The ultimate goal of investing in rental property is to turn a profit and self-managing it is more profitable. For most beginners, rental property investing is a fairly simple equation: profit = rental income – (mortgage + expenses). Many investors think that self-managing a rental property is just a matter of finding a nice tenant who pays on time.
To make sure that you achieve that goal it is essential that you follow several critical guidelines.
First, always make sure that you check references. This can be a burdensome step that many landlords overlook if they feel as though they have a good instinct about the tenant when they meet with them. Not checking references; however, can lead to a number of problems. You can uncover a wealth of information about potential problems before you rent to a prospective tenant.
Always make sure that you have everything in writing. This is to protect not only your rights but also the rights of your tenants as well. Everything from the code of conduct you expect tenants to abide by while renting your property to the rental application itself should be in writing.
You will find that you have better success with your rental property if you take the time to ensure that it is both secure and clean. The grounds of the property should be free of clear and trimmed regularly. Not only will the property be more visually appealing but these actions will also assist you with property liability. You will also want to take additional security measures. Extra security may be able to lower your insurance premiums as well as provide an incentive to quality tenants to rent your property when they know it is secure.
If you make the decision to hire a property manager, take the time to interview prospective candidates very carefully. Property managers can be quite helpful if you do not have the time to tend to all of the details yourself. The wrong property manager; however, can cause you tremendous problems. This means that you will need to hire a thoroughly responsible and professional individual to handle the job.
Always make sure that you obtain adequate insurance. Not only should you have property insurance but you should also have liability insurance. One incident is all it takes to wipe out your investment. Check with your state to determine if any additional insurance coverage is required.
Regardless of the condition the property was in when you purchased it, there will come a time when repairs are needed. This is part and parcel of owning rental property. If you take too long to make repairs, not only will your property suffer and repairs will ultimately cost more to take care of but you will also likely lose quality tenants as well. By making sure that you handle repairs promptly you will be able to maintain the life of your property as well as retain good tenants.
Always make sure that you follow all applicable regulations in the renting of your investment property. The Fair Housing Administration Act provides precise regulations in order to prevent discrimination. If you violate those regulations you could find yourself facing a lawsuit that is costly in terms of time as well as money. The best course of action is to take the time to do your homework and consult an attorney experienced in real estate matters for guidance regarding the FHA as well as ensuring that you have the proper forms.
Finally, make sure that you do not violate the privacy of your tenants. Check with your state’s regulations to find out whether you must provide any type of notice to your tenant before you enter the dwelling.
Following these guidelines will help you to retain quality tenants and avoid any potential legal problems.
Property management tasks include:
Advertising your property
Determining rental rates
Preparing the lease
Doing preventative maintenance
Making repairs as needed
Moderating issues between tenants
Checking in with tenants at least once a quarter
Enforcing the lease
Evicting a tenant when necessary
Finding new tenants when vacancies occur
Self-management might save you money BUT is it a good use of your time?
Ask yourself if you have:
•Commitment to customer service?
•Sense of balance?
•Confidence to lease successfully?
Also, consider the following:
•Are you aware of your rights and responsibilities as a landlord?
• Are you aware of the latest legislation, rights and responsibilities of tenants?
•Basic knowledge of Maintenance and repairs?
•Stay cool under fire?
•Sweat the small stuff?
If you answered “no” to any of these questions
Then you should strongly consider hiring a professional property manager, regardless of your proximity to your investment property.