There are many steps involved in managing a rental property. This guide can help you get a 10,000-foot view of what you’ll need to do.
Finding tenants can be a time-consuming part of the process. You’ll need to advertise the property, show it and screen tenants carefully.
Rental properties also come with operating expenses that need to be covered each month. These include rent, security deposits, and other fees.
Lease Agreements
Landlords need to provide tenants with a lease agreement before renting a property. A lease contract defines the parties involved, how long the tenancy is, rent costs, and other terms and conditions of the rental.
Some landlords choose to use a month-to-month lease, which automatically renews each month until the tenant or landlord gives notice of termination. This type of lease is ideal for landlords that focus on flexibility and can reduce the cost of managing a property by reducing the amount of time needed to find new tenants.
Ensure your lease agreement includes the legal description of the rental property, including any storage areas or parking spaces. It should also include a detailed list of what utilities the lessor covers, if any, and what utilities the lessee is responsible for.
Tenant Screening
Tenant screening is a crucial part of managing rental properties. It can help identify and prevent issues such as late payments, property damage or legal disputes. This process typically includes a background check, credit report and employment verification. It also involves reaching out to previous landlords and references for firsthand insights into an applicant’s rental history. It is important to ensure that your screening process does not violate the Fair Housing Act, which prohibits discrimination based on race, national origin, religion, sex, familial status and disability.
A thorough tenant screening process can save you time, money and trouble in the long run. To streamline the process, you can use online applications and services that provide a one-stop shop for tenant screening, verifications and other processes.
Rent Collection
Rent collection is one of the most important aspects of managing a rental property. Efficiently collecting rent and managing finances can help a landlord make the most of their investment property. Learn how to separate personal and business accounts, set up individual accounts for each property, choose cash or accrual accounting methods, and take advantage of accounting technology to manage property expenses.
Using thorough tenant screening can also reduce the risk of lost income. However, even the best screened tenants may encounter difficult times that impact their ability to pay their rent. This is when it’s important to use compassion while encouraging rent payment. Emailing tenants a reminder 1-3 days before rent is due, and providing multiple payment options can help keep collections on track.
Maintenance
One of the most important aspects of managing rental properties is maintenance. Keeping the property in good condition will help attract tenants and keep them happy while reducing tenant turnover and increasing overall profitability. Landlords must also perform periodic inspections of the property to ensure that it is up to code and in good repair. Proactive inspections may prevent costly repairs down the road, such as replacing a water heater or repairing structural damage. Tenants must also be able to make maintenance requests, which can be done via a tenant portal or another online tool. Landlords can find many premade maintenance request forms on sites like TemplateLAB and Jotform.
If you are not comfortable performing maintenance on your own, consider hiring a professional to handle the tasks for you. This will allow you to focus your time and energy on other parts of your business, such as marketing and advertising your rentals.
Accounting
One of the most important aspects of managing rental property is accounting. Proper record-keeping will help you understand your financials and make informed decisions for your business. It will also save you time and money at tax time.
To keep track of your finances, you should create a bank account for each of your properties. The bare minimum is a separate checking account for each rental, and you should consider creating savings accounts for each as well to manage deposits. This will prevent you from commingling deposit money with other income and will make it easier to track your finances.
Consider using an accounting software program, such as Quickbooks or TenantCloud, to streamline your record-keeping and automate payments. These tools can allow for online rent payments and automated late fees, and you can customize them to fit your needs.manage-rental-properties