If you’re wondering how to manage rental properties, we could give you our best advice up-front: hire a property management company. That was a short read, wasn’t it? But whether or not that’s your ultimate decision, you should know what’s involved when you sign up to be a landlord. The phrase “passive income” is irresistible for anyone looking for financial independence, but there’s not really anything passive about owning property.
And if this is your first, you’re probably planning to expand your real estate portfolio, too. If your goal is to manage multiple rentals, you’ll need a system sooner rather than later. You’ll need to get up to speed quickly, because tenants will not only expect you to be professional, but an expert. Here’s a quick overview.
Determine the Rent
Before you made the down payment, you did your due diligence in selecting your rental property. You know everything there is to know about the location, comparable properties, unique amenities, expenses, and more; now it’s time to come up with a number. With more than one property, the variables can start to make your eyes cross, so make sure you can keep up with the changes and keep them straight. You’ll need to reassess the rent regularly so you can attract the best tenants while optimizing your profit.
Cover the Legalities
Familiarize yourself with the Fair Housing Act before doing anything else. Even if you have the best of intentions, you could make a mistake during the tenant screening process that could open you up to a lawsuit. It could be the wrong wording in your rental listing, or an offhand comment that could be misinterpreted. If it can be, it probably will be, so keep the guidelines in the back of your mind at all times. Your state and local laws could have more stipulations and details to know and follow. Consult a lawyer from the first so you’re on top of everything, and check back occasionally for changes in the law. For your protection, document everything with an effective method, whether that be a filing system, cloud-based storage, management software, or smart technology.
Customize a Lease
You’ll need to have an ironclad lease ready for signing that covers any eventuality. Don’t just use a template; take stock of what your standards are, your policies, your consequences for any violations, and your deadlines and grace periods. When your tenants sign, you should be able to point to the lease to answer almost any of their questions.
Make the Property Pretty
If your property needs a makeover, you are the visionary stylist. There’s a lot of psychology involved in knowing what tenants are looking for, so learn about balancing neutral interiors with a warm feel and an inviting personality. Above all, tenants want “move-in ready” appeal, so everything needs to be squeaky clean, as new and new-looking as possible, and in perfect working order. After you’re pleased with your creation, you’ll need to become an accomplished photographer who can play up all the property’s outstanding features and make it an attention-getter in the listings, while not going so overboard that interested parties will be disappointed when they see it.
Market Your Rental
The perfect tenants are out there, but where? You’ll need to determine the most effective way to find them. What’s the best way to describe the unit in your listing? What sets it apart? For the candidate pool in your target area, what’s the venue for advertising? How can you capitalize on relevant social media? What incentives do you want to offer? What will pay off in the shortest amount of time?
Find the Right Tenants
First, you need to make a list of all the qualities your dream tenant will have. Then you’ll have to determine what you’re flexible on, and which are deal-breakers. Then you’ll have to take on the personality of a parent interviewing your child’s potential suitor. Background checks and follow-up calls with referrals can be illuminating, but so are many of the little things you don’t know to look for in the beginning. Watch them closely—and listen closely during phone interviews—and in the end, you’ll have to trust your gut.
Build a Relationship
Once you find your tenants and establish the ground rules, you’ll need to work on the relationship like any other. Or harder, even though you may be able to break up with someone you’re dating, you have a signed contract with this one. Hone those communications skills, because it’s not easy to stay detached and professional while proving that you’re invested in their well-being. You’re not selling a product. You’re selling a home, and it’s your job to ensure that they continue to feel comfortable there. Above all, be direct and transparent—and firm when you need to be.
Repair and Maintain
Even when everything is functioning well, it’s a lot to keep up with maintenance. You need to take inventory of all the systems, appliances, and features in the home, when they were installed, how often they should be inspected and maintained, and make sure you have the funds to replace them when necessary. Your schedule needs to have a foolproof reminder system for yourself, and scheduling appointments around your time and your tenants’ is no easy feat. It’s also absolutely key to assemble a team of local vendors you know you can trust to be on time, do good work, and charge reasonable prices—even discounts.
Back To That Short Answer
The only way to learn how to manage rental properties is by experience. Even if you don’t mind a trial-and-error approach to being a landlord, your tenants will not enjoy being your guinea pigs. All the words above this—the duties, the details, the specialized knowledge, the headaches—a property management company can take it off your hands or guide you through the process. As you dive deeper into your responsibilities, you’ll find that sounds increasingly appealing.
If you don’t live close to the property, or like to travel, you might want to hire a manager. Own multiple investments? Have a full-time job? Have other demands on your time? Just don’t want to do it? Hire a manager. R. Russell Properties has been in Orlando property management with thousands of clients for decades, and we have a supportive system for all these endless things to remember and do. When landlords need a best friend and trusted partner, we’re there. Contact us to learn more about how to handle your rentals.