Top 5 Tips for Self-Managing Rental Property
Buying a rental property requires some risk-taking already. Self-managing your own rental property can be even more intimidating. Too many people have shied away from real estate investment because they are afraid of managing properties themselves. Learning how to manage your rental property is easy.
Luckily we have compiled the best tips from investors who manage their own rental property.
Good Tenant Placement
One of the most crucial determinants to your success is your ability to find great tenants. The investors we interviewed have recommended using Zillow, Trulia, and Craigslist for finding tenants in most markets.
Despite what realtors say, tenants do not look at Multiple Listings Service (MLS) for rentals. If you happen to live close to your properties, you can also meet tenants in person before signing the lease with them.
Some investors make the mistake of prioritizing quantity over quality. Especially when their properties have just been renovated and made available. Taking the time to find great tenants is more important than filling the units quickly with bad tenants. One bad tenant can make other good tenants want to move.
Always background and credit check prospective tenants. Burbz offers free screening reports, click here to learn more.
Further, the best investors underwrite a sufficient reserve for when vacancy is still ramping up. This allows them to afford to be selective and wait to find the best tenants.
Simplify the Payment Process
Tenants are more likely to pay rent on time if you make the process easier for them. Given the technology available today, many rental properties are offering digital payment options.
Tenants no longer have to physically visit the bank to buy cashier checks. Therefore you will no longer have to visit banks to deposit checks. You will never have to worry about losing a rent check again if you decide to use a digital payment method.
Further, you can easily keep a complete record of the exact time your tenants made their payments. However, please keep in mind that not every tenant is tech-savvy, especially in non-urban markets.
The best approach is to offer both digital and traditional payment options. Let the tenants decide which works for them. Even if a tenant decides to hand you a physical check, you can still save time if your bank allows you to deposit checks through the bank’s app.
Visit Regularly & Take Photos
Since you are managing your own property, you can draft your own lease without an attorney. In your lease, you should include a clause in which you obtain the tenant’s permission for you to visit. Take advantage of this to take photos every 3-6 months. If tenants refuse to let you see their unit, there could be a red flag that there is something they don’t want you to find out about.
One of the perks for self-managing is seeing the condition in first-person. During your visit, you should verify that the unit is kept in good condition. Confirm there is no maintenance issue that your tenants have not told you about. You may be surprised that some tenants will ignore for months water leaks that can cost you a fortune.
Lastly, remember to take photos to document what “normal wear and tear” look like over time. These photos will come in handy if you decide to fund repairs from security deposits when tenants move out.
It’s OK If Tenants Don’t Know You’re The Owner
Many investors found it easier to manage their properties if their tenants did not know they were the owners too.
Some investors swear by setting up LLCs under different names, so their tenants never find out their “property managers” actually own the properties. Some tenants may start paying rent late, asking for extensions, or making excuses when they realize you, the owner, have the ultimate authority to make decisions.
If they think you are only the property manager, you can always tell tenants that you cannot make exceptions for them because the “owner” does not permit it.
Alternatively, you can tell them your “partner” will not allow you to provide them more lenient terms if your tenants already know you are the owner. When tenants don’t think you have any decision-making power, they will not be incentivized to make excuses or negotiate with you.
Delegate, Delegate, Delegate
It is now easier than ever to manage your rental property while you are away. However, while you can learn a lot and save money by self managing your properties, you may eventually need to hire property managers as your portfolio grows.
Many investors who refuse to let go of control eventually realize they no longer have the time or energy to manage all of their properties. If you are looking for property management services, a great place to start your search is Burbz, an online platform where you can find and screen property managers or property management companies in your market with ease.
Your time is valuable, and the time that you don’t spend self-managing your rental portfolio is time that you can spend acquiring more investment properties.