Owning real estate has been a tried-and-true method for building generational wealth for many years. It’s no surprise that with all the money in real estate, other industries have sprouted up to service it. One of the industries that has continued to gain momentum over the years is property management. Simply put, property management is a service for real estate investors that manages the daily operations of rental property, so owners don’t have to.It has proved to be a very valuable service for many investors that either can’t manage their properties or have no desire to.
If you’re a rental property investor, you may be debating whether to hire a property management company or to manage the property yourself. This is a decision that every rental investor has had to make, and there isn’t one clear answer. The decision you make will depend on the number of properties you own, how close you live to them, and how involved you want to be in the management of the properties.
On one side, hiring a property manager could save you a lot of time and energy with them managing your property for you. And although they aren’t required, the property management certifications that a property manager holds can assure you that your property is in the hands of an expert.On the other side, managing your property yourself can save you quite a bit of money in fees. But before you make your decision, it’s important to understand what it takes to effectively manage your rental properties.
- Market Research and Insights
- Marketing Your Rental Property
- Finding and Vetting Tenants
- Rental Property Maintenance
- Managing Tenant Relationships
- Market Research and Insights
The first thing you should do when renting out and managing your property is to conduct market research and gain insights on how to position it. If you don’t have an idea of who your ideal tenant is and what they’re willing to pay for a property, you’re much less likely to find ideal tenants.
Know your market: The best way to understand your ideal tenant is to research your market demographics. Learning things about the existing population like age, stage of life, income level, and what they value will paint a clear picture of who you should tailor your property towards. You can find this information out from local real estate professionals.
Know your price: It’s equally important to know the value of your rental property. Knowing the value of your rental is essential to any profitable investment property. Talk with local real estate experts and check local listings of other rentals on the market to get an understanding of what you can charge for yours.
- Marketing Your Rental Property
The one thing that separates a successful rental property from an average one is marketing. The first impression potential tenants have of your property can be the difference between them scheduling a viewing or just scrolling right past it. For this reason, it’s imperative you get your marketing right. Consider taking these steps before listing your property:
- Touch up the indoors AND outdoors
- Take professional photos of the property
- Have a virtual tour posted on the listing
- Have a descriptive summary highlighting the features and benefits of your property
- List it on multiple sites for maximum viewings
It’s important to remember that potential tenants decide if they like your property within seconds of landing on your listing. Make sure it makes a good impression.
- Finding and Vetting Tenants
Once you have tenants interested in your property, it’s crucial that you properly vet them so you can be confident they’ll take care of your property. The tenants you choose can make your job as the property manager easy or difficult. There are a few things you’ll want to investigate when deciding on a tenant:
- Credit score and credit history
- Current and previous employment history
- Annual income (ask for pay stubs and bank statements as proof)
- Proof of reserve funds in the event of unemployment
- Any recent rental history and landlord contact information
- Rental Property Maintenance
To keep your tenants happy with your rental property, you’ll need to keep up with the maintenance of it. Some of the maintenance can be done yourself, but you should consider hiring out to professionals for preventative maintenance to ensure the job is done properly. Here are some regular services you should have lined up for your rental property:
- Landscaping and gardening services
- Annual HVAC inspection and cleaning (ahead of the summer months)
- Check for leaks during the rainy season to avoid any costly water damage
- Schedule pest control quarterly
- Replace air filters quarterly
Addressing any problems before they happen or before they get bad can save you a lot of time and money in repairs.
- Managing Tenant Relationships
One of the best things you can do for yourself as an investor managing your own property is to fostera relationship with your tenants. There is a fine balance between making sure their needs are met but also not being an “on-call” property manager.
It is much easier to keep your tenants happy,so they stay for years rather than always marketing your property and vetting new tenants. At the same time, it’s important to set boundaries with your tenants so you’re not being contacted frequently with problems and unnecessary requests.
Final Thoughts
As you can see, there’s a lot that goes into managing rental properties effectively. That’s why there is a thriving industry of professionals handling this side of the business for investors like you. If you have the time and energy to manage your own properties yourself, it can be a great way to increase your monthly cash flow. If you find yourself unable to manage all the tasks associated with property management or just not wanting to devote the time to it, then hiring a property management company could be the right move for you.
Hiring a company that will handle all aspects of property management for one monthly fee is the best way for investors to turn their rental property into truly passive income. When vetting potential property management companies, check for local market experts like Bay Property Management Group.
