While an amenity-rich rental property in a popular area is likely to turn a good profit, purchasing the property is far from the end of your commitment. In order to maximize your success as a landlord, you’ll need to manage this property in a professional and effective manner. If this is your first time managing a rental property, you’re likely to learn a fair number of lessons through trial and error. However, by doing some research beforehand and teaching yourself the ropes, you can effectively minimize unpleasant surprises.
Learn From Someone Who Knows the Ropes
If you know anyone with experience in rental property ownership and/or management, now would be a good time to seek their advice. Virtually every property owner hits a few stumbling blocks when learning the ropes, and getting first-hand insight from someone who knows how to build a real estate portfolio is sure to serve you well. Whether you want to consult this individual over the phone, arrange an in-person meeting or bring them on as a consultant, you stand to greatly benefit from their body of knowledge.
Properly Screen Prospective Tenants
Failing to properly screen prospective tenants can result in a multitude of headaches down the line. After all, if the tenants you take on are unwilling or unable to pay their rent on schedule, your financial bottom line is going to be adversely impacted. With this in mind, every rental application you receive should be put through a rigorous screening process.
For starters, you’ll need to run a credit check on every applicant. While few applicants are likely to have flawless credit, applicants whose credit histories are extremely troubled aren’t always the safest bets. You should also confirm that each applicant has enough monthly income to comfortably afford their rent. As a general rule of thumb, many landlords look for applicants whose monthly salaries are thrice the cost of rent. Furthermore, you should require each applicant to include references – preferably former landlords and employers. For good measure, make a point of contacting every reference they provide. Some applicants bank on landlords being too preoccupied with other matters to get in touch with their references, so you should take care to avoid skipping this vital step.
Be Attentive to the Needs of Your Renters
Ignoring requests and concerns from tenants is a staple of a bad landlord. To set yourself apart from this type of landlord, make sure to respond to all tenant queries in a timely and professional manner. Since many of these queries will pertain directly to maintenance matters, it’s in your best interest to employ knowledgeable and dependable maintenance personnel. This will ensure that assorted repairs and renovations are taken care of in an expedient fashion instead of placed on the backburner for weeks or months.
Additionally, while you should be courteous and responsive, take care to avoid allowing tenants to walk all over you. Although it’s advised that you maintain friendly relationships with your renters, becoming their friend can make things awkward in the event that they’re late with rent or unable to pay it altogether.
Encourage Applicants to Purchase Renters Insurance
Since homeowners insurance can’t be applied to residences that aren’t occupied by their respective owners, you’ll need to purchase landlord insurance for your first rental property. A good landlord policy will help protect you from liability, provide reimbursement for lost rental income and cover you in the event of property damage. However, in order for your tenants to enjoy the full protections of a good policy, they’ll need to invest in renters insurance. Like landlord insurance, many renters policies provide liability protection and reimbursement for damaged or destroyed personal property. So, whenever you take on a new tenant, make sure to advise them to seek out a good renters policy.
Contrary to what many first-time investors believe, the responsibilities of owning a rental property don’t end once the paperwork has been completed. In order to keep renters happy and ensure that a property remains profitable, you’ll need to put actual work into managing your investment. While they money made from rental properties may technically be considered “passive income,” your approach to property management should be anything but passive. First-time landlords looking to manage rental properties like pros would do well to consider the tips discussed above.