property management, here are three approaches you can choose for you to completely have an idea whether you’ll go manage your property on your own, or with the help of the professionals:
In this management approach, you are responsible for everything, hence, DIY. You are the one who is collecting rent, shovelling snow and filing your taxes.
Half Do It Yourself/Half Outsource
In this approach for managing rental property, you manage the areas that you feel you have expertise in and then outsource the areas that you do.
Outsource Management Completely
Have all tasks related to your rental property be off your plate, and let property managers do the job for you- completely.