Read Also: All You Need to Know About Owning and Managing Residential Real Estate Properties
Tip #1: Decide between self-management vs. professional management
As the owner of a rental property, you have to decide whether to self-manage your rental property or hire a professional property management company.
If you own multiple rental properties, it makes more sense to hire professional management services. But if you have one or two properties, it’s best if you self-manage them and use your rental income for other purposes.
Let’s quickly take a look at the advantages of both self-management and professional management for rental properties to help you come to a decision.
Advantages of self-management:
- Ability to save money
Professional management companies are known to be costly. Most companies charge 10% of your property’s collected rental income and the first month’s rent for each new tenant. This is one of the many reasons why so many investors, especially beginner real estate investors, choose to self-manage their property and save a few bucks.
- More control
When you self-manage your own rental property you have more control and it is easier to make decisions and implement them yourself.
- Gain experience
As a landlord, it is important that you know all the ins and outs of rental property management, even if you’re not the one doing it. When you self-manage your rental property, you gain experience in rental property management and it becomes easier for you to evaluate how well others manage your properties in the future when your portfolio grows.
- You care more about your baby than anyone else
Owning a rental property is very valuable and taking care of it requires only the best of the best. Consider it a known fact that no one will ever care as much about your rental property as you do. Putting care and effort into your property can be the difference between a well-performing investment property and one that loses money every month.
Advantages of professional management:
- Organization on point
Professional property management companies will always have everything ready. From property leases and applications to notices of entry and other documents, everything will be ready and organized. They will make sure all the paperwork is taken care of as well as the tenant screening process. If you’re self-managing your rental property, then you will have to prepare all of this by yourself. Additionally, management companies will always have a list of vendors and contractors to use.
- Ability to save time
The more time you spend self-managing your rental property, the less time you’ll have to finish other tasks. So hiring professionals provides a huge advantage especially for real estate investors who work as part-time investors.
Read Also: Part-Time vs. Full-Time Real Estate Investor: Which Real Estate Investment Strategies to Go For?
- Opportunity to avoid headaches
Every job in the world comes with its own set of headaches and worries and real estate investing is no exception. You will need thick skin to deal with tenants and their non-stop complaints and needs. Most tenants are great renters, but there will be times where you’ll have to deal with a bad tenant. Hiring property management companies will save you from these headaches.
As you can see each rental property management approach has its own set of advantages. Whichever one you choose, it must match your financial situation and needs.
Tip #2: Always be prepared
Owning a rental property requires a lot of work, time, and money. As a landlord, you need to always remember that renting out a property generally means extra rental property management costs. Your annual management costs should on average be about half of your monthly rental income. Of course, this is only an estimation. Annual expenses can vary based on the age and condition of your property.
You should always be prepared and ready for extra expenses. Set a budget for maintenance and repair costs for when a tenant moves out. That way, your property will always be prepared to rent out for future tenants.
Tip #3: You must understand legal regulations
Each state/city has its own laws and regulations regarding rental properties. There are certain specifics about what rental property management landlords are responsible for and how it should be completed. So it is crucial that you understand and familiarize yourself with your city’s regulations.
Tip #4: Keep your tenants happy and satisfied
A key factor to successful rental property management is a happy tenant. Managing your rental property well and responding quickly to tenant requests keeps them happy. When a tenant is satisfied with your managing skills as a landlord, they will likely renew the lease and it encourages them to maintain your rental property as well. Ignoring your tenant and not fulfilling their needs can lead tenants to take poor care of your property.
Tip #5: Rental property management for tenant turnover
Any property that experiences tenant turnover requires some maintenance costs to bring it back to rentable condition. Your rental property should be cleaned and repaired between tenants. Make sure the yard is tended, the locks are rekeyed, the walls painted and the structure of the home examined.
Good rental property management and making sure your property is in optimal condition will increase your property’s value in the long run. Additionally, when you renovate your rental home before presenting it on the market, you make the property more attractive to prospective tenants. This will increase your property’s occupancy rate and motivate future tenants to take care of the property once they sign the lease.
Tip #6: Don’t forget your property’s ongoing management
There are ongoing tasks that must be taken care of on a regular basis. Once the tenant lives in the property, you must remember to:
- Collect monthly rent payments
- Handle and respond to all maintenance requests
- Update all safety certificates as and when necessary
- Carry out a home inspection of the property at least once a quarter
The Bottom Line
It’s the little things that can make a big difference and for rental properties, the little things count the most. First impressions are the most important and in order for tenants to always have a good first impression, you must have great rental property management skills. This means that every part of your rental property needs to be in excellent shape, not just to get the perfect tenant, but to see your property grow more in value every day.
Every landlord needs the right toolkit and that includes a rental property calculator! Learn more about the best one here.