Proper rental property management is the healthy heart of a property, it keeps it alive and well. Although the benefits of great rental property management are clear, the way to achieve this is somewhat cloudy to many real estate investors. To clear up the air, here’s what you need to know about rental property management:
Basics of Rental Property Management
At its core, rental property management boils down to five functions. These functions tend to come in order of a cycle with every new tenant, but that isn’t necessarily the case. Whatever the case may be, these functions are vital to the success of a rental property.
1. Finding New Tenants
Finding new tenants is one of the most important tasks of property management. There are many ways to find new tenants. For starters, you could consider having a realtor find tenants for your investment property. This is a safe option as realtors will be able to find tenants through appropriate channels. You also can’t forget the impact of common advertisement. In fact, you will probably find most tenants this way. Try to use mediums that will have a broad reach when advertising an investment property, like newspapers and the Internet.
Once you have found a potential tenant, have him/her fill out an application form. The application should focus on a tenant’s rental history, income, employment, credit history, and criminal history. From there, you can evaluate the tenant candidates and see which one suits your rental property best. If you’re looking for a rental application form, check out Zillow’s free application form.
2. Showings and Screenings
Once you have some potential tenants interested in the property, you can prepare a showing. Conducting a showing will require some time, so arrange meetings with tenants. You could decide to show tenants the property individually or have a rental open house. An open house is a great idea if you can conduct one. It saves time and creates a sense of urgency among the potential tenants, making the entire application process quicker.
After you’ve complied some applications, it’s time to review them. Make sure the application follows Fair Housing Laws so that you can evaluate each tenant objectively. The next step is to screen the tenants.
Always be sure to screen tenants meticulously. Run a background check and a credit check on each tenant. Credit bureaus like Equifax and Experian are great sources for credit checks. Additionally, you can consider having an interview with the tenant. Once you’ve found your suitable tenant, inform him/her. Have him/her sign the lease and make a security deposit. Also, be sure to inform the applicants who did not make the cut.
3. Knowing the Law
A huge part of rental property management is to be aware of the real estate laws that impact your experience. This is especially true if you are considering a short-term rental, like Airbnb. There are several laws you should be aware of, but the most common ones deal with evictions, state laws, and zoning.
A property manager must know how to deal with evictions too. That’s because evictions tend to be tiresome, and any legal mistake on your part can land you in hot water. Evictions can differ by state laws. Zoning is also affected by state and local laws. In some counties of an area, the placement of an income property can have serious implications. Be sure to be aware of these laws before proceeding in real estate investing.
4. Collecting Rent
Rent is the bread and butter of your rental income, that’s why collecting rent is such an important task for property managers. Nowadays, most tenants pay rent online. You could also have tenants pay rent through checks. Whatever way you opt for, just make sure you receive your rent on time. You could implement a late-rent fee to further enforce rent to be paid on time.
Keeping the investment property running properly is of utmost importance. Maintenance is something you will need to upkeep all the time, whether you have a vacancy or occupancy. Before you rent out to a tenant, make appropriate repairs and renovations to the property. Even once you’ve secured a tenant, you will need to keep an eye on any maintenance issues that may arise. This may mean waking up in the middle of the night to visit the property to fix an issue, if a tenant calls. Of course, you could always have a handyman take care of repairs. Either way, make sure the maintenance of your rental property is always at its best. Tenants are most attracted to properties that function excellently, and will remain there in the long run, earning you more money.
The #1 Tip You Need to Know About Rental Property Management
Rental property management sounds like a lot of work. That’s because it is, but it’s work that needs to be done. That’s why, in order to stay on top of things, you need to arrange your time properly and wisely. Set a schedule that will allow you to perform all your management and rental duties. Keeping a reasonable and effective schedule will save you a lot of headaches and money.
What About Professional Rental Property Management?
Sometimes, the obligations of rental property management may be too much, especially if you have other responsibilities such a full-time job. Managing multiple properties may also be an issue, but some real estate investors still manage to keep up. If you’re looking to ease the burden of management, you should consider hiring professional property management. The obvious upside is that your income property will be taken care of by professionals, making your investment duties more passive. This is also great for beginning investors. The downside, however, is that professional management costs money. Still, using professional management can give you the opportunity to spend more time on other properties.
Successful rental property management is the essence of a successful investment property. Allowing management duties to operate properly will reward you with positive cash flow as well as tenant stability and satisfaction. To learn more about property management and other duties while investing in real estate, visit us at Mashvisor.