How to Manage Your First Investment Property
How to Manage Your First Residential Investment Property
The real estate market is lucrative and can provide a steady income, but only if you understand the industry and know what it entails.
Upkeep Media Inc., a professional property management marketing company, shares some tips on managing your first residential investment property:
Set a competitive rental price
Always conduct market research of the neighborhood to determine the price range. You do not want to set the rent of your investment property too high or too low as this will keep away many prospective tenants. If your location offers extra benefits like a pool, street, or a private parking lot, then you can charge a little more. Understand all these elements that make your property stand out before you determine the rent for your property.
2. Have a lease
Before you even send out the ad for rentals, you must have a lease that documents the tenant requirements, your responsibilities, rules for eviction, and time of payment. Make it comprehensive and make sure to have this document reviewed by a lawyer.
The real estate market has its perks, but tenants have a lot of rights, and if you miss any important clause or condition when renting out your property, it can create complications in the future.
Make sure that the lease is ironclad, clear, and states everything. This is not only beneficial for you, but also for your tenants. It is vital that before the prospective tenant signs the lease that you discuss the eviction process, payment timing, maintenance details, and house rules. Mention that there will be a security deposit collected before the tenant can move in.
Let the tenant review the document overnight so that both of you have a clear understanding of the contract. This lease must be signed and dated, and a copy must be given to the tenant.
3. Screen tenants thoroughly
Never rush through this process. Make sure you conduct a thorough background check and obtain bona fide references and/or call up the previous landlords for all applicants. The few extra days spent doing this can save you many problems in the future.
5. Type of tenants
Know the type of tenants you want to target. Some of the things you should consider if they are: employed, have pets, have a good credit score, past rental history, smokers or non-smokers, and able to give references.
One of the keys to easy management of a rental property is to find good tenants. You want to find tenants who pay their bills on time, won't tear your place apart, and not cause unnecessary problems.
You should have a proper applicant form and if possible, try to interview the tenant personally. If you don’t have the time to do this, and if you are really serious about running your rental investment property profitably, you could always have a property manager who could do this for you.
Once the lease is signed, take the tenant for a walk through the place and document as much as you can. Take pictures of any minor damage as this will help prevent any disagreement if there is any future damage.
6. Regular Maintenance
One of the most important things you should do with your investment property is to keep it properly maintained. This is important for two reasons.
First, under landlord-tenant law, you are legally responsible for maintaining the residential property as per the safety and health standards of your state. This includes keeping the common areas in relatively good condition and ensuring that the tenant has a place to put the garbage.
Second, if the property is not well maintained, you may find it difficult to find and retain good tenants.
7. Relationship with tenants
Landlords often regularly keep in touch with the tenants to ensure that there are no issues and to maintain a cordial relationship with them. But legally, you are required to give the tenant at least 24 hours notice before you show up. Never walk into the tenant's home without permission, unless there is an emergency. However, it is a good idea to check the place regularly, as long as you have a process where you inform the tenant beforehand.
8. Other Responsibilities
As a landlord, you need to make sure that all the repairs are done timely and that there are no hazards in the hallways of the staircase. The tenants must have a way to contact you in case of a problem to ensure that maintenance is done promptly. In order to ensure things, run smoothly and repairs are done on time, you should:
a] Keep a list of handymen or contractors
b) have an emergency fund set aside
c) Schedule regular maintenance for things like the air conditioner, heater, etc.
Managing a rental investment property requires time and effort. But if you are able to do it properly and/or if you have a team to do it for you, your investment property can generate a steady income for you. It’s all about how effectively and properly you run this business.