If you just secured your first rental property, congratulations! Not everyone’s up for the challenge of being a landlord, you know. Now, maybe you start to encounter the question “How can I manage my rental property effectively?”
In this guide, we’ll help you learn how to take care of your rental property in the best way possible. We’ll discuss all the important things you should think about to make sure renting out your property goes well and you make good money from it without any biases. Let’s get started.
3 Key Responsibilities in Managing Rental Properties
As an experienced local property management company in Northern Virginia, Bay Property Management Group is well-versed in managing rental properties, from single-family homes to multi-family properties. As a landlord or an investor, you should understand that along with your rental properties are key responsibilities of managing them. Let’s establish one thing: being a landlord is more than a title. You must continuously learn and adapt to a lot of information in the real estate field as time passes by.
Remember: You’re not just renting out space; instead, you’re providing a service. And like any service, the quality you deliver matters. You need to be good at communicating with renters, fixing problems when they arise, and keeping track of financial matters at the same time.
The three main key responsibilities of managing rental properties include the following:
- Property Management
- Managing Your Tenants
- Financial Management
Let’s start with how you can effectively manage your property.
1. Property Management
General rule of thumb: In managing your rental property, make sure it stays in good condition so it continues to be a great place to live for renters or tenants. Here’s what you need to consider in managing your rental property:
Regular Maintenance and Repairs
As a landlord, you must know the importance of regular maintenance and repairs. If something goes wrong in your rental units, you need to make sure to take care of it right away. Here are some usual maintenance requests tenants make in rental properties:
- Fixing electrical problems
- Repairing heating and cooling systems
- Fixing plumbing problems
- Patching up roof leaks
- Addressing window and door concerns
- Touching up paint and walls
- Repairing appliances
- Lighting problems
- Managing pests
- Outdoor maintenance
- Repairing flooring
- Handling drainage and water issues
Upgrades and Improvements
Let’s say you’ve been successful in your first rental property and you earned quite a bit of cash from it. You will need to think about investing in upgrades and enhancements for your rental property. This not only enhances the property’s value but also provides the chance for you to gradually raise your rent over time. Here are some great rental upgrades and improvement ideas for you:
- Improved lighting
- Bathroom Remodel
- Kitchen Renovations
- Overall Painting
- Energy-Efficient Features
- Updated Curb Appeal
- Security Enhancements
- New Flooring
- Soundproofing
Safety and Compliance
Safety and compliance are things that you always need to consider as a landlord before anything else. You need to make sure your property meets all local safety codes and regulations. This includes things like smoke detectors, carbon monoxide detectors, and making sure all exits are clear. When you invest in the safety of your property, you’re not only looking out for your tenants but also protecting yourself against potential legal challenges that may arise over time.
2. Managing Your Tenants
Once you’ve effectively managed your property, your focus will now shift to managing your tenants.
Finding and Screening Tenants
As a landlord, you will need a thorough and careful screening process. This helps you find reliable tenants. Here are a few important verifications to keep in mind as you search for and assess potential renters for your property:
- Background checks: Before renting to someone, it’s important to check their past to see if there are any reasons to be cautious. This includes looking into whether they’ve been involved in any crimes or evictions before.
- Credit checks: For you to understand how reliable someone is with money, you’ll want to check their credit report. This tells you about their financial habits, like if they’ve paid their bills on time and if they have any debts.
- Income verification: You’ll want to make sure your potential tenant can afford the rent. This means checking to see if their job pays them enough each month. Usually, their income should be at least three times the rent amount.
- References: Talking to people who’ve known your potential tenant before can give you a good idea of what they’re like. This includes their past landlords, who can tell you if they paid rent on time and took care of the property.
3. Financial Management
Let’s say you applied our tips above and you have consistent cash flow from your rental property. One thing we’ll add to your key responsibilities as a landlord is to manage your finances. Managing your finances as a landlord means keeping track of your money coming in (rent), and going out (expenses), and being prepared for anything that pops up.
Here are helpful tips that might help you manage your finances:
- Budget your rental income wisely: We know this is a common thing to consider, but don’t try to spend all your rental income. You will need to set aside some each month for regular maintenance and unexpected repairs. A general rule of thumb for most landlords we know is that they try to save 1-2% of your property’s value annually for these costs.
- Keep track of everything: It’s important to write down every little thing you spend money on, so you don’t miss anything. This means you need to document everything from mortgage payments and property taxes to maintenance costs and utility bills. Even small expenses can add up over time.
- Save for Upgrades: Do you remember how we mentioned upgrades on one of the points above? You will need to upgrade and invest in improvements that increase your property’s value and appeal. This could be for things like getting better kitchen appliances or making the inside of your home look better.
- Maximize Tax Deductions: As a landlord, it’s literally fine to take advantage of every opportunity to lower the amount of tax you owe. Look into all the deductions you qualify for and make sure you claim them.
We have an article that simplifies the top tax benefits for landlords you might want to take a look at.
DIY Property Management vs. Hiring A Property Management Company
After considering all of the key responsibilities listed above, you may realize how overwhelming it can be for you as a property owner to handle everything on your own. You usually have two options for managing your property. You can either do it yourself (DIY) or hire a property management company to manage your rental properties for you. This is how they differ from each other.
Time and Effort
- Doing it Yourself (DIY): In DIY property management, you need to put your own time and energy to manage your rental properties. This means it’s fine if you only have one rental property. However, issues arise if you have multiple rental properties to handle. You need to handle tasks like finding tenants and fixing things when they break, all on your own.
- Hiring A Property Management Company: If you hire a property management company, they take care of most tasks for you. This frees up your time for other things because they handle finding tenants and handling repairs.
Expertise
- Doing it Yourself (DIY): If you manage your rental properties alone, you need to know about things like marketing, finding good tenants, maintaining your property, and understanding rental laws.
- Hiring A Property Management Company: Property management companies have professionals like property managers who are experts in handling multiple rental properties. They are actually required to understand local laws, and they must also have connections with maintenance workers in a local area. In short, they handle almost all the necessary property management tasks for you.
Expenses
- Doing it Yourself (DIY): If you manage your property yourself, you save money on management fees. However, you’ll have to spend on things like advertising vacancies, screening tenants, and maintenance.
- Hiring A Property Management Company: While it is true that you have to pay management fees, it’s actually worth it. The reason why this is true is because property managers save you time and hassle, and at the same time, their expertise can help you make more money from your rentals.
Usually, in the case of a property management company, it can be a percentage of the rent that is collected or it can also be a flat monthly fee, but it can be worth it considering the time and hassle you save.
Responsibility
- Doing it Yourself (DIY): When you manage all the rental properties by yourself, it means that you’re also in charge of everything. You’re the one to decide who rents your place. But it also means you have to deal with all the issues that come up. For example, issues with electricity in your rental property. You need to be in control of everything as long as it is about your rental property.
- Hiring A Property Management Company: While you’re still in charge overall, the management company shares some of the responsibilities. They deal with tenant issues and maintenance problems, which can be a hassle for you.
How Bay Property Management Group Can Help
We hope you learned a lot from the tips we mentioned above. As a landlord, you will need to have an effective property management for you to continuously grow in the rental industry. While it is true that you can handle all the property management by yourself, we understand that it can also be overwhelming, especially when you’re struggling to balance it with your family time.
We want to let you know that Bay Property Management Group is here to help. Our local experts will handle all of your property needs, from safety and compliance to making sure everything runs smoothly in your rental property. With our local knowledge and resources, we can assist you in streamlining all your rental operations.
Contact us to learn more about how our services can help you reduce the stress associated with managing your rental properties.
