Tips And Tools For Managing Rental Properties
Molly Grace7-minute read
March 28, 2023
Renting out a property you own might seem like a pretty easy, passive way to earn some extra income, but in reality, becoming a landlord means you’ll be starting your own small business: you’ll have customers to deal with, accounting to take care of and plenty of day-to-day work to keep you busy.
If you want to start renting out your investment real estate, you need to be serious about taking care of your tenants’ needs and ensuring your business remains profitable.
What does all that mean? Here are some of the most important things you need to know about managing rental properties.
Managing A Rental Property: Top 3 Responsibilities
Though managing a rental property comes with a wide variety of responsibilities, you can generally sort all of these duties into three basic categories:
As a rental property owner, you can oversee each of these realms yourself, or you can hire someone else to do it for you. But no matter how you handle the management of your property, you’ll need to make sure your tenants, your property and your finances are all taken care of.
Should You Self-Manage Or Outsource A Rental Property?
For a more hands-on approach, you can do everything yourself. This means you’ll be in charge of every aspect of managing your rental property, from sending out rent reminder emails, to completing repairs (or calling in a professional if need be) and bookkeeping.
This route can save you money, but it also means you’ll spend a lot more time taking care of the business.
When it’s just you, you’re responsible for everything, 24/7.
On the other end of the spectrum, you might consider hiring a property management company to do all of the work for you. You’ll still own the property, but the company or property manager you hire will handle every aspect of keeping the business running for you, including vetting potential tenants, dispatching repair services and maintaining the property.
This option is costly, but it also can be much less stressful and less time-consuming.
You might also consider a hybrid approach, where you manage certain responsibilities yourself while outsourcing others.
For example, maybe you’re good with numbers, so you decide to do all the accounting yourself. However, you’re not super handy with tools or completing repairs, so you hire a building superintendent to take care of that for you. Or maybe you do all the groundskeeping yourself but you hire an accountant to oversee your business’s finances.
Ultimately, which management method is the best for you will depend on your needs, the amount of time you have and your ability to complete all of the responsibilities that come with being a landlord.
If you only have a single rental property with one tenant, it might be relatively simple for you to manage everything yourself. However, if you have many properties to manage, it’s probably not realistic for you to try and take that on all by yourself.
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Managing your tenants is more than just finding a suitable renter and collecting checks from them each month.
First, you’ll need to market your property so that potential tenants can find it. Utilize online databases, social media or local ads to spread the word – and make sure to include quality, attractive pictures.
Once you start getting applications, you’ll need to screen your potential tenants. This might include running background and credit checks, verifying that the applicant can afford the rent amount and checking any provided references.
As you go through this process, be sure you’re complying with federal and state fair housing laws.
Then, you’ll need a lease agreement for the tenant to sign. You can find standard leases online, but it’s best to run yours by a lawyer to be sure that the lease is in compliance with your state’s laws.
During the leasing period, you’ll need to be available – or ensure that someone else is – to respond promptly to repair requests, complaints and questions from your tenant as they come up.
As a landlord, you should have a good understanding of all the state and local laws regarding the landlord-tenant relationship, including how much notice you need to give if you plan to enter the property, what the eviction process entails and how long you have to fix issues with the property.
How To Keep Tenant Turnover Low
Having to find a new tenant at the end of each lease, rather than having your existing tenant renew theirs, can be expensive and time-consuming.
Having a vacant property while you search for a new tenant can cut into your property’s return on investment. That’s why it’s important to do what you can to avoid this.
It’s not always possible to avoid tenant turnover; a new job or a move to another town may necessitate it.
However, there are things you can do to make your tenant want to stay.
Remember, your rental property is a business, and the key to a successful business is keeping your customers satisfied.
Make sure the amount you’re charging for rent is fair. If another rental property in the area costs less than yours with more amenities, that can contribute to turnover.
Be a good landlord. Make sure the property is maintained and looks nice. Respond to requests from your tenant quickly, and get repairs done as soon as possible. Communicate regularly and work to build a good relationship with your tenant. If you create an environment where they feel their concerns are heard, where repairs are taken care of in a timely matter, where the property is safe and well-maintained, tenants will be more likely to stick around.
Keep The Tenant Happy With Requests
In addition to keeping turnover low, happy tenants are just generally easier to deal with than unhappy tenants.
Not sure how to keep your tenant happy? Ask them! Send out surveys or solicit feedback on how you could improve. Then implement that feedback.
If the tenant complains that you take to long to send out repair professionals, for example, work on making the process more efficient on your end.
Tenant Move-In And Move-Out Dates
Make sure your lease specifies when the tenant can move in and when they have to move out by if either of you decide not to sign a new lease agreement at the end of the leasing period.
Prior to move-in, make sure the property is ready for them: the locks should be changed, the home should be clean with no safety hazards, and any necessary repairs and maintenance should be completed.
Document the current condition of the home. When the time comes for the tenant to move out, you’ll use this as a reference when assessing damage they may have caused to the property.
As the move-out date approaches, communicate with your tenant about the moving-out process. Schedule a final inspection and make sure they understand their responsibilities in regard to cleaning the apartment and repairing damages.
Managing And Maintaining A Rental Property
Remember, taking care of your tenants is just one part of being a landlord. Another vital part is overseeing the management and maintenance of the physical property you’re renting out.
Good Management Goes A Long Way
As the owner and landlord, you’ll need to stay on top of everything that’s going on with your property. This includes making sure the home remains properly insured, that it’s in compliance with local housing codes and that regular maintenance is taken care of.
Maintaining The Ins And Outs Of A Rental Property
As a landlord, you have a legal responsibility to provide your tenants with a safe and habitable home.
But keeping your property maintained isn’t just for the benefit of your tenant. After all, you own this property, and forgoing regular maintenance or improvements can not only make it harder to find and retain tenants, but it can also hurt the overall value of your property and make it difficult for you to sell down the road.
Rental property maintenance includes the same type of regular maintenance you’d do in your own home: changing smoke and carbon monoxide detector batteries, installing new air filters, spraying for pests and getting essential components, such as the HVAC, inspected and serviced.
Both the interior and exterior needs to be maintained. If something needs to be replaced, don’t put it off – an aging roof, for example, can end up costing more in the damages it can cause if you avoid replacing it.
Managing Rental Property Finances
As with any small business, you’ll need to be sure you’re keeping a good record of your rental business’s finances.
If you don’t have a lot of experience managing finances for a small business, you might want to consider purchasing accounting software to help you keep track of everything or even hiring an accountant to manage the finances for you. This can be especially helpful during tax season.
What Do Rental Property Finances Include?
Managing your rental property finances means keeping track of all the money that goes in and out of your business.
This includes recording rent payments, collecting security deposits and keeping them safe and tracking how much you’re spending on maintenance, repairs, the mortgage, insurance, taxes, utilities and other costs each month.
You’ll also want to have a plan for how to keep your business afloat if you aren’t bringing in any income. If a tenant leaves and it takes you a few months to find a new one, you want to make sure you have the funds to keep paying your mortgage and maintaining the property until you start receiving rental income again.
Keep Documents Safe And Sound
As a landlord and a small business owner, you’ll have a lot of important paperwork to keep track of.
Make sure to implement some sort of organizational structure, whether it be a dedicated filing cabinet or a digital document management system, so that you always know where your important financial or legal documents are located.
The Bottom Line On Managing Rental Properties
Though you might hear people describe the money that comes from an investment property as “passive income,” there’s nothing passive about the actual work of being a landlord, should you choose to take that on.
Being a landlord is often a full-time job – a full-time job that requires you to be on-call 24/7, with lots of overtime.
If you want to rent out your property but don’t want to deal with all of the work involved with that, you can hire companies to manage the property for you. However, the trade-off is that you’ll make less money on your investment.
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