How you manage your properties is going to either make or break your chances for success. If managed properly, a rental property can help you on the path to a successful financial future. However, if incorrectly managed, it will fall into shambles.
Here are five tips to make your investment a success.
1. Pay your taxes.
To have a successful investment property, you need to meet your tax obligations.
Because it is a property, there are many deductions involving depreciation that you are allowed to take. And, since it’s a business, you can often deduct home office expenses as well.
If you aren’t skilled in investment property tax law, it’s in your best interest to hire an accountant. The accountant will help you adhere to IRS requirements with regards to property deductions and other legalities.
2. Consider hiring a property manager.
A landlord’s job is a tough one, no doubt. It can be overwhelming and time-consuming. To solve this problem, think about hiring a property manager.
A competent property manager will handle all property details for you. They will thoroughly vet all rental applicants and place the best ones on your property. They will ensure your property is in its best condition at all times.
And above all, they will be your no-nonsense rent collector and will take immediate action when rent is late.
A property manager can do as much or as little as you want. They can handle everything if you want. Or, they can handle specific tasks only.
Hiring a property manager is an important decision. As such, you want to weigh the financial benefits and challenges of doing so. Bear in mind that choosing the right manager is also important. So screen them, just as you would potential renters.
3. Follow the law.
Every US state has a law that guides the relationship between landlords and tenants. Understanding it is key to your success as a landlord.
For instance, by following your state-specific law, you are able to understand all matters regarding a tenant’s security deposits. It will guide you on how much to collect, how to store it, and when to return it among other things.
The law will also guide you on how to handle lease violations.
Aside from understanding the statewide landlord-tenant law, you also need to be familiar with local laws as well.
4. Keep the tenant turnover low.
A low tenant turnover is another contributor to property success. A high tenant turnover means a greater expense for the property owner. The expense is generally in the form of advertising, redecorating, and uncollected rents.
A low tenant turnover, on the contrary, means you won’t have to constantly spend money to attract new tenants. This is because your tenants will be renting for longer periods. For tenants to rent longer, it means that they are satisfied with their quality of living.
There are simple things you can do to maintain a low tenant turnover. You can begin by finding and placing high-quality tenants in your properties. This means having a thorough tenant screening process in place.
Secondly, you can ensure you respond to maintenance and repair requests promptly. Tenants hate landlords who don’t respond to or who blow off complaints.
Thirdly, you can ask for referrals from your existing tenants. If you already have a few great tenants, you can ask them to refer their friends.
5. Keep up with maintenance and inspections.
Keeping up with tenants’ maintenance requests is the key to your success. It is important for two reasons. First, if your property isn’t maintained, you will have a hard time finding and keeping quality tenants.
Think about it. Would long-term, quality tenants want to rent a property that does not meet their high expectations? Of course not!
Second, the landlord-tenant law obligates you to ensure your property meets certain standards. Specifically, it must meet the basic safety and health standards. No tenant would want to live in a property with constant plumbing issues or one that is infested with pests.
Keeping up with property inspections is also key to your success as a rental property owner. Property inspections will give you a great opportunity to document lease violations at your property or unreported damage.
Whether you hire professionals or do it yourself, there are different types of rental property inspections. They include:
- Move-In Inspection. This will help you document the property’s condition prior to the new tenant moving in.
- Move-Out Inspection. This will help you document the property’s condition at the end of their tenancy.
- Seasonal Inspection. This will help you address the myriad of maintenance challenges that each season brings.
- Drive-By Inspection. This will allow you to simply pass by your property at any time and check the exterior condition of the property. Unlike the others, it doesn’t require coordinating with the tenants.
There you have it, 5 top tips for managing your rental properties. Remember, you can choose to be completely hands-on, or you can choose to outsource everything to a property manager.
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