Managing rental properties requires a strong commitment to tenant satisfaction and the protection of your investment. Doorstead has put together a comprehensive guide to help you avoid common mistakes that can make the difference between a profitable landlord and a slumlord.
The first step in managing rental properties is identifying quality tenants. This involves thorough tenant screening services, accessing rental history, and checking references.
Rent Collection
Collecting rent is one of the most important parts of managing rental properties. It’s essential to establish how you will accept payments from tenants, set a due date, and decide what happens when rent is late.
It’s easy for tenants to forget their rent payment, so setting up reminders is a must. Landlords can also use rent collection apps that were designed with landlords in mind.
Property management companies take on a variety of tasks, including marketing and locating rental properties, screening prospective tenants, drafting lease agreements, collecting rent, and more. However, hiring a company can be expensive. Rent collections can be done by landlords themselves, though it can be time consuming.
Tenant Screening
Tenant screening helps landlords find the right tenants for their properties. It includes a variety of checks, such as credit reports, background checks and employment verifications. It also includes interviews with references and previous landlords to help understand a tenant’s character and reliability.
Proper tenant screening can reduce the risk of legal complications, such as property damage or unpaid rents. It can also help landlords avoid tenants with a criminal record that could endanger the community or other tenants. Landlords should ensure that their screening process complies with the Fair Housing Act, which prohibits discrimination on the basis of race, national origin, religion, sex, familial status and disability. It’s also a good idea to meet potential tenants in person before renting to them. This allows the landlord to verify that they are who they say they are and that they look normal.
Property Inspections
Property inspections allow landlords to monitor the physical condition of their rental property. A pre-move-in inspection (or walk-through) should be conducted to identify any existing issues and document the condition of the property before a tenant moves in. A move-out inspection should be completed after the tenant vacates the property, and a comparison between the two inspections will help you identify any damage caused by the tenant.
Background checks, including credit, income verification, eviction history, criminal, and national sex offender records, are also important to ensure you are selecting quality tenants. Additionally, a prompt response to maintenance requests and repairs is critical to maintain tenant satisfaction. Having a network of reliable contractors and implementing preventative maintenance can reduce maintenance costs and extend the life of your rental property.
Documentation
Managing rental property requires an extensive amount of paperwork and documentation. Whether you hire a property manager or manage your investment properties yourself, it is important to keep accurate records of all income and expenses. This includes tracking payments, separating personal and business accounts, choosing cash or accrual accounting methods, and keeping track of fluctuating expenditures.
Having the right documents in place can add a layer of professionalism and accountability to your landlord-tenant relationship. They may also be useful in resolving disputes between you and your tenants or the IRS. While it may seem like an exhaustive list, some of the most important documents include rental application records, background and credit checks, reference letters, move-in and move-out inspections, and lease renewal forms. This ensures you can comply with state laws and be prepared for any tenant-related disputes.
Maintenance
Property maintenance is a critical component of managing rental properties. It’s linked to tenant satisfaction and retention, and it preserves the investment value of a property.
It’s normal for tenants to request repairs, and a good property manager will respond quickly to their requests. They will also establish a network of reliable contractors and implement preventative maintenance to avoid costly problems down the road.
Managing rental properties is a demanding job that requires time and resources. But it can be an excellent source of income if you do it right. Be sure to manage the aspects of the business that you’re comfortable with and outsource the rest. This will help you stay on top of your game and maximize your profitability. Good luck!
