Although investing in rental properties is a great way to earn passive income, this investment requires the right management. When not managed properly, investment properties can cause many issues, namely longer vacancies, legal problems, and less tenant retention.
Managing rental investments is challenging, especially if you’re a novice, but it’s not impossible to accomplish. As long as you follow the right pieces of advice, you can start managing your property and earn passive income from it in no time.
Below are six tips to help you manage rental investment like a pro:
- Take Notes From A Professional
One of the best ways to manage rental investments is to build an image as if you’re working from a property management company. For starters, you should regularly communicate with your tenants to ensure that both parties are on the same page. You should also set different communication channels to make it easier for tenants to talk to you and vice versa.
Most importantly, tenants should know that the person managing the rental property (that’s you) is someone who should be taken seriously. Sure, you can establish friendships with your tenants but make sure to set boundaries. This will enable you to foster healthy, professional relationships long-term.
If you don’t know how property management companies operate, visit this site or look for other companies in your area. The more you know about property management companies, the easier it’ll be for you to determine the extent of your role as a landlord.
- Implement A Strict Screening Process
One of the most important responsibilities you’ll have when managing rental properties is looking for high-quality tenants. Your ability to earn passive income and your experience as a landlord depends on the tenant you decide to accept in your property. How can you earn if the tenant doesn’t pay rent on time? Do you think you’ll enjoy being a landlord if this is the case?
To make your life easy as a landlord and ensure that you can maximize your rental properties, implement a strict screening process. This will enable you to establish clear requirements for tenants and help weed out individuals who don’t qualify due to low income or eviction history.
Make sure to incorporate these tips to implement a well-thought-out screening process:
- Develop qualification criteria and document them: Make sure that your set qualifications are disability-, race-, gender-, and familial-status-neutral, and these should be properly documented. Having these documents will save you from any legal repercussions if the tenant accuses you of housing discrimination.
- Verify income sources: The advent of technology makes it easy for anyone to create fake financial documents, so make sure to verify the income sources of tenants before accepting them. You can verify the income source of an applicant by asking for at least three months of bank statements and a contact number of their employer.
- Talk to previous landlords: Is the applicant a chronic late payer? Do they often cause property damages when drunk or angry? Does the tenant know how to clean their space? You can get answers to these questions when you talk to the applicant’s previous landlords, so make sure to ask for contact numbers.
- Adhere To Laws And Regulations
Investing in rental properties isn’t just about looking after your tenants and earning passive income; this role will also require you to follow local laws and regulations. As a landlord, you need to follow fair housing laws that prohibit discriminatory practices in housing.
Under the law, you’re not allowed to:
- Ask unnecessary or invasive questions during the screening until the tenant is living in your rental property;
- Evict a tenant without providing eviction notice and sufficient time;
- Forego completing necessary or important repairs and require the tenant to pay or do their own repairs;
- Forego disclosing conditions of the property, namely the presence of radon in the property or having a weak roof;
- Stop a tenant from entering the rental property; and
- Remove a tenant’s personal belongings.
The fair housing law is created to ensure that home renters aren’t discriminated based on their race, religion, color, sexual orientation, family status, and disability. This means that you can’t reject the application of a person solely based on the mentioned attributes.
However, there are certain situations where you have the right to refuse an application, namely:
- Applicants having pets when it was clearly communicated that pets aren’t allowed on the property;
- Applicants who have a criminal history;
- Applicants who refuse to submit a background check when one is required in the screening process;
- Having a poor history with previous rentals or caused damage to previous rentals;
- Poor credit history or bankruptcy issues;
- Poor references;
- Refusing to adhere to the conditions stipulated on the lease; and
- Submitted fake documents or falsified information.
- Prepare A Well-Written Lease
The stipulations in your lease can influence your success as a landlord. This document serves as a legal agreement between you and the tenant, so make sure to address policies, rules, and conflict resolution strategies for living in your rental property. Most importantly, your lease should also clearly define landlord and tenant responsibilities.
To avoid any legal repercussions and ensure that you can benefit from the agreement, it’s best to hire a real estate attorney to create your lease. With their expertise, you can easily prepare a well-written lease that covers the following:
- Lawn maintenance: The lease should indicate who’s responsible for maintaining the lawn and what tasks need to be accomplished for maintenance.
- Parking: If you provide a parking spot, ensure that your lease includes the exact location where tenants can park and the number of allowable cars each tenant can bring to the parking area.
- Pet clause: If you’re going to allow pets in the property, include a pet clause wherein the tenant agrees that they’re solely responsible for the pet and any damage caused on the property.
- Property alterations: If you allow property alterations, be as detailed as you can about the policy. For example, if you allow tenants to paint the walls during their stay, are they required to paint it back to the original color when they leave? Do they need to ask for your approval when picking wall colors and paint types? Don’t forget to include the consequences or penalties if a tenant fails to meet the rules.
- Invest In Property Management Software
Managing rental properties can be time-consuming and stressful, especially if you have more than one property to look after. The responsibility of being a landlord can also become overwhelming if you have too many responsibilities on your plate—taking care of the kids, having a full-time job, or both.
Make the most out of today’s tech-savvy world by investing in property management software. Sure, buying one can mean spending more money, but the benefits will be worth it in the long run. There are several types of property management software today, but most of them can help with:
- Maintenance management and tracking: Property management software offers scheduling tools to ensure that your home maintenance tasks aren’t neglected. With this tool, you’ll know when to hire roof contractors or electricians to inspect the overall condition of your property.
- Tenant applications and screenings: Looking for ways to speed up your screening process? Property management software can help as it helps you filter less qualified applicants using reference verification tools, renter histories, and background checks.
- Online payments: Knocking into your tenants’ doors is a thing of the past. Nowadays, you can use property management software to remind tenants about their rent and receive payment. Property management software also offers rent tracking capabilities, so you can determine which tenant paid on time and which one is falling behind on their rent.
- Keep Responsible Tenants With Incentives
Good tenants don’t come around every day. Finding them is often a very difficult process that requires a lot of time and effort. If you do find responsible tenants, encourage them to stay longer in your rental property by offering incentives.
As a landlord, you can offer different types of incentives to high-quality tenants:
- Monetary incentives: You can reward responsible tenants with a discount to ensure their loyalty. Depending on your preferences, you can inform tenants of the incentive as they celebrate their rental anniversary or when they renew your lease.
- Competitive amenities: Showing appreciation to your responsible tenants doesn’t always have to be in the form of money. You can win tenant loyalty by offering competitive amenities, like new flooring or appliance. You can also offer perks that will allow the tenant to enjoy the community, such as grocery delivery services or gym membership.
- Outstanding maintenance: You can also grant unique permissions to responsible tenants so they can make desired changes to the property. You can offer free landscaping services, provide some pieces of garden furniture, or improve their patio with a fire pit or grill.
Take Your Time
Becoming the best property manager requires time. Even if you carefully followed all of the tips presented in this article, don’t expect that you can see results after weeks or months.
To make the most out of your rental investments, incorporate the tips in this article into your daily routine. Managing your rental investments will come off easier if certain practices or strategies have become second nature to you!