There are a variety of reasons (and benefits) to becoming a landlord. Many people enter the business for the extra income that a rental home can provide, but without doing your homework and knowing the ins and outs of the endeavor, it can quickly become a source of financial and emotional distress. Here are 10 common aspects of property management to master.
- Understand your local rental market
Everyone knows that location is one of the most important factors in real estate purchasing, and renting is no exception. How well do you know the area? It’s important to have your rental in a desirable area to attract the most potential tenants.
You will also want to be familiar with the features and services in the area, including stores, transportation, schools and businesses. Imagine yourself in the shoes of a renter: What amenities would be most important to you? Keep this in mind as you are deciding the best location for your rental home. Next, research area real estate, especially other rentals to determine the appropriate rent for the property.
- Market your property competitively
Now that you have chosen your rental property, it’s time to put your best foot forward in advertising it. Start with high quality photos, and consider hiring a professional real estate photographer. Photos are the face of your property and the first thing to catch someone’s eye, so be sure the photos showcase your rental in the best light.
Next, you want an accurate and thorough description of the property and it’s features. Be sure to include the essential details of the home (number of bedrooms and bathrooms, square footage, etc.) along with any of the amenities that are strong selling points, such as a remodeled kitchen or a washer and dryer. Lastly, post your property on your area’s popular rental websites to get the most eyes.
- Screen all potential applicants
Choosing a qualified renter is important, so it’s essential to screen all potential renters thoroughly. Each interested renter should fill out a rental application. Be sure to verify all of the information the application contains. Verify prior addresses and contact previous landlords to make sure rent has been paid on time and that the renter was responsible. Perform a background check and a credit inquiry, and verify employment.
- Know your responsibilities as landlord
When you are a landlord, you must uphold the terms established with your tenant in your lease agreement. Check on the home occasionally, complete regular maintenance and respond to tenant requests as quickly as possible. Also check in with your tenants from time to time. Neglecting the home or your tenants will lead to turnover, a drop in rental income or potentially a lawsuit.
- Have solid knowledge of fair housing laws
Fair housing and discrimination laws are state and federal laws that insure equality and fairness in accessing housing for everyone. To avoid legal trouble, familiarize yourself with these laws and make sure to abide by them as you search for tenants. It is illegal to discriminate against anyone’s race, religion, national origin, gender, disability or family status. Even stating something in an ad like “good for families” or “single female only” is illegal. Think about the features of your property versus who the perfect tenants might be. Treat every applicant the same way.
- Complete leasing paperwork
A lease is a legal agreement between landlord and tenant. It is imperative that you address all policies and rules for renting your property, along with an outline of your responsibilities as landlord. Don’t forget to include conflict resolution procedures as you will want procedures in place should something come up. Most importantly, make sure everything is in writing. A written contract is the only form of a binding contract that will hold up in court, so don’t leave anything out. You will want to have a firm understanding of your state’s lease requirements and incorporate them into your rental contract. There are many generic leases online that may be used, but be sure to have it reviewed by a legal professional to be in compliance with local regulations.
- Don’t forget your rental is a business
You need to treat your property as an income source and a business. To protect yourself from legal action, it’s a good idea to set up a Limited Liability Company (LLC). An LLC is a business structure that limits your personal liability in the event of a lawsuit so your personal assets are protected. In other words, your rental property is the only asset at stake and not your personal finances. In addition, keep your personal and rental expenses separate. It’s a good idea to open a separate bank account for your rental property and keep close track of your income and expenses to evaluate your investment. Also photograph your rental inside and out, and document any communication you have with your tenants so you have a written record.
- Plan ahead for future costs
You’ve found the ideal tenant, but there’s still a chance your property will be vacant at some point. If your rental sits unoccupied, can you pay the mortgage, utilities and routine maintenance costs? There will always be unexpected expenses in a home, and you don’t want to be left with an unforeseen surprise that you can’t afford to pay for. Look at the cash flow in your property and make sure you can cover these costs at a moment’s notice.
- Balance your business and personal time
It can be a full-time job managing one investment property, and if you don’t effectively manage your time it can become overwhelming. Problems will come up, usually at the most inconvenient time. Issues run the gambit between emergency maintenance issues or resolving conflicts among tenants to tenants not paying rent and going through the eviction process. Being a landlord is a big time commitment, so make sure you are prepared going on. It can also be stressful. Don’t neglect yourself – set aside time for you and your family.
- Don’t be afraid to hire a professional
Juggling rental property along with all of life’s other responsibilities is hard, but if you are up for the challenge, go for it! However, you can still own rental property and make all the major decisions while having a professional property manager, like Destination Maui Realty, act as your rental agent. That way you will not have to disrupt your life to quickly respond to requests and handle maintenance and repairs yourself. We have been in the property management business on Maui for over 40 years, and handle everything from marketing and screening tenants to interacting with tenants and helping to avoid legal issues. We offer online applications, online rent pay, and online owner account access. Key to our success is maximizing your return on investment. We also have a host of contractors and handymen we work with to do everything from preventive maintenance to major repairs.
Please contact our friendly licensed agents at firstname.lastname@example.org if you would like to explore having the assistance of a professional property manager.