In episode 4 of The Profitable Rental Podcast, we talk with Kim Avant-Babb about tenant management techniques and how she's managed to keep a 0% eviction rate over a 39-year career in real estate.
As a real estate investor, your rental portfolio represents a pathway to financial success and passive income. A critical aspect of achieving profitability lies in effectively managing your tenants.
While many investors opt for property management companies, self-managing your properties and your tenants can offer substantial advantages, from enhanced control to significant cost savings.
In our fourth episode of the profitable rental podcast, we talked with Kim Avant-Babb. Kim is a real estate investor with a 0% eviction rate over a 39-year career in real estate. In this interview, she reveals the techniques she employs when forming the foundation of the landlord-tenant relationship, tips for tenant screening, and the mindset that has helped her navigate these often challenging relationships.
Selecting the right tenants is the foundation of a successful rental portfolio. Logan Ransley, co-founder of Landlord Studio, began the intevriew by exploring some of the negative impacts of bad tenants. "Bad tenants can quickly become a big problem," he warns, leading to missed rents property damage, and even evictions proceedings that can cost investors tens of thousands.
Kim echoes this sentiment, stressing the importance of tenant screening. She advises, "It's all about setting standards and setting expectations" up front. Thorough tenant screening, including background checks and employment verification, is essential to minimize rental risks.
Open and transparent communication is the cornerstone of a successful landlord-tenant relationship. Kim believes that approaching landlording with a business-oriented mindset is crucial. "Landlording is a skillset, and without the right skills, it can lead to missteps, frustration, stress, and lost revenue," she says.
Clear communication about expectations, standards, and property care helps build trust and mutual respect between landlords and tenants. Identifying preferred communication methods, whether it's email, phone calls, or texting, enhances tenant satisfaction and ensures efficient issue resolution.
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Reducing tenant turnover is a key goal for maintaining profitability. Kim's experience highlights the significance of single-family properties for longer tenant stays. Single-family homes tend to provide a sense of home and stability that contributes to lower turnover rates.
Tenant screening remains at the forefront of her strategy, aligning values and character to ensure a strong tenant-landlord partnership. The concept of tenant selection as a dating process is instrumental—this approach helps align expectations and character, minimizing turnover risk.
Collecting rent efficiently is pivotal for maintaining a profitable rental portfolio. Kim emphasizes embracing technology for this purpose. "95% of our rent collection is through ACH," she reveals, highlighting the convenience and efficiency of electronic rent payments.
The positive impact of technology in rent collection can be seen when looking at the stats of Landlord Studio users which shows that landlords who use online rent collection software are less likely to have late and missed rent payments. Online rent payments not only enhance on-time payments but also offer convenience to tenants, increasing tenant satisfaction.
As your rental portfolio expands, implementing tools and systems becomes imperative. Kim's advice aligns with this notion, urging real estate investors to continuously seek improvements. "Being a lifetime student and continuously learning new techniques and systems to run your business more efficiently is critical," she asserts.
Property management and accounting software allow real estate investors to streamline operations, enhance accounting accuracy, and provide data-driven insights for informed decision-making.
Successfully self-managing tenants requires a strategic blend of tenant selection, effective communication, modern rent collection methods, and implementation of efficient systems. The insights provided by seasoned investors like Kim offer a roadmap for real estate investors to optimize their own rental portfolios.
By adhering to the principles of transparency, professionalism, and continuous improvement, investors can create a thriving rental business that stands the test of time and economic fluctuations. Remember, the key to profitable self-managing lies in a holistic approach that balances business acumen with tenant-centricity.