This guide outlines the strategies you should implement to ensure your rental property investment keeps earning for you.
Many people consider exploring the real estate industry when it comes to starting their own business, and for a good reason. Although earning money on buying and selling real estate might be a little too complicated for beginners, starting a rental property investment is among the most optimal choices for those who want to generate a steady cash flow.
However, to be a successful landlord and have satisfied tenants, you need to tackle several elements — from conducting thorough research and inspecting the property before buying it to keeping it in an excellent condition, setting the right rent price, and finding tenants.
Managing a rental property investment: key tactics
Continue reading to learn more about managing your rental property investment and ensuring a steady stream of extra income.
Carefully select your rental property investment
The first step in starting a rental property investment is carefully selecting a property to buy. First of all, you have to choose the location that’s most profitable. A prime location on a busy street or a popular neighborhood is usually a good choice. In addition, the property should be in good condition, with a good layout and a nice view.
It is crucial to conduct thorough checks of the property — from the foundation to the roof, from the basement to the attic. You should make sure that there are no leaks or moisture problems in the home. Also, make sure that the property is safe and secure.
It might be wise to look into the electrical system and plumbing to avoid making costly repairs in the future. If the house has an outdated electrical system or is located in an area experiencing frequent blackouts, you might have to pay for the repairs or purchase a portable generator. If you choose the latter option, make sure to pick the best portable generator on the market, as a low-quality one will only result in more problems down the line.
Screen tenancts carefully
Once you have found the perfect rental property investment, you will need to find the right tenants. The best way to find suitable tenants is to approach people who already live in the neighborhood and ask for recommendations. You can also post ads in newspapers or online or contact real estate agents who specialize in finding tenants for landlords.
If possible, you may also run credit checks on potential candidates. There are many free services online where you can get credit reports within minutes. However, if you want an official credit report, you will need to pay some sum out of your pocket. Keep in mind that not all tenants can pay rent on time, so it is crucial to screen your candidates carefully before signing a lease agreement.
Set the price
Once you find the right tenants for your rental property investment, you will need to decide how much rent to charge them. Although no rules are set in stone when it comes to setting rent prices, you need to make sure that the rent covers all expenses related to managing and maintaining your rental property (including paying for repairs) and still brings you some profit.
According to experts, it is usually better not to set rent prices too high to avoid scaring away potential renters in the long run. However, this is unnecessary if you are confident that you can find tenants easily or know that you can successfully negotiate for a higher price.
Ongoing management
Once you have found the perfect property and signed a lease agreement with your tenants, it is time to start managing your rental property investment. If you want to succeed in this business, you will need to ensure that your property is in excellent condition and that your tenants pay rent on time.
The best way to ensure that everything is running smoothly at all times is to maintain a good relationship with your tenants. Always be friendly and courteous, and always respond to their requests promptly. It is also crucial to conduct inspections of your property regularly and promptly fix any problems you might find.
If you do not fix the problems in time, your tenants might withhold paying rent until the problems are fixed. For this reason, it is vital to keep an eye on the property and ensure that all repairs are carried out promptly.
Find a good lawyer or accountant
It is essential to establish a good relationship with a lawyer or an accounting firm to minimize the chances of losing money on your rental property investment. If you hire an accountant to help you with the tax preparation, they will find any miscellaneous expenses that you can deduct on your tax return. If you hire a lawyer, you will avoid common pitfalls that landlords can encounter when buying or selling rental properties.
Track all rental property investment expenses and income
The final step in managing a successful rental property investment is to keep track of all expenses and income. You should always have a well-organized system, from paying for repairs and maintenance to paying rent and taxes.
In addition, you should also keep track of how much money you earn from your business by adding up all receipts and invoices for all your transactions. As a bonus, if you use a virtual bookkeeping service, your bookkeeping will be done automatically.
The Bottom Line
The rental property investment business is an excellent option for people who want to earn money and, at the same time, enjoy the freedom and flexibility that comes with being your own boss. However, being a landlord is not as straightforward as most people think.
Once you rent a property, you will need to keep track of all expenses and income and manage your properties properly to succeed in this business. You also have to keep your tenants happy, which can be pretty challenging. Following the tips and tricks we have outlined in this article can help you get started on your path to success. Good luck!
