Managing your rental property can become assiduous if not planned right. Often times, real estate investors that fail to properly manage their investment property may then have a high tenant turnover. Renters become dissatisfied with the property and end up leaving. Landlords, on the other hand, get discouraged and shun the business. But, as a matter of fact, investment property management should not be a nightmare if done right. Meticulously planned, investment property management will, in fact, reflect into a high occupancy rate and, thus, a high return on investment.
How would I go about managing my rental property without incurring losses? What can I do to efficiently carry out Airbnb property management? How much should I charge for rent? These are questions that any real estate investor might and will have. Need you not to worry, today we have developed 6 tips to help you achieve a positive cash flow from your investment. Be sure to follow these steps and we promise that your investment will have a low vacancy rate. Tenants will be satisfied and will want to stay in your property for as long as they can.
Investment Property Management Tip #1: Know the Property Before You Purchase
Buying the right property plays an important role in your investment property management. We recommend that you buy new or newer investment properties so as to avoid any unexpected costs and/or renovations. Often times, real estate investors buy older properties (for cheaper) believing that they will be more profitable. Older properties, however, tend to be more difficult to manage as they may need more maintenance. In fact, you might be inundated with renovations that you will be forced to make. Often times, these properties tend to have plumbing and electrical issues leaving you to pay more to fix them.
That being said, we advise that you purchase properties built after 2005. This is because the newer the properties are, the more technologically advanced systems (from electrical to plumbing to air conditioning) they will have.
Regardless of the age of the property, you should still hire an investment property inspector to inspect the property for you. Investment property inspectors will find flaws that even the savvy real estate investor will not be able to find.
Investment Property Management Tip #2: Screen Your Tenants
Are you afraid of a tenant not paying rent? Or damaging your property? You certainly should be, but you can avoid such incidents with a proper screening process. When you thoroughly screen your tenants, you ensure that your property is in the hands of good tenants. The screening process is important as it reveals whether or not a tenant has the financial solvency or employment stability to pay rent. Moreover, a good tenant will take responsibility for the property.
When you are screening tenants, request that potential tenants fill out an application. Make sure that the application covers financial information, employment information, and, of course, personal information. In the application, inquire about current income level, contact information for previous landlords, and request personal references. You should, moreover, request a background check, criminal history report, or credit check.
Investment Property Management Tip #3: Be Wary of All Costs
Fees, Taxes, and Insurance: These costs include property tax, property insurance, and association fees for any real estate groups and associations you belong to. Property tax varies from one location to another, so it is important to study your local legislation before buying an investment property. Moreover, according to the Insurance Information Institute (III), the landlord’s insurance premium is about 25% higher than that of homeowner’s insurance premium. Beware!
Legal Advice and Administrative Costs: When buying an investment property, you ought to hire an attorney to have access to good legal advice. Moreover, administrative costs can often be neglected in calculations. Make sure to include the following costs in your assessment: costs of interviewing potential tenants, running credit history for potential tenants, and checking their references.
Maintenance: These costs could include dealing with issues such as a leaking roof, plumbing, the heating system, and electrical installations. Often times, real estate investors neglect maintenance issues and end up having paid plenty of money to fix them.
Investment Property Management Tip #4: Follow Landlord Tenant Law
Streamlining the investment property management process requires a real estate investor to make fewer mistakes. Make sure to understand and follow landlord tenant law before you invest in a rental property. When you familiarize yourself with landlord tenant law, you learn about evictions laws, per se. You will learn of the reasons to evict a tenant and the process of evicting tenants, if necessary. You will also learn of how much you can collect as a security deposit. It is important to know that laws governing rental properties vary from one state to another. Reach out to your local council to inquire about these laws.
Investment Property Management Tip #5: Use an Investment Property Calculator
An investment property calculator is a must for all real estate investors. An investment property calculator will calculate the different values used to derive property valuation. When you use an investment property calculator, you can determine metrics to express the return on investment of an investment property. These metrics include cap rate, cash on cash return, and return on investment. An investment property calculator will, moreover, account for all expenses, both one-time and reoccurring expenses.
An investment property calculator makes the process easier and simpler as you would only have to enter the different values in the dedicated places on the calculator in order to derive the best results.
In fact, Mashvisor’s investment property calculator is ideal to derive the profitability of an investment. Not only does it calculate cap rate, cash on cash return, cash flow, and rental income, but it also takes into account the financing method, whether using cash or mortgage, to help you conduct proper real estate investment analysis and property valuation.
Sign up for Mashvisor for access to the best investment property calculator in the current housing market. To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
Investment Property Management Tip #6: Hire a Professional Property Management Company
Professional property management services have become abundant nowadays, aiding real estate investors in investment property management. For some real estate investors who own properties out-of-state, professional property management services have come to cater to their needs. When you hire a professional property manager, you can both agree on the tasks they will responsible for. Professional property management companies can do the following:
- Market your rental property for you
- Fill vacancies with the most suitable tenants
- Collect rent and track rental income and expenses to determine profitability
- Maintain and keep your rental property in good condition
- Negotiate rental agreements and contracts with tenants on your behalf
- Comply with federal, state, and local laws
- Respond to tenant requests and deal with problems tenants may have
When you follow the aforementioned tips, you are sure to have proper investment property management for all of your properties. Many real estate investors who have followed our guidelines have witnessed a positive cash flow and even further growth in their investments. To learn more about tools available to efficiently and effectively go about investment property management, visit Mashvisor.