Managing rentals can be a rewarding investment venture but comes with its fair share of challenges. It can be time-consuming but also lucrative. Adopting effective management strategies is crucial for success, whether you’re a first-time landlord or an experienced property owner. You’ll need specialized knowledge, patience and persistence as a rental investor. Here you’ll find insights and tips on how to manage rental properties efficiently.
Steps Required to Manage a Rental Property Successfully
How do you manage rental properties? Here is a comprehensive guide to managing a rental property that covers various aspects of rental investment, from determining fair market rent to property inspection and maintenance, marketing the property, rent collection and lease enforcement as well as eviction procedures.
You also will find guides to using rental property accounting systems to simplify income and expense reporting. Here’s what you need to know.
Determine the Fair Market Rent
Determining the fair market rent for a rental property requires you to understand realistic rental values for the location, property condition, amenities and market trends. You’ll want to look at comparable properties, also called comps, in the same area and see what they are renting for. This offers a base guideline for current market rental rates.
In addition, to conduct market research, consider online listing sites and physically driving around a neighborhood to check comparable listings. Zillow, RentRedi and other sites offer current rental income information for a comparison search to establish an appropriate rental price.
Market the Vacant Home for Rent
Marketing a vacant home for rent is crucial to attracting potential tenants and minimizing vacancy periods. With a strategic approach, you can effectively showcase the property’s features, reach a wider audience and secure quality tenants. First, you’ll want professional photographs showcasing property features. Then, create a compelling property description. Finally, consider staging the property to attract potential tenants.
Effective strategies for marketing a vacant rental property include:
- Using online platforms and property management sites
- Spreading the word on social media
- Engaging with local real estate agents
- Creating a virtual tour and video
- Posting yard signs and flyers
- Distributing flyers at local community centers, coffee shops and other high-traffic areas.
- Networking with local businesses, including real estate agencies, relocation companies or the human resources (HR) departments of corporations
- Hosting open houses and showings
- Offer finder’s fees or incentives for potential clients, including discounted first month’s rent, flexible lease terms or added amenities
Inspect and Maintain the Property
Regular property inspections and maintenance are essential. Key areas to inspect include structural elements, electrical systems, plumbing, roofing, doors and windows and appliances.
Create a maintenance schedule and ensure that nothing falls through the cracks. Address repairs promptly and maintain regular upkeep to ensure tenant satisfaction and property value preservation.
Collect the Rent and Enforce the Lease
Consistent and timely rent collection is vital for the financial stability of your rental property. Clearly communicate to tenants the rent payment schedule and methods of payment. Offer convenient options such as online payment platforms or automatic deductions. Enforce lease agreements regarding late fees and follow up promptly with tenants who fail to pay on time.
Include in the contract fees or penalties in case of lease violations, and follow up by issuing appropriate notices and enforcing rules and regulations.
Evict Tenants Who Don’t Pay the Rent
Consult a local lawyer for the legal procedures for evicting tenants who fail to pay rent. Generally, you will need to file a complaint with the court. This complaint will initiate the court proceedings. You must send the tenant a copy of the formal complaints, generally through certified mail.
Consider a settlement agreement, a payment plan or mediation with the tenant to settle eviction proceedings and minimize potential conflicts quickly.
Use a Good Rental Property Accounting System
A reliable rental property accounting system will simplify tax reporting. The benefits of accurate financial record-keeping and tracking income and expenses will simplify the tax preparation process. It can also help in managing rentals’ security deposits on multiple properties. Popular accounting software suitable for rental property management includes AppFolio, Rentec Direct, Buildium and Property Matrix.
Property Maintenance Obligations
Landlords have significant responsibility for property maintenance from routine maintenance tasks to the supervision of hired personnel to emergency maintenance. Scheduling common maintenance tasks ensure the property remains in good condition.
Perform Routine Maintenance
Essential routine maintenance tasks that landlords should undertake regularly include:
- Landscaping
- Cleaning common areas, especially in apartments or commercial properties
- HVAC maintenance
- Pest control
- Appliance inspections
Creating a maintenance checklist and establishing a preventive maintenance schedule can include:
- Scheduling regular yard maintenance
- Performing annual equipment checkups and necessary property repairs, including sealing doors and windows and checking for cracks
Handle Emergency Maintenance Promptly
It’s important to address emergency maintenance issues promptly. Common emergencies include:
- Plumbing leaks
- Electrical problems
- HVAC failures
- Problems with locks
- Water pressure or drainage issues
- Appliance malfunctions
For a good tenant experience, it’s important to handle all emergencies on the same day. Maintaining a network of reliable contractors or establishing emergency contact protocols can ensure that any issues that arise are handled efficiently.
Supervise All Hired Personnel
Of course, hired help is only as good as their focus and work. Especially when starting out, it’s essential to supervise any personnel hired for property maintenance tasks. Clear communication and setting expectations can go a long way in ensuring hired contractors or maintenance staff perform their duties effectively.
When communicating requested activities, maintaining proper documentation of personnel agreements will ensure that if anything goes wrong, you’ll have backup information.
Tenant Management Obligations
Responsibilities of landlords in managing tenants effectively include regular communication, prompt response to repair requests, rent reminders and ensuring tenant safety. This includes:
Communicating with Tenants Regularly
Maintain regular communication with tenants, including through email, phone or online platforms, to address concerns promptly and provide relevant updates or notices. Maintaining a positive relationship with tenants will benefit both parties and establish better communication if any issues arise.
Responding Promptly to Repair Requests
Nothing will annoy tenants as much as ignoring necessary repairs. Reply promptly to all repair requests from tenants. Establish a repair request process, prioritize urgent repairs and maintain clear communication throughout the repair process, including updates on any scheduled tradespeople who need to enter the property. Again, maintaining relationships with reliable contractors can help to expedite repairs and ensure better service for clients.
Sending Rent Reminders
Sending rent reminders to tenants is one of your fundamental responsibilities as a landlord. Set up automated reminders through email or text, and establish a consistent rent payment schedule. Handle late payment notices clearly and professionally. You can also consider incentivizing on-time rent payments with additional amenities, annual rent reductions or other financial bonuses.
Ensuring Proper Safety Measures Are Taken
The landlord’s responsibility to ensure tenant safety includes installing essential safety measures, such as functioning smoke detectors and CO2 detectors. You’ll also need to maintain secure locks, address potential hazards or dangers like loose railings and comply with local safety regulations. Conduct periodic safety inspections to ensure everything is up to standards and inform tenants about emergency procedures.
Rental Property Accounting
Rental property accounting practices include clear records of rent collection, security deposits, reporting expenses related to rental properties and filing taxes.
Collecting Rent
The best practice for collecting rent from tenants is to make it easy to pay. Offer different payment methods, such as online platforms or direct deposits, as well as cash and check payments. Tips for tracking rent payments efficiently include using a dedicated rental expense tracking app and putting all expenses on one business debit or credit card to make tracking easier.
Address late or missed payments professionally with a reminder. Communicate with the tenants to work out a payment schedule, and as a last resort, submit an eviction notice.
Managing Security Deposits
You’ll need to manage multiple security deposits if you have multiple properties. Adhere to local laws regarding security deposits, including their collection, storage, and return. Establish clear procedures for handling security deposits and resolving disputes, including when the security deposit will be returned and under what conditions. Have the contract with details signed by both parties.
Filing Taxes and Reporting Expenses
You’ll need to file taxes to report the rental income and expenses on tax form Schedule E (Form 1040) for supplemental income. Consider possible deductible expenses, such as maintenance costs or property management fees, with interest payments and depreciation. Consulting a tax professional for accurate tax reporting and to maximize deductions.
Final Tips to Manage Rental Properties
If this list is overwhelming, don’t worry. Managing rentals, as with so many investment opportunities, requires that you take it one step at a time. You can hire a property manager to help smooth out management costs, usually at a flat percentage of rental income. Marketing firms and local Realtors will be happy to help find good tenants. Sometimes, the best way to manage rental properties is to build a team of specialized professionals to ensure the process goes smoothly.
If you’re ready to start, learn how to buy your first rental property here. As you diversify your investment portfolio, consider other ways to invest in real estate or check out Arrived Homes to invest in real estate or learn more about managing rental properties here.
Alternatives to Owning and Managing Rental Properties
While rental properties can be a great investment, it's not the best option for everybody. Real estate crowdfunding has made it possible for individual investors to add real estate to their portfolios without taking on any of the headaches that go along with being a landlord. Below is a list of Benzinga's top real estate crowdfunding options as an alternative to managing rental properties.
Must be accredited investing a minimum of $25,000.
This is a testimonial in partnership with Fundrise. We earn a commission from partner links on Benzinga.com. All opinions are our own.
Frequently Asked Questions
How do I determine the fair market rent for my property?
To determine fair market rent for your property, consider doing market research and comparing rental prices of comparable properties through online listing sites and by speaking with local Realtors.
How often should I inspect and maintain my rental property?
Usually, it’s a good idea to conduct routine checks two to three times during a lease period or at a minimum, every year. Depending on the type of property, the number of tenants, the age of the property and its amenities, you might want to check in more frequently.
How often should I communicate with my tenants?
For good tenants, communicating with them every few months is sufficient. For other tenants, you might need to communicate each month to remind them of rental payments and ensure everything is functioning smoothly.
About Alison Plaut
Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.
