The Landlord's Complete Guide To Rental Property Management

We take a closer look at what you need to know when it comes to how to manage a rental property and outline the six steps for profitable rental property management.

Navigating rental property management often appears daunting to new investors. There’s so much to learn, from selecting the best tenant and creating your lease to filing taxes at the end of the year.

This is why some investors decide to entrust rental management of their properties to external management companies. However, for those wanting to maximize profits and are willing to take on some of the admin work, managing your own rental property will not only allow you to learn valuable lessons that will enable you to grow your real estate business but also enable you to streamline operations and increase ROI.

In this article, we delve into the principal responsibilities involved in being a self-managing (or DIY) landlord and outline the six steps for running a profitable rental property.

Key takeaways

  • The core responsibilities entailed in self-managing a rental property include tenant management, property oversight, and financial administration.
  • The six steps of rental management are establishing a fair rental rate, marketing the property, conducting property inspections, upholding the lease agreement, and staying on top of your real estate bookkeeping.
  • Landlords can choose to self-manage, enlist a property management agency, or employ a mixture of the two approaches.

Landlord Responsibilities: Rental Property Management

Before we get into the nitty gritty of learning how to manage a rental property it’s first important to understand the various aspects of rental property management and the core responsibilities of landlords.

What is rental property management?

Unless you hire a property manager to oversee your rental property management, you’ll need to become comfortable with your real estate assets’ day-to-day operations. This includes addressing any queries or problems that renters may have from collecting rent to managing your books, and preparing for tax time. Responsibilities also include filling vacancies and dealing with maintenance.

The following are some of the most frequent rental property management responsibilities:

  • Finding and screening tenants.
  • Organizing legal documents such as the lease.
  • Collecting rent and chasing late payments.
  • Tracking and managing maintenance issues.
  • Understanding landlord/tenant laws, both federal and state specific.
  • Income and expense tracking.
  • Financial management of the rental properties.

Below we go into more detail.

1. Tenant management

Tenant management is an area that a lot of investors feel uncertain about. It’s one thing to make strategies for maximizing your profits on paper, it’s quite another to listen to complaining tenants, chase late rent, or deal with unexpected maintenance emergencies in the middle of the night.

However, tenants are your customers, and as customers, you need to keep them happy whilst maintaining a professional relationship.

There are numerous facets to tenant management, from learning how to create a good rental listing, running tenant screening reports, setting up communications, collecting rent, dealing with late fees, managing routine inspections, and of course the dreaded eviction proceedings.

To ensure your rental property maintains strong cash flow with minimal vacancies you will want to familiarize yourself with lease documents and addendums, landlord-tenant laws, notice periods for property entry and end-of-lease notices, the Fair Housing Act, and actions you can take should the rent be late. Failing to comply with local and federal laws could lead to substantial penalties or even legal actions by the tenant.

2. Property management

As well as maintaining good tenant relations, it’s your responsibility as a landlord to ensure that your property is safe and habitable for both the tenant and the community.

Proactive property inspections and preventative maintenance can help prevent minor issues from escalating into costly repairs. For instance, seasonal servicing of HVAC systems and pre-winter/rain gutter cleaning can avert substantial expenses.

On top of this, you need to establish routine processes for inspecting the property and documenting its condition as well as build relationships with trustworthy contractors you can call when the need arises.

Finally, you need to understand the difference between wear and tear vs damage, as well as repairs vs property improvements as each needs to be treated and accounted for differently.

3. Financial management

Ultimately, you’ve invested in real estate to make money and if you don’t keep a watchful eye on your cashflow, carefully track deductions, and reduce unnecessary costs it can be very easy to find your property falling far short of your initial projections.

Financial management as a DIY landlord necessitates meticulous tracking of all income and expenditures.

Accurate bookkeeping of all income and expenses is essential if you want to operate your real estate business profitably. It will allow you to maximize your deductions and avoid unwanted attention from the IRS.

For this reason, many real estate investors employ tools like Landlord Studio to streamline financial rental management and automate income and expense tracking.

6 Tips On How to Self-Manage A Rental Property

Once the property is purchased and made ready for occupation with any necessary renovations and repairs completed you can finally take the first steps to rental management.

1. Determine how much rent to charge

Determining the optimal rental price is both an art and a science. Setting the rent too high may discourage potential tenants, while setting it too low might hinder potential returns.

Factors to weigh when establishing rent include:

  • Local median household and per capita income
  • Prospective tenant demographics, such as singles or families
  • Competitors' median rent rates
  • Property features warranting higher rent, such as extensive garages or communal pools

Online resources like Rentometer and Zillow Rent Estimates can aid in finding comparable rental rates, spotlighting opportunities to enhance cash flow based on current listings, market comparables, and trends.

2. Market vacancies and find great tenants

In order to secure great tenants fast you need to market your property effectively. Thankfully, there are plenty of online listing sites, such as Zillow and Zumper, which allow you to get your rental listing in front of hundreds of prospective tenants as quickly as possible.

Finding new tenants often follows the following steps:

  1. Write the rental listing and post it to sites like Zillow.
  2. Show interested tenants around the property.
  3. Receive and pre-screen applicants. 
  4. Run a comprehensive tenant screening report on qualifying tenants.
  5. Run any additional checks, such as confirming landlord references.
  6. Offer the lease to the best tenant and sign the lease agreement.
  7. Welcome the tenant to their new home.

Once your tenant is selected and the lease is signed, the next steps include securing the security deposit and first month’s rent and arranging a move-in inspection with the tenant.

You might like: 12 Free Rental Listings Sites To Advertise Your Property

3. Inspections and property maintenance

The landlord’s job doesn’t end once the tenant has moved in. Swiftly addressing maintenance and repair concerns bolsters tenant satisfaction and increases the likelihood that the tenant will stay on for longer (helping you keep vacancies to a minimum). 

Periodic property inspections and routine maintenance to things like the HVAC system and appliances will also reveal any unreported damage or wear and tear that needs resolving so you can identify and tackle minor problems before they escalate.

For streamlined repairs and quicker responses to tenant maintenance requests, you can use software like Landlord Studio, which allows tenants to submit maintenance requests with images via the app. These can then be prioritized and tracked via the app.

It’s a good idea to maintain a roster of licensed quality contractors for heating, cooling, plumbing, and electrical work that you can call when needed.

4. Collect rent and enforce the lease

A quality system for rent collection will help keep your tenants happy whilst minimizing the chances of late and missed rent payments.

There are a variety of ways you can collect rent, including cash and checks. However, most self-managing landlords opt for employing an online rent collection software like Landlord Studio.

Online rent collection is faster, more secure, and easier for both parties. With Landlord Studio, tenants can set up auto-pay to avoid forgetting about payments, and landlords can set up automated rent reminder emails, block partial payments, and income is automatically tracked in our award-winning rental accounting system.

Should a rent payment be late, you will need to ensure that any late fees stipulated in the lease are enforced. And should a tenant continue to not pay rent you may need to resort to eviction proceedings.

5. Evictions and tenant management

Despite stringent tenant screening, an eviction may eventually become necessary. Residential evictions are costly and time-consuming and the details vary based on circumstances, location, and jurisdiction. 

During an eviction, rental income often comes to a complete halt and costs can quickly stack up. Because of this, some landlords employ a pragmatic approach - offering cash incentives for tenants to vacate. This strategy, known as "cash for keys," mitigates eviction expenses and allows landlords to more quickly get the old tenants out and new tenants in to restore cash flow.

6. Adopt a good accounting and management system

A quality accounting system for your rental properties should come with a few key features. These include document storage, receipt tracking, and the generation of accurate financial reports. 

While basic spreadsheets or generic software suffice, many real estate investors turn to Landlord Studio to streamline investment tracking and automate income and expense management.

Landlord Studio offers the ability to:

  • Monitor single-family, multifamily, and short-term rentals
  • Automate income and expense tracking
  • Generate reports and export tax-ready financials
  • Evaluate property and portfolio financial performance
  • Track expenses on the go through the iOS and Android app
  • Scan and securely store property-related documents

Landlord Studio aims to empower investors with powerful tools at minimal costs, offering core services for free.

Rental Property Management Options

When it comes to deciding how to manage a rental property, investors can employ one of three distinct rental property management strategies:

1. Self-Managed Approach

Landlords looking to maximize their returns often opt for the hands-on route of managing their rental properties themselves. This DIY property management approach appeals to owners who are hesitant to delegate tasks and have enough spare time to dedicate to their investments.

Nonetheless, the scope of management responsibilities can become overwhelming, and it’s essential investors thoroughly understand landlord-tenant and Fair Housing laws, to avoid exposing themselves to legal disputes.

2. Selective Outsourcing of Services

Certain property management companies provide landlords with the flexibility to cherry-pick specific services for outsourcing. For instance, many management firms offer a "leasing only" package, catering to DIY landlords seeking assistance in marketing vacant properties, screening potential tenants, and finalizing lease agreements. While this à la carte model might suit certain landlords, it can pose challenges for those juggling full-time employment or residing in a different state.

3. Engaging a Full-Time Property Manager

The third avenue involves entrusting your rental property management to professionals. Opting for a skilled local property manager to oversee daily intricacies such as tenant interactions, upkeep and repairs, and legal matters can be a prudent choice, warranting the monthly fee involved.

Property management companies typically levy a monthly charge, often around 8-12% of the monthly rent. Many landlords find this fee to be a modest investment to evade the challenges associated with self-management and to ensure a hassle-free property ownership experience.

Why Use Rental Property Management Software

Some elements of property management software provide more excellent value than others, therefore it’s important to know which features to look for.

So, let’s explore a few of the benefits of employing property management software like Landlord Studio.

  • Access anywhere, on any device - Update your rental property accounts in real time, digitize receipts at the point of sale, and access reports, manage communications and set reminders so you never miss an important event or expense again.
  • Save time with task automation - Streamline time intensive tasks like chasing and collecting rent payments, reconciling transactions, and generating reports.
  • Lease management - Set lease end reminders, store documents, automate tenant communications and easily adjust rent amounts.
  • Industry-specific accounting - Track your rental property accounts on a property by property, unit by unit basis with expense categories in line with IRS requirements.
  • Financial reporting - Instantly generate any of over 15 accountant-approved reports for detaild financial insights and a streamlined tax time. Maximize deductions and increase your portfolio profitability.
  • Property maintenance management - Build your list of contractors, allow tenants to submit maintenance requests online, and easily track and prioritize jobs.

Final Words: Rental Property Management Guide

Mastering the art of rental property management is a dynamic endeavor that demands strategic choices and the right tools. By leveraging Landlord Studio’s comprehensive suite of tools, landlords can confidently navigate the intricate landscape of property management.

Whether you're a hands-on DIY landlord or prefer the ease of professional assistance, Landlord Studio empowers you to make informed decisions, maintain financial clarity, and ensure the utmost satisfaction for both you and your tenants.