If you own a rental property, you can choose to either hire a property manager or manage the property yourself. Most real estate investors prefer hiring a property manager to avoid the many responsibilities associated with rental property management. However, you can still learn how to manage multiple rental properties on your own and do it successfully. Though it may seem overwhelming, DIY property management can be very rewarding if done right. This guide will help you learn the basics of how to manage rental properties on your own successfully. Read on to learn how to work through the different aspects of managing rental properties yourself.
For the best rental property management tips for first-time landlords, check out our video below:
How to Manage Rental Properties on Your Own
1. Buying a Rental Property
Even before rental property management comes into play, the first step to being a successful landlord is buying a rental property that is profitable. And the best way to ensure that you buy a profitable investment property is to do a thorough real estate market analysis and investment property analysis. You can do this analysis easily using Mashvisor’s real estate investment tools.
After finding a good rental property, you will then need to do any necessary repairs to make the property rentable. A home inspector can help you decide what repairs to carry out and a few good contractors can help you finish the project and get the investment property rent-ready.
2. Setting Your Rental Price
Now that you have a profitable rental property that is ready to be rented out, the next step is to set your rental rate. To appropriately price your rental property, you’ll want to perform a rental market analysis to know the average rental rate of comparable rental properties in the area. This way, you won’t overcharge or undercharge tenants.
3. Learning the Local Property Laws
A common mistake that many first-time landlords make is not taking time to learn the fundamentals of the local landlord-tenant laws. Renting out your property without a good knowledge of the property laws of the area is setting yourself up for legal problems.
Make sure to review the local regulations to avoid potentially costly legal action when you break the law. If possible, consult a real estate attorney to guide you on what you need to know as a landlord.
4. Rental Property Marketing
Once you understand the local property laws, the next step is finding tenants. You should advertise your rental property on multiple channels to get a good pool of prospective tenants to choose from. For instance, you can advertise on real estate websites like Zillow, social media, and local publications.
5. Tenant Screening
As a landlord, you shouldn’t just pick the first person interested in your rental home. Without carefully evaluating tenants, you could end up with bad tenants who fail to pay rent on time, damage your real estate investment property, or threaten the safety of neighbors.
To find a good tenant, you should conduct an in-depth tenant screening process for all prospective renters. This may involve conducting a credit and background check, contacting their former landlords, and doing a one-on-one interview with them.
You can decide on your own tenant screening criteria, so long as you keep in mind fair housing laws. It is illegal to discriminate against any tenant. You can also choose to hire a third-party tenant screening service to help you find the perfect tenant.
6. Writing a Lease Agreement
Once you have found a good tenant, you need to sign the rental contract. If it is your first time managing rental property on your own, you will want to find a few samples online to learn how to set up yours. Better still, you can hire a real estate lawyer so that you don’t miss any important details. The rental agreement should include things like rent payment time, tenant responsibilities, eviction procedures, security deposit, etc.
Go over the agreement with your new tenant and provide clarification where needed before they sign it. This will ensure that they understand it and will prevent potential disagreements in the future.
7. Rental Property Maintenance
You will begin to take a more passive role once the selected tenant occupies your rental property. However, this does not mean that you are done with most of your rental property management responsibilities. In fact, you are just getting started.
Be ready to receive calls from tenants whenever they have an issue. For instance, there may be a plumbing issue that needs quick repair for the house to remain habitable. This means that you should be available at all times to solve tenant issues speedily and satisfactorily.
Nevertheless, you should not just wait for tenants to contact you when issues arise. To ensure that everything is working well, do regular inspections on appliances and the general state of the rental property. There might be some small maintenance issues that weren’t reported that could escalate and become costlier to repair later.
To stay on top of rental property maintenance, you need to have a specific maintenance fund. You should also have contacts of reliable local contractors that can act fast when called upon to fix any issues.
8. Rent Collection
Another duty that comes with being your own property manager is rent collection. There are many ways of collecting rent including checks, direct deposit, mail, and electronic methods. Make sure you choose one that is swift and favorable for most of your tenants.
To discourage late rent payment, have clear rent policies on the lease and enforce them. For instance, charge a late fee when a tenant pays rent late. Also, remind them of the possibility of being evicted should they keep on paying late. If you condone late payments, they are likely to get used to late rent payment. In case there is a need to evict a tenant, make sure you follow the local laws to avoid legal problems.
9. Rental Property Accounting
To successfully manage a rental property business, you need to keep a good record of all rental income, expenses, taxes, and transactions. However, doing rental property accounting on your own can be complicated, especially for first-time landlords. So, you can hire an accountant to do your taxes and manage your accounts.
The Bottom Line
Becoming a landlord may look great on paper but it can be very challenging if you don’t know how to manage rental properties. If you desire to manage rental properties yourself, you can still do it without feeling overwhelmed. With the right strategies, managing rental property yourself can be done successfully. Keep in mind that a well-managed rental investment can bring you more profit in the long run. Now it’s time to put the knowledge you have to take action! Start searching for a rental property now.