Investing in rental properties can be a lucrative and rewarding endeavor, but it also comes with a lot of responsibilities. Property management is crucial to safeguarding your investment and ensuring the success of your rental property business. Here’s a guide we put together with the best practices to safe guard your investment and avoid costly mistakes!
1. Screen Tenants Thoroughly
One of the most important things you can do as a property manager is to carefully screen potential tenants. Conducting a thorough background check can help you avoid problematic tenants who may cause damage to your property or fail to pay rent on time. Check for employment history, credit score, and rental history to ensure that the tenant is reliable and can pay rent on time.
Here’s what we use to screen tenants:
- Request a rental application from the tenant: Ask the tenant to fill out a rental application that includes personal information, employment history, rental history, and references.
- Verify employment history: Contact the tenant’s employer to verify their employment history, income, and job stability. Hard to pay for a rental if you don’t make money!
- Check credit score: Request a credit report to check the tenant’s credit score and payment history. Look for any red flags, such as late payments, defaults, or high levels of debt.
- Verify rental history: Contact the tenant’s previous landlords to verify their rental history, payment history, and whether they caused any damage to the property.
- Check criminal history: Conduct a criminal background check to ensure that the tenant does not have a criminal history that could pose a risk to your property or other tenants.
- Review eviction history: Check if the tenant has been evicted before or has a history of breaking lease agreements.
- Interview the tenant: Schedule an in-person or virtual interview with the tenant to get a better understanding of their personality, lifestyle, and rental needs.
2. Set clear expectations
Setting clear expectations with your tenants is crucial to ensuring a positive rental experience for both parties. Here are some ideas on how to set clear expectations:
- Develop a clear and concise lease agreement: A clear and concise lease agreement is essential to avoid any misunderstandings between you and your tenants. Your lease agreement should clearly outline the terms of the rental agreement, including rent, security deposit, length of the lease, and any other important details. Make sure your tenants understand the terms of the lease before they sign it.
- Provide a move-in checklist: Providing a move-in checklist can help ensure that your tenants are aware of any existing damages or maintenance issues before they move in. Ask your tenants to review and sign the checklist to confirm that they agree with its contents. This can help prevent disputes over damages when the tenant moves out.
- Establish rules and guidelines: Establishing rules and guidelines for your property is an important part of property management. Your rules may include guidelines for noise levels, parking, pets, smoking, and other important issues. Make sure your tenants are aware of these rules and understand the consequences of violating them.
- Communicate regularly on maintenance and inspections: Regular communication with your tenants about maintenance and inspections can help prevent problems from becoming more significant issues. Make sure your tenants know how to report maintenance issues and when you plan to conduct inspections. Address any maintenance issues promptly to keep your property in good condition.
- Provide a tenant handbook: Providing a tenant handbook can help your tenants understand their responsibilities and rights as tenants. Your handbook may include information on how to report maintenance issues, contact information for emergency repairs, rules and guidelines for the property, and other important details. Make sure your tenants understand the contents of the handbook and have easy access to it.
By setting clear expectations with your tenants, you can avoid misunderstandings and conflicts and create a positive rental experience for everyone involved.
3. Respond to maintenance requests promptly
As a property manager or landlord, it’s important to address maintenance issues promptly. Waiting to respond to tenant requests can cause more harm than good and end up costing you more money in the long run. Here’s why:
- Small problems can become bigger: A small maintenance issue, such as a leaky faucet or a clogged drain, can quickly turn into a bigger problem if left unattended. Water damage can spread quickly and cause structural damage to your property. If you don’t address the issue promptly, it can become more expensive and time-consuming to fix.
- Tenant satisfaction: Tenants expect a quick response when they have a maintenance issue. Delaying a repair request can make them feel neglected or ignored, and this can lead to decreased tenant satisfaction. Dissatisfied tenants are more likely to move out, which means you’ll have to spend time and money finding new tenants.
- Safety concerns: Delaying repairs can also lead to safety concerns for your tenants. For example, a broken lock on a door or a malfunctioning smoke detector can put your tenants at risk. By not responding to repair requests promptly, you may be exposing yourself to liability if an accident occurs.
To avoid these problems, it’s essential to make sure tenants know how to contact you or your property management team if they need repairs or maintenance. Respond to requests as soon as possible, even if it’s just to acknowledge the request and provide a timeline for when the issue will be addressed. By addressing maintenance issues promptly, you can prevent small problems from becoming larger and more expensive to fix, improve tenant satisfaction, and ensure the safety of your tenants.
4. Conduct regular inspections
Conducting regular inspections of your rental property is crucial for a number of reasons. Here are some reasons why it’s important to conduct regular inspections:
- Identify maintenance issues early: Regular inspections can help you identify any maintenance issues before they become major problems. By catching small issues early, you can prevent them from turning into costly repairs down the road. This can save you time, money, and stress in the long run.
- Ensure tenant safety: Inspections can also help ensure the safety of your tenants. For example, you can check smoke detectors, carbon monoxide detectors, and fire extinguishers to make sure they’re working properly. You can also inspect the property for any potential hazards, such as loose railings or tripping hazards.
- Maintain the property’s condition: Regular inspections can help you maintain the condition of your property. This can include checking for wear and tear on appliances, carpets, and walls. By addressing any maintenance or repair issues promptly, you can keep your property in good condition and maintain its value over time.
- Build a positive relationship with tenants: Regular inspections can also help build a positive relationship with your tenants. By showing that you’re invested in the property and ensuring their safety and comfort, you can build trust and respect with your tenants. This can lead to longer tenancies, lower turnover rates, and fewer conflicts down the road.
In summary, conducting regular inspections is important for identifying maintenance issues early, ensuring tenant safety, maintaining the property’s condition, and building a positive relationship with tenants. By scheduling inspections at least twice a year, you can stay on top of any potential problems and ensure a positive rental experience for everyone involved.
5. Keep accurate records
Keeping accurate records is crucial for effective property management for a number of reasons. Here are some reasons why it’s important to keep accurate records:
- Financial management: Keeping track of rent payments is essential for financial management. Accurate records help you ensure that all tenants are paying rent on time and allow you to identify any outstanding balances. By keeping accurate financial records, you can also prepare tax returns and track expenses, which can help you make informed financial decisions.
- Maintenance tracking: Keeping track of maintenance requests and inspections can help you stay on top of repairs and ensure the property is well-maintained. For example, if you notice that a particular appliance has needed multiple repairs, it may be time to consider replacing it. By keeping accurate maintenance records, you can also ensure that you’re meeting any legal requirements for maintaining the property.
- Legal compliance: Keeping accurate records can also help you ensure that you’re complying with legal requirements. For example, you may need to keep records of security deposit transactions or provide documentation of any repairs made to the property. By keeping accurate records, you can ensure that you’re meeting all legal requirements and avoid potential legal issues down the road.
- Tenant communication: Accurate records can also help you communicate effectively with tenants. For example, if a tenant has a history of late rent payments, you can use the records to remind them of their payment history and any consequences of late payments. By keeping accurate records of communications with tenants, you can also avoid misunderstandings and disputes.
In summary, keeping accurate records is important for financial management, maintenance tracking, legal compliance, and tenant communication. By keeping detailed and organized records, you can make informed decisions about your property and ensure a positive rental experience for both you and your tenants.
6. Enforce the lease agreement
Enforcing the lease agreement is an important part of property management, as it helps to protect your property and your investment. Here are some ways you can enforce the lease agreement:
- Collect rent on time: Rent collection is one of the most important aspects of enforcing the lease agreement. Make sure your tenants know when rent is due and how it should be paid. If a tenant is late with rent, follow up with them immediately and remind them of the consequences of late payments, such as late fees or legal action. If necessary, consider using a collections agency to help collect past due rent.
- Enforce rules and guidelines: Your lease agreement should include rules and guidelines for your property. These may include rules about noise levels, parking, and maintenance responsibilities. Enforce these rules consistently to ensure that all tenants are held to the same standards. If a tenant repeatedly violates the rules, consider taking legal action, such as issuing a warning or eviction notice.
- Take legal action if necessary: If a tenant repeatedly violates the lease agreement, you may need to take legal action to protect your property and your investment. This may include issuing a warning or eviction notice, filing a lawsuit for damages, or hiring an attorney to represent you in court. Make sure you understand your rights and responsibilities as a landlord, and consult with legal counsel if necessary.
- Document everything: To enforce the lease agreement effectively, it’s important to document everything. Keep detailed records of rent payments, maintenance requests, and communications with tenants. If you need to take legal action, having detailed documentation can help support your case.
In summary, enforcing the lease agreement is an essential part of property management. To enforce the lease agreement effectively, collect rent on time, enforce rules and guidelines consistently, take legal action if necessary, and document everything carefully. By enforcing the lease agreement, you can protect your property and your investment and ensure a positive rental experience for everyone involved.
7. Consider hiring a property management company
Managing a rental property can be time-consuming and challenging, especially if you have multiple properties. Consider hiring a property management company to help you manage your properties more effectively. A property management company can handle tenant screening, rent collection, maintenance, and other tasks, allowing you to focus on other aspects of your business.
In summary, property management is critical to safeguarding your investment and ensuring the success of your rental property business. By screening tenants carefully, setting clear expectations, responding to maintenance requests promptly, conducting regular inspections, keeping accurate records, enforcing the lease agreement, and considering hiring a property management company, you can manage your rental property effectively and efficiently.
