Congratulations on buying your first investment property! You are now on your way to becoming a landlord and earning passive income every month.
That said, owning a property is only half the equation. The other half depends on a myriad of other things. Among these things is how you choose to manage the property.
And truth be told, property management is a complicated business. Between filling vacancies, lease signings, and conducting repairs and maintenance tasks, property management can be stressful and overwhelming.
Nonetheless, don’t let this list of responsibilities scare you away. Self-managing your rental property can be very rewarding. You only need to avoid some common pitfalls.
So, in this article, we’ll share with you 6 tips on how to manage your first investment property.
Tip #1: Keep up with maintenance.
Ensuring your property is always in tiptop condition is key to running a successful rental business. Regular property maintenance is important for two reasons.
One, the law requires it. Under the landlord-tenant law, it’s the duty of the landlord to provide a property that meets certain safety, health, and building codes. Among other things, it means making sure tenants have garbage receptacles and ensuring common areas are in good state.
Two, ensuring your property is well-maintained can help you minimize rental vacancies. Quality tenants are always looking for quality living conditions. After all, who wants to live in a rental that has constant plumbing issues or rat infestations?
Thus, if you are unable to provide a habitable premise, then you may have a hard time finding good tenants. The poor living conditions may even force some already existing tenants to vacate.
Tip #2: Keep tenant turnover low.
Tenant turnover is one of the biggest killers of profitability for a landlord. Every time your rental sits vacant puts a serious dent in your bottom line.
The only way to minimize tenant turnover is to try and keep tenants happy. In other words, you need to build a good relationship with your tenants. For example, doing some simple things as responding to maintenance issues can make all the difference.
You could also try to improve your screening process so that only the best tenants rent your property. Why? One main reason why tenants move is because of issues with neighbors.
Tip #3: Follow the landlord-tenant law.
Adhering to the landlord-tenant law can help you in a variety of ways. For one, it’ll help provide a structure for you to follow. Second, it’ll help prevent potential legal disputes with your tenants.
Examples of such problems include:
- Security deposit issues. Following the security deposit laws will help you understand how much you can charge as deposit and how you must return it.
- Tenant evictions. The process of evicting a tenant requires strict adherence to the law. Making one mistake could prove costly.
- Tenant discrimination claims. Without understanding the Federal Fair Housing law, it can be easy to discriminate against tenants.
These are just some of the laws that every landlord should be familiar with. In addition, you should check with your local town to see if there are any additional laws besides the statewide landlord-tenant law.
Tip #4: Set the right rent.
You need to know how to set the right amount of rent if you want to be a successful manager. The right rent attracts the right tenant.
It’s neither too high nor too low.
Because, when the rent is high, it can make it harder for you to fill your vacant units. Remember, tenants do their due diligence prior to deciding which property to rent. And, when it’s too low, it can mean you are leaving money on the table.
Tip #5: Pay your taxes.
Uncle Sam needs money to run the government and provide essential services. So, as a law-abiding citizen, you need to properly manage your tax obligations.
Generally speaking, as a rental property owner, paying taxes can be confusing. This is because a rental property is both a property and a business. If you are just starting, it might be in your best interest to just hire a CPA.
Tip #6: Hire a property manager.
Managing a property isn’t an easy walk in the park. It can be stressful and overwhelming. If you lack the experience, skills, and industry knowledge, then it might be in your best interest to just hire a professional.
Best of all, you can hire a property manager to do as much or as little as you want. Others offer comprehensive services while others only offer select services.
These are the 6 steps to make your investment a success. Remember, the way you manage your property can mean the difference between a struggling business and a money-making machine. So if you lack the skills and experience, hire a professional.