Owning an investment property brings you one step closer to collecting passive income and building wealth for yourself and your family. Whether you choose to own a single-family home, a condo, a townhome or a multi-family residence with a varying range of apartments, you will be responsible for this property. This means that as the owner you are responsible for fixing anything that is damaged, anything that needs to be repaired or replaced, ensure that the grounds are well-kept and that your tenants are taken care of. Owning an investment property is a big responsibility – many landlords will choose to take on property management by themselves and only seek assistance from qualified plumbers, electricians and other professionals or handymen as necessary. Others will choose to hire a property management company that will take care of the property from top to bottom, including maintenance, tenant complaints and issues, collecting rent, marketing the property when there are vacancies, etc.
Whether you are a first-time landlord or an experienced investor with an impressive portfolio, we’ve compiled a list of property management tips for any landlord. Being prepared can help you avoid common mistakes so you can focus on taking care of your investment and building up your net worth.
Research, Research, Research
Before you even begin thinking about becoming a landlord, it’s very important to do your research and understand the demand of the market. Do you have what it takes to be a landlord? Do you have the time to dedicate to managing your tenants and property? Here are some questions to ask yourself before you take the plunge into being a property manager for your investment property:
- How much money is required for a down payment on the property you are interested in?
- Is the area where the property is located considered to be desirable?
- Are rents in the area appreciating?
- How much can you charge for rent?
- What are the rent control laws and policies in the area?
- Is this a fixer-upper property and what will it take to renovate it? Is it worth it?
Run It Like a Business
You need to treat your investment property as a business – even if it’s hard to do at first, you will need to separate business from emotions. It’s not uncommon to encounter a tenant who is struggling to pay rent, but it’s important to put boundaries in place for things like late fees so that paying rent late doesn’t become a bad habit. Think about it this way – you have to pay the mortgage and bills on the property on time no matter what, so it’s important that you hold your tenants accountable for their rent. As a landlord, you should consult with a team of experts who can advise you on dealing with difficult situations – this can include lawyers, accountants, insurance agents and other property owners.
Additionally, you will want to treat your tenants with kindness and respect so you can maintain a good reputation. Put practices in place that will keep your tenants satisfied so that in turn they won’t give you any more trouble than necessary. For example, ensure that you have reliable maintenance staff on hand that can respond to requests and emergency repairs on call. Similar to any other businesses, if you are not trustworthy and professional towards your tenants they won’t stick around.
Lastly, discover new ways to increase your income beyond raising the rent on your tenants. If you properly researched the property before you made your investment, the value should appreciate, and you should be able to increase rent in the future. However, in the meantime you can think about different ways to collect income on the property, some ideas may include:
- Installing a vending machine in a common area
- Renting out storage space
- Offering paid laundry services on site
- Renting out additional parking or storage space to tenants
- Leasing a billboard if you have the room for it on a larger building
There are so many different types of insurance policies in place to protect you and your assets. Fire, earthquake, flood and other disaster plans will keep your property safe in case of an emergency; homeowner’s insurance will reimburse you for any losses you experience or if you need to repair anything as a result of damage from a disaster. As a landlord you need to protect yourself from any potential liability by purchasing insurance. Depending on the laws and requirements of your state, you may also consider requiring your tenants to carry renter’s insurance as well.
Learn How to Manage a Property
Being a good, successful landlord goes beyond filling vacancies and collecting rent. In order to thrive it’s important to learn how to effectively manage your property.
- You need to have a basic understanding of landlord and tenant rights, including rules about security deposits, notice laws, inspections, licenses and other procedures to ensure that you are fully informed and running your property within state law.
- Determine how you want to collect rent from your tenants – will you be collecting in person or do you prefer to use an online system? Although many tenants will opt to pay with checks and cash, it can create a complex situation if a check bounces and accepting cash can also be dangerous. An online payment system is an easy, safe and efficient way to collect rent and ensure that you avoid risky situations.
- Stay organized by saving copies of all records and paperwork that affects your property. This includes receipts for anything you have purchased, invoices for service and repair work, vendor contracts, etc. You can digitally scan paperwork so you can organize it on your computer and easily search for it next time you need it. Many property management companies will handle lease agreements, payments, maintenance requests and more online so they always have a digital paper trail to refer to.
- Make sure to work with an experienced accountant that can help you keep your expenses organized, advise you on how to pay yourself and tell you what you need to file for taxes.
- Be professional by setting office hours that tell your tenants what days and times you are available. Even if you live onsite, it’s important to put this boundary in place so you’re not being approached by tenants 24/7. You should also have a plan in place in case of an emergency so your tenants can be taken care of as soon as possible.
- Decide if you are going to accept tenants with pets. Pet-friendly apartments are difficult to come by, so you can really stand out and quickly fill vacancies if you allow cats and dogs into your investment property. Although pets can be a liability, you can charge extra pet rent as well as a separate pet deposit to cover any damage that may be inflicted by the animals. Most tenants will gladly pay for the extra rent and deposit since there are so few options for pet-friendly properties.
Sell a Lifestyle Experience
In order to make your investment property profitable, you will need to fill any vacancies that pop up. Your best shot at quickly filling vacancies is to make the property and unit(s) comfortable and desirable so that potential tenants can envision their life in this new home. Basic upkeep of the grounds is necessary because similar to buying a home, first impressions on curb appeal make a big difference. Ensure that the property is clean, gardening is maintained, and the common areas are welcoming. When it comes to individual units in a multi-family property make sure that you refresh the paint when tenants move out, do a deep clean, that the unit smells good and that old appliances are repaired and/or replaced. If your goal is to charge top dollar for rent, then you may want to invest in updating the property with hardwood floors, stainless steel appliances and other desirable upgrades.
There’s no better teacher than experience, and as you continue to build your real estate portfolio and acquire more investment properties you will become an expert landlord. Renting out a property and working with tenants can be a challenging business, and the best way to enjoy a smooth experience as a landlord is to educate yourself in advance, be knowledgeable in all aspects of real estate and work with professionals who can support you when you need it. Last, but not least, it’s also important to acknowledge when it’s time to hand the work over to professionals – there are countless outstanding property management companies that can take over the work so you can focus your energy on your other priorities without having to worry about your investment property. Our team at Brazos County Realty would be thrilled to assist with all of your real estate needs – including helping you fill vacancies in your rental properties. Please contact us to learn more about our team, our experience and if you have any questions about investing in real estate and being a landlord in Bryan College Station – we look forward to hearing from you.