Owning rental properties can be as rewarding as it is tedious! Passive income is a great reward, but managing properties might not always feel so "passive" with so much to maintain. As any rental property owner knows, the more properties you own, the higher the potential for problems becomes.As a real estate investor, obtaining peace of mind while making your investment work for you is the secret balance that not many find. Let's help you discover that sweet spot by addressing the ways most rental property owners fail & where the very best succeed.
How to succeed in property management:
Choose great software.
Your company can only grow as far as the software you choose to use allows. If your tools aren't conducive to your future success, your business will ultimately pay the price. So do your research & select the program you'll be using carefully, always keeping the end in mind. Here are some things you'll want to ensure your software is capable of doing well:
- Collecting rent payments in a variety of ways
- Allowing self-scheduled maintenance requests
- Top-tier reporting on things like vacancy rates, turnover times, past due rents, etc.
- Ability to communicate with tenants via text, email, or mail
- Task management systems
- Tools to market units for rent, collect applications, & run background checks
- Options for renewing leases, sending addendums & drafting amendments
There will be other features your business might deem more necessary depending on the size of your portfolio, your budget, and the interworkings of your company. In general, these are features that industry professionals deem highly important for success.
Develop vendor relationships.
Conducting inspections, scheduling maintenance-related requests, making property improvements & renovating after a tenant vacates a property are a part of your life now. Managing properties well means you'll always be doing something to improve, maintain or repair them, probably more often than you realized. Costs can add up fast, so finding the right vendor for the job is crucial to your business's financial well-being. Any property owner can make easy mistakes by paying too much for labor or hiring the wrong person who will cut corners. Keeping your eyes out for contractors who do good work in a timely fashion, all while not overpaying, can be a tall order to fill. Our recommendation is to always be on the lookout for referrals and don't be afraid to set standards with your vendors upfront about what rates, turnaround times, & standards for quality you expect.
Plan for turnover.
Turnover can be defined as the time during which one tenant vacates a property and a new tenant takes up residence there. Property turnover comes with the territory and it's where most management systems fall apart. Letting your property sit vacant for too long is the easiest way to eat away funds from your wallet. There are a few key factors you'll want to perfect to avoid this:
- Marketing your vacancies
- This area can be particularly hard for most property owners to do on their own. In order to market a vacancy effectively, the listing needs to be in front of the right eyes and it needs to capture the attention of that key audience. Moreover, the rent needs to be priced correctly from the start. Lastly, you need an effective way for interested individuals to contact you, apply, ask questions, etc. Getting this right takes experience, attention to detail, and a knowledge of the market.
- Showing empty properties
- Once you have interest in your vacancy, you'll need to set up times to tour with your future tenants. Most people will want to view the space before they pay a deposit, pay an application fee or sign a lease. Answering calls, scheduling times to view the rental & coordinating all these details can be extremely time-consuming. This is why most management companies or property owners hire someone to do this for an hourly rate.
- Running credit and background checks
- All real estate investors know that long-term paying tenants, people who pay on time and keep the terms of their lease, are the ultimate goal. Finding these people can prove challenging and to do so you'll need a tight list of criteria and thorough background and credit check program. Thankfully, there are great options available to the everyday consumer including those offered by the 3 credit bureaus, Transunion, Equifax, and Experian that should do the trick.
Create a sound lease.
Getting tenants in the door is essential, but ensuring your leases and other legal documents are airtight is the true key to long-term success. Some documents you'll need to craft will include:
- A lease agreement
- This should detail the dates the lease begins and ends, fees owed by the tenant, responsibilities of both parties, and what happens when there is a breach of contract.
- Proper disclosure
- Depending on your state, the licenses you carry, and your relationship to the property, you may need to provide certain disclosures to tenants
- Addendums to the lease
- These may cover special occurrences such as pet ownership.
- Amendments to the lease agreement
- This will be used when the original lease terms need to be altered somehow, like an extension of the lease or a change to the tenants listed in the agreement.
- Rules and regulations
- These should spell out in great detail how the tenants and their guests are to conduct themselves during the term of their lease agreement. These might be specific to the building they live in.
It should go without saying that consulting a lawyer before implementing any lease-related documents is highly advised. Paying a fee for a contract lawyer to look over your terms and conditions could save you a lot of time and money in the future. In addition, speaking to another property management company with more experience or a property management consultant about the verbiage in your documents can help you gain insight into areas of your contract that are too vague or particular circumstances you may not have thought to touch on.
Know when to ask for help.
If everything listed so far has you overwhelmed, you're not alone. A lot goes into managing properties, but doing it well is no easy task. Knowing when it's time to ask for help is crucial. After all, when you fail to meet your tenant's needs, don't appropriately control rent rates, or you start to see properties sit vacant for too long, it's your pocket that directly suffers. Even if you're working your tail off, sometimes you need to step back & let someone else do it for you.
We've developed a shortened list of all you could come to expect from a property manager vs. what you're responsible for when you do things on your own.
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If you don't want to go through the hassle of taking on all this responsibility, we don't blame you. We're here to do it for you! Just schedule a consultation and we'll take it from here.