Fortunately, there are ways to eliminate the many problems that come with owning an investment property. Despite the nightmare-ish scenarios that you might have read about online, you can still manage your property effectively and profitably.
We asked our property managers for their expert tips on handling property issues so that you can continue making good rental income:
#1 Understand What Tenants Want
Have you ever wondered why your tenant doesn’t want to renew his/her lease? Answering this question will provide you with a great deal of information. When a tenant moves out, consider asking for their honest feedback through a survey or casual chat. Most of the time, tenants leave because of incomplete amenities, broken appliances, unreasonable rent prices, and so on. If you take the time to understand what your tenant wants, you may even be able to convince him/her to stay.
#2 Leverage the Internet to Collect Rent
Collecting rent is one of the most tedious tasks of rental property management. Using the Internet can make this process much easier. There are plenty of pre-made programs that you can use to automate rental payments. You also have the option to hire a developer to create a digital payment system that accepts credit, debit, and bank transfers. Using the software is useful for both you and your renters, as it provides both parties a way to conveniently review their transactions at any time.
#3 Maintain an Emergency Fund
Whatever you do, do not rely solely on your rental income. Owning a rental property means constantly having to pay for maintenance and repairs. There are certain expenses that you can budget for, such as routine maintenance, but unexpected events such as natural disasters, burst pipes, etc. may drain your finances in an instant. It’s important to remember that not all perils will be covered by your insurance policy. That’s why it is ideal to set aside an emergency fund so that setbacks won’t devastate your cash flow.
#4 Always Screen Your Tenants
We’ve said it time and time again — tenants will either make or break your investment. Good tenants mean fewer problems. The only way you’re going to get good tenants is by meticulously screening each applicant. This lets you “weed out” high-risk tenants who may lead you to financial peril. Make sure to conduct background checks, verify their employment, call their previous landlord, and so on.
#5 Remember the Fair Housing Act
Landlording requires complying with federal, state, and local regulations, especially the Fair Housing Act. To avoid paying fines, getting in trouble, and potentially landing in jail, it is important to know the Fair Housing Act (and other housing laws) by heart. Generally, you should not discriminate against anyone based on their race, religion, color, sex, nationality, familial status, disability, and so on. Be very careful with the words and images that you use in your advertisements as these may be perceived as discriminatory — even if it was never your intention.
#6 Think Twice About Increasing Rent
Many landlords are tempted to increase their rent because it means making more money. However, it’s important to strike the balance between maximizing your investment and keeping your tenants happy. A sudden rent increase may cause you to lose your tenants. On the other hand, rent that is too low may hinder you from realizing your investment goals. When you’re planning on increasing the rent, study the local real estate market to determine if an increase is feasible.
Here are some questions that can help determine if you should increase the rent:
- Are there similar properties in the neighborhood that are being leased at a lower price?
- Can the current tenant afford a rent increase?
- If the current tenant leaves because of the rent increase, how soon will you be able to find a replacement tenant?
- How much will it cost to market the property?
- Will the rent increase make up for the turnover costs?
If you’re unsure if you should increase the rent, try consulting a property management company or real estate agent.
#7 Document Everything
Avoid legal trouble at all costs. Lawsuits can drain your finances, which means you might have to say goodbye to landlording. The best way to avoid lawsuits is by documenting everything. That includes emails, text messages, and other written correspondence. Avoid making verbal agreements because proving this will be extremely difficult if not impossible. By documenting everything, you will be able to defend yourself should disputes arise.
#8 Listen to Your Instincts
Does a tenant seem too good to be true? When it comes to dealing with tenants, it pays to trust your gut. A tenant may seem perfect — always paying rent on time, never filing complaints, etc. — but if you aren’t 100% confident that the tenant is who he/she says he/she is, it may be best to trust your gut. There have been instances wherein landlords unknowingly leased their property to tenants who were conducting illegal activities.
#9 Outsource Repairs and Maintenance
You don’t need to hire full-time employees to handle repair and maintenance work. Instead, you can outsource those tasks to local service providers. Outsourcing lets you save a lot of money, compared to spending thousands of dollars on one minimum-wage employee who might not even have the expertise required to complete the job.
#10 Hire a Property Manager
Why go through all of that trouble when you can pass your responsibilities to a reputable property management company? A company like Luxury Property Care has property managers who have significant experience in handling maintenance, repairs, complaints, tenants, accounting, and much more.
Hiring a property management firm eliminates the challenges that come with being a landlord. The best part? Property management fees are often deductible from your taxes.
Rental properties are a great source of income. It may be challenging, but it can be rewarding if you keep the tips above in mind.
If you’re interested in going for Tip #10, get in touch with Luxury Property Care today. We’d be happy to talk to you about our property management plans and create a custom package that suits your specific needs. Call us at (561) 944 – 2992 or fill out our contact form.