Whether you manage one property or fifty, the right tools will help you run a profitable and efficient rental business.
Although managing rental property is often considered passive income, you still need to work to make it a successful financial venture. Minimal involvement might seem stress-free and ideal but can lead to wasted time spent chasing tenants and sifting through unorganized records.
Whether you manage one property or fifty, there are tools available that can help you run your rental business in a way that is efficient and enjoyable, allowing you to spend more time doing what you love. With that being said, here’s our tried and tested advice for managing your rental business like a pro.
Tenants are at the heart of every successful rental business, as reliable renters lead to steady rental income, reduced vacancy rates, and minimal evictions. Unreliable tenants, on the other hand, can result in costly lawsuits and trashed properties. In order to build a good working relationship with your tenants, there are a number of things you can do.
Before you have filled your vacancies, you will need to screen potential tenants to ensure they fit your expectations. Having a thorough tenant screening process in place will allow you to bypass tenants with low credit scores, eviction history, and insufficient income. Just be aware that you do not discriminate against protected classes, as outlined in the Fair Housing Act.
Ensure there are open lines of communication between you and your tenants. Encourage them to contact you when they have fair requests or questions. The last thing you want is for property damage to go unnoticed (to you) because your tenants are unable to reach you. Having open communication gives you a chance to address any issues with tenants before they spiral out of control.
Just as you expect tenants to pay their rent on time, you should also make sure that you respond to their maintenance requests as promptly as possible. If, for example, your rental property’s HVAC system breaks down in the middle of the winter, you could be violating laws if you don’t have it fixed within a reasonable time frame or provide alternative adequate heating.
Make sure you respect your tenants’ space, by giving them notice before visiting them for routine inspections or maintenance work. While regular visits might give you peace of mind, it can be a nuisance to renters who might feel like their personal space is being encroached on.
Value can be added to your property through renovations. A rental that both functions well and looks pleasing to the eye will help you attract and retain high-quality tenants. If appliances are past their prime and no longer serving as they should, swap them out for new ones. Worn carpets can be replaced with LVP for more durability and easier maintenance. Increasing your rental returns through renovations will allow you to grow your rental business to its full potential.
As well as keeping your property up to date in terms of renovations, you can also better manage your rental business by remaining attentive to what is happening in the market around you. While you shouldn’t increase rent on a whim, you should make sure it stays at a fair market rate. This could mean either reducing or increasing rent in line with similar properties in the area. Keeping rent too low will lead to you missing out on extra income and keeping it too high will make it difficult to find tenants.
One of the most important things to manage when running your rental business is rent collection. Without being paid in full and on time, you run the risk of poor cash flow and unavoidable evictions which can drain your time and money.
If your tenants aren’t already paying their rent online, online rent collection can be a great way to make sure a rent deadline is never missed again. With this process, rent will go directly from your tenants’ bank to your account, meaning no time is wasted collecting checks and waiting in line at banks. You can also prevent partial payments this way.
As well as rent collection being optimized, you can also automate late fees. This sets the expectation for you and the tenant and discourages late payments due to automatic fees. You won’t have to worry about chasing your tenants for their rent every month, which can be a real hassle, especially when you’re managing multiple properties. Automatic reminder emails can also be implemented for extra assurance that the tenant is aware of due dates.
When managing your rental business, you will need to make sure that you abide by local and state guidelines to avoid being caught up in messy lawsuits. As well as the Fair Housing Act (mentioned above), there are other laws regarding rental business. Legislation varies depending on your locality, so you should always check before implementing any new policies.
Whether or not you decide to allow pets in your rental property, the Fair Housing Act specifies that landlords cannot deny emotional support animals. This means that even if you would normally charge a pet deposit or pet rent, you are not able to request additional charges for ESAs.
Oregon and California both have state-wide rent control laws in place, with other cities such as New York City and Washington D.C. having their own legislation. If you are renting out a property from one of these areas, you will need to ensure that your rent increases remain within the guidelines. For example, in California, this means you cannot increase rent by more than 10% a year.
Rental property accounting can seem complicated or even boring at best but is essential to the smooth functioning of your rental business. This involves everything from tracking income and expenses to reconciling transactions and creating reports for tax purposes.
Unlike general accounting software, property management software will allow you to treat each of your properties as an individual business, making it easier for you to fill out your Schedule E reports. Stay on top of your bookkeeping to avoid being subject to an IRS audit.
Managing your rental business has never been easier, thanks to purpose-built property management software like Landlord Studio. With it, you can screen tenants, list properties, automate rent collection, track expenses, create reports, and more at the tap of a button. It gives you full control of your portfolio and scales alongside you, allowing you to grow your rental business with ease, no matter your experience.
To get the most out of your property management journey, there are endless ways to manage and organize your rental business. Every portfolio and property within it is different, so find what works for you, to ensure a stress-free, smooth-sailing clear path to success.