Once you purchase a real estate rental property, you virtually become the CEO of your own small business. Sure, you feel good about becoming a landlord and owner of your own private money-maker, but unless it’s raw land, your work has just begun.
Now you must manage the property. As a real estate investor who has chosen the renting of apartments as a business, your goal now is to keep the units full, and at the highest rent per square foot possible.
So let’s consider the big picture of property management and look at some rental management basics every real estate investor should be aware of inside real estate investment.
Property condition. Getting the best tenants and commanding the highest rent starts with a sharp-looking building that has good curb appeal. Keep the structure, landscaping, common areas, and parking in good clean condition.
Tenant applications and screening. Require each potential tenant to complete an application, and then follow up to verify their employment, rental history, and credit and criminal history. Remember, it is always easier to get tenants into your building then it is to get tenants out of your building.
Emergency repairs. Be sure you have reputable maintenance personnel on-call to service emergency repairs. This may be your job or someone you hire, just be sure the tenant has a repair “help line” they can call 24 hours a day when something must be fixed immediately.
Aggressive marketing of vacancies. Get the word out about an upcoming vacancy instantly. Use signage, advertise in the newspaper, or post it on the web.
Move-in/move-out coordination. Always plan to get a unit “rent-ready” within a day or two after it becomes vacated. Even when you don’t have a new tenant in the wings, a clean unit ready to show a prospective tenant does help.
Keys and locks. It is always a good idea to change locks each time you have a turnover in tenants. This added security is good for you and your new tenant.
Learn the laws about eviction. Know what you must do to evict a deadbeat tenant even when you don’t think it is necessary.
Keep accurate books and records. Maintaining a good income and expense history is vital to your rental property business and the cornerstone to profitability.
Many real estate investors simply turn their properties over to professional management companies. The advantage being that it relieves the real estate investor of the time and stress of having to deal with tenants and repairs, and puts matters like late rents into the hands of experts.
On the other hand, a professional management company is not free. Moreover, in cases where the property is small enough for owner management, the cost of outside fees for professional property management might not be justifiable.
You must decide whether you want to hire out the management out or to do it yourself. The important thing is not to neglect a sound plan for property management. Otherwise you could find that owning and becoming CEO of your rental property business can quickly become more unpleasant than profitable.