When it comes to “passive income”, it is not unusual to hear of rental property as one great investment to try on. And while most people successfully venture with this type of business, noting it as the easiest way to keep the money rolling in, a lot still are confused on how to make a rental property investment run smoothly – especially with all many tasks involved or work to manage etc.
MANAGING YOUR OWN PROPERTY
Let’s face it, sometimes being a property manager is a tough job esp. if you’re residing in Orange County, catering to the needs of both tenant and landlord. Whether you’re managing a rental property yourself or if you’ve hired a property manager to handle things on your behalf, you’ll always want to choose a strategy that will journey your rental business to success – and that’s what we’re here to tackle.
Today’s guide, we will walk you through on how to set the right rent prices, find tenants worth your time, keep up with maintenance and even what to do when you face an eviction situation. We also outline the upsides and downsides of managing your own property as well as insider tips on how to make it work.
First let’s identify the key responsibilities of managing your own property….
If you’re someone who’s ready to take steps on rental property management yourself, there are few areas that you’ll need to know; contracts, maintenance, & late fees can be a bit overwhelming as a new property manager but don’t let these tasks scare you away.
It is essential to understand the these three basics:
- Managing the Tenants
- Managing the Property
- Managing the Accounts/Finances
One of the most essential roles in rental property investment is the tenant. You need to prioritize the rigorous process of tenant screening for this is your pathway in the successful rental business. Don’t just stop the research if there’s a prospect or query, checking renter credit with a reliable tenant screening service, checking references, creating a lease and collecting rent should always be processed professionally and remain untangled.
THE ESSENTIAL GUIDE
When it comes to managing tenants, you’ll need to have the utmost patience and skills in handling complaints or problems. Be proactive in attending to whatever concerns a tenant has cited, plus learn also what are the common complaints that may arise when it comes to rental property management. It’s also essential to follow-up the tenants after addressing the issue and taking care of it, be it pest invasion, maintenance and repairs or neighbourhood concerns; it just shows how you care for their comfort as your tenant.
If the complaint goes understated or uncontrolled, always be respectful and responsive in a manner of making them understand the situation, and talk things out. Nothing can go wrong with a two-way conversation process.
Aside from complaints, these are the things you’ll come across with while managing your tenants:
- Tenant Eviction
To maintain the streaming profit in your rental property investment, as a landlord, you’ll have to be mindful and avoid costly evictions as possible. If you need to start the eviction process – for such reasons as threats to the safety of your other tenants or your property – you have to follow the state’s rules. To prevent an eviction in the first place, tenant screening should always be a priority. Select high-quality renters through the applicant’s background or checking eviction history check.
- Tenant Non-payment of Rents
Landlord’s major dilemma. As a landlord, always send gentle reminders and notice of rent dues or late fees to avoid late payments before they start. Make the method of payments be more convenient, offer online rent payments or register to accept rent collection on payment apps, so it’ll be less hassle for tenants. Be sure to enforce a late fee for all late rental payments. If your tenant is regularly late with their rental payments, be sure that they are aware of the possibility of eviction should they continue to pay you late.
- Tenant Turnovers
You may see this situation less in your angle but this can definitely swarm your property investment earnings. If turnovers happen frequently or vacancy periods are often extended, it can charge you more to maintain your area and have it inspected for incoming tenants over and over again. Always make your tenants happy; such as, responding to maintenance repairs, upgrading features, etc. all to attract long-term renters. You can raise rent for long-term tenants too.
There are federal Fair Housing Act as well as state and local regulations you need to abide by as a landlord when you deal with tenants. Learning articles like security deposits returns, tenant selections and giving all processes that’s under landlord tenant law will help you ease the common hassles associated with property management responsibilities.
Managing the Property
- Property Maintenance and Repairs
It is always essential to keep your property safe and habitable, and it’s a huge challenge if there are situations that involve the need for maintenance or repairs. What a tenant would specifically require is a peaceful abode, and it’s important to regularly maintain the property that way, whether it’s a single-family home or multi-family homes you’re having. Performing upkeeps like replacing the supply hoses and drain lines on a dishwasher and washing machine every few years, or changing out water valves and sink faucets, can help reduce the risk of water-related damage down the line and prevent big repairs for you as landlord.
- Property Renovation/ Remodeling
Renovation or upgrades can help your property rental more profitable. Key areas such as the bathroom, kitchen, or bedroom where the most neat and clean are required can be renovated or remodelled. It is cost-effective to not renovate all areas one at a time, just focus on what you think is more favorable for your tenants.
- Property Inspections
Document the condition of the property, three to six months during the tenant’s stay or residency. This keeps you more controlled on your space and address in early manner whatever concerns that you or your tenant is responsible with. The earlier you fix the problem, the better. As a landlord, you are the tenant’s contact point. If they need help with the property or have an issue, you should be available to help them resolve the matter speedily and thoroughly.
Managing Your Finances/ Expenses
- Set Prices & Expectations
If you feel that your rental property is ready to be rented out, you need to set up your rental prices and expectations. Know the average rental price in the area and the number of rental properties available and figure out the average income in the area, average rental price, average family size, location strengths, etc. With these criteria, you’ll be able to appropriately price your rental property.
- Advertising and Marketing
You may need to shell out an additional sum of money for advertising your property. Exposure in area-specific publications such as a community magazine can help you have your property occupied fast and will be worth it.
You may not be familiar with a property’s amount of taxes and other accounting information that you will be handling. And it might become complicated if you chose to do it on your own. To make sure our business accounting easier, follow these:
- Hire an accountant to work on your taxes. It helps you ensure you have your clean records and maximize deductions.
- Record off all money spent on upkeeps e.g. maintenance or turnovers.
- Separate your personal bank accounts and your business bank accounts – do not get mixed up with expenses/ finances.
- Prepare for the rainy days, set aside money to cover taxes and other fees. You won’t know what will surprise you.
HIRING A PROPERTY MANAGER
While some are managing their own property, others have chosen to hire Property Managers to help them manage their properties. If you own an investment property, yet not have the time to oversee it on daily operations, you may choose to hire a property manager too.
When you hire a property manager, you may need to give up some control over the daily operations of your rental. And most of the time, your property rental hassle will definitely be off your plate since managing the property through a property management firm does not require yourself available 24hours a day – even for emergencies. They take a large portion of the management responsibilities and often have industry connections which will aid your property’s vacancy rate be lowest as possible.
They also do the writing and reviewing the rental contracts with their legal team and advise you as a land or property owner the necessities on house rental laws. They keep you posted and ensure you don’t miss any crucial details for your first few contracts. A property manager, on the other hand, doesn’t have the same pride of ownership as a landlord. Landlords and Property Managers may not handle matters in the same way, so always remember to be on the same page when it comes to whatever is related to your property. You can also do a final walk-through either with the tenant or with a third-party objective observer for property visits or inspections.
How much does Property Managers charge?
Rates vary by market, but most management companies charge 10% of the monthly rent to manage a single-family home.
On Average, fees often range from 6 to 12 percent of whatever rent is being charged, not including any additional costs. Property managers charge according to how much you are giving them to handle.
- For a single home or condo, or only a few units from a building, they will probably charge closer to 12 percent.
- For a building with many units, it will be closer to 6 percent.
Single-family Homes VS. Multi-family Homes
Single-family homes are easier to manage since renters more likely treat your space as their home. They often stay long-term and fix small repairs themselves. It may also cost you less than the multi-family rental since it does not depend on the number of units.
Multi-family homes on the other hand have their advantages also. You can have the landscaping, maintenance benefits since it is included in the HOA membership you’re paying.
Rental properties are a great investment, but they take work to manage, especially if you do not use a property manager. If you are thinking of managing your own rental, yes you can still do it. Managing rentals is not extremely difficult but it takes time, you have to pay attention to details, and be firm with tenants to successfully manage rental properties yourself. But if you’re looking for a seamless and headache-free management, best to get yourself a property management team to solve the day to day management for you. If you want to learn more helpful tips on property management, check out these experienced rental professionals for more covered topics like landlord-tenant law, full-service property management, tenant rental criminal background checks, and more!