Congratulations! Buying a residential investment property can be a huge step toward financial growth. As you pay down the debt, you build equity in the property that, ideally, appreciates in value.
What’s more, you earn a passive income through the income you receive at the end of every month.
With that in mind, the buying part is only half the battle. There are a number of elements to keep in mind when managing a property. One area that will significantly impact your success is how you choose to manage your property. The way you do it can either make or break your operation.
And truth be told, managing a property isn’t as simple as it appears. Between finding tenants (and keeping them), managing tenants issues and concerns, and conducting maintenance tasks, property management can often feel overwhelming.
Nevertheless, you can still be successful at the job if you are willing to commit yourself to the process. You’ll just need to develop the necessary skills and avoid some common pitfalls.
Today, we’re going to share with you 6 tips on how best to manage your first investment property.
1. Hire a property manager
Yes, self-management can be rewarding. You’ll not only get some experience, but it’ll also mean zero property management fees. Keeping operational costs low is actually a great way to maximize your rental income.
Nonetheless, managing a rental property requires some skills, knowledge, and experience. You need skills on how to manage tenants, knowledge on how the industry runs, and experience to avoid some common pitfalls.
If you are just starting out in the world of property management, it may be in your best interest to hire a professional.
2. Set the right rent
You want to price your rentals correctly. Overpricing will only make your tenants resentful towards you and may even cost you a good tenant when the time comes to renew the lease.
Underpricing, on the other hand, means that you may not be maximizing your income. Remember, your goal is to make as much money from your investment as possible.
You need to use a variety of strategies to calculate how much rent to charge. Among these strategies is conducting a comparable market analysis in the neighborhood.
3. Adhere to the landlord-tenant law
Dozens of federal, state, and local laws govern the relationship between landlords and tenants. Understanding all these laws is the only guarantee to avoid potential legal disputes with your tenants.
These laws help outline rules in regards to rent, security deposits and tenant evictions.
Additionally, you need to check the local laws in your state that address landlord-tenant issues.
4. Minimize tenant turnover
Nothing kills rental profits more than a high tenant turnover. Every time your property sits vacant means you are losing money.
But how do you minimize tenant turnover? Keeping your tenants happy goes a long way in ensuring your property is treated kindly, the rent is paid on time and the tenants remain in place.
And to keep your tenants happy, you’ll need to provide them with necessary services, maintain the property and listen to their concerns. Besides keeping your tenants happy, you also need to improve the way you screen tenants. Why? One of the top reasons tenants move is due to issues with neighbors.
5. Keep up with maintenance.
Nothing frustrates a tenant more than a landlord who doesn’t respond to maintenance problems within a reasonable time. Keeping your property in top-notch condition will benefit your business in two main ways.
First and foremost, it can help you minimize rental vacancies. No tenant wants to live in a rodent-infested house or one that has constant plumbing issues.
Secondly, the law requires it. As a landlord, it’s your responsibility to ensure the rental premises are habitable. In other words, habitability means that the building meets the basic health, safety and building codes.
Being proactive with maintenance is a surefire way to score big with your tenants. If you provide them with good living conditions, chances are that they will reciprocate with timely rent payment and a long-term stay.
6. Pay your taxes.
It’s through the tax the Internal Revenue Service collects that the government can provide essential services. Therefore, you must pay taxes on the income you receive on your investment property
A rental property is both a property and a business. Generally speaking, this often brings confusion to rental property owners when it comes to managing taxes. If you are just starting out, hiring professional services is highly recommended.
There you have it. Six tips on how to manage your first investment property. If you find the management part a bit daunting, consider hiring professional services.
(Upkeep Media is a property management marketing company that creates custom tailored marketing plans based on your company’s current market position. Contact them at firstname.lastname@example.org or 1-800-418-9430).