Newbie investors embrace property management as a lucrative opportunity to earn a passive income without putting in much effort. That’s an unrealistic expectation, because landlords have numerous responsibilities, making it a full-time job more or less.
It’s crucial to embrace property management as a business that needs diligent attention and efficient management strategies. This mindset will help you increase your rental income, and minimize the hassles of maintenance and tenant-related complications.
Keep reading to explore valuable insight that will help new landlords learn the ropes and make property management easier and streamlined.
Treat your Property like a Business
Even if you’re renting out a room or a treehouse on Airbnb, it’s crucial to treat your property like a business enterprise. This will help you manage your property and rental income like a professional. We advise managing rental properties and communicating with tenants like a professional property manager, as opposed to encouraging informal communication. Keep your communication professional, preferring written records and emails to maintain transparency.
You want to establish an aura of seriousness so your tenant realizes that they’re dealing with a disciplined professional. This professionalism will discourage them from asking for rent relaxations, waivers and delays. Be sure to closely follow and enforce all clauses and terms enshrined in the lease.
Here are some tips that will help you channel professionalism:
- Always collect late payments to discourage tenants from delaying the rent.
- Perform regular inspections to ensure tenants are mindful of property maintenance and cleanliness.
- Make sure requests for repairs and maintenance are resolved promptly.
- Don’t hesitate to initiate the eviction process if rent is unpaid.
Establish a Thorough Tenant Screening Process
Choosing a credible, decent and mindful tenant is the biggest challenge new landlords struggling with, as problematic tenants make this journey incredibly challenging. You can escape these challenges by starting your journey with a thorough and strict tenant screening process.
The screening process allows landlords to learn more about potential tenants with background checks, credit history and other information. Suppose you own a centrally-located property with a competitive market rate and top-notch condition. In that case, you will attract scores of applicants expressing their interest in your rental.
A thorough and detailed screening process will weed out all problematic tenants that have issues with paying rent on time, or have a history of criminal conduct. Then, you must set some ground rules, based on the eviction history, income range, and whether you are willing to allow your tenants to keep pets on the premises. These ground rules will define your screening process, and help you find the right tenant who addresses your requirements.
The screening process must focus on the following:
- Rental history
- Credit history
- Financial health and income stability
- Background check
Educate yourself on the Federal & Local Laws
The landlord-tenant relationship is subjected to various legislation's, and both parties must adhere to these laws to avoid legal trouble. Are you aware of the federal and local laws you must adhere to as a landlord? Unfortunately, most newbie investors begin with journey with minimal knowledge about the rules and regulations of renting a property.
We advise all landlords to understand the federal and state-mandated guidelines to ensure full compliance with the law. Educating yourself on the tenant-landlord laws is crucial, especially if your state gravitates towards tenant-friendly laws.
A Well-Written & Comprehensive Lease
The lease agreement is a powerful document that gives authority, leverage and power to landlords. It’s a legally binding agreement that defines the rights and responsibilities of the landlord and tenants. It lays down specific guidelines for everything the landlord and tenant must do to adhere with the legal requirements, alongside describing the process of eviction, lease violations, and problematic behaviors.
Most new landlords rush through the lease agreement in hopes of securing a tenant and starting a passive rental income. That’s a terrible mistake that sets the stage for scores of challenges and problems. You must address all your requirements with great attention to detail to avoid challenges.
The lease must include all the terms and conditions in light of legal clauses, and it’s wise to work closely with an attorney who specializes in real estate laws.
The lease must address the following terms:
- Who is responsible for property and law maintenance?
- What are the parking guidelines and policies?
- Is the tenant allowed to make alterations or improvements to the property?
- Would you require the tenant to restore the property to its original condition after moving out?
- What are the consequences of unhygienic habits that lead to pest infestations and property damages?
- The consequences of subletting or using the property as a business outlet.
- Pet-related clauses and damages.
Explore Strategies to Increase your Rental Income
Landlords who think like business owners use their entrepreneurial acumen to increase their rental income and minimize their expenses. You can collect extra rent aside from the property rent by constructing a storage shed, offering community amenities, charging for parking space, or even demanding a monthly fee for pet allowances.
It’s crucial to think like an entrepreneur and add value to your tenant’s life quality to encourage them to pay an extra amount that would supplement your rental income.
Do not Neglect Repairs & Maintenance
If you want your tenants to be vigilant about timely rent payments and property maintenance, you must inspire them with your work ethic and discipline. Delaying maintenance and repairs, neglecting to address their requests, and showing inflexibility will encourage them to maintain the same attitude.
Instead, if you are responsive and responsible about addressing their complaints promptly, you will encourage them to exhibit the same level of professionalism. Besides, neglecting repairs and maintenance will increase your expense and property damages in the long-run.
We advise newbie landlords to build a strong understanding of the local market and real estate dynamics to use knowledge to their advantage. Market research will help you increase your rental income by making periodical increments in the rental rate based on market dynamics.