The Covid-19 pandemic has created a cloud of uncertainty that forced us to worry and fear for our lives and future. Because of that, many of us have started to look for ways to generate more income. It’s all fueled by our goal of securing our future.
Like any other property owner, it’s time you make your investments start working for you. Starting a business in real estate is an excellent way to generate extra income, and renting out your properties is the most lucrative option. That’s because you can still make money from them without selling them.
While it’s true that you can get great returns from renting out your properties, it’s not a set-it-and-forget-it type of business. It does still require some work before you can start earning from it. Fortunately, all of them are worth doing since the potential profit you can gain from renting out your properties outweigh the work that’s needed.
The first thing you must do before you get started should be to learn your way around property management. Without it, even the most beautiful and well-made properties can end up becoming unprofitable if not managed well. It’s not just about knowing how to fix a leaky pipe or changing out a light bulb. It runs much deeper than that. Property management requires you to become many things and have knowledge about everything. With that said, here are some of the things you should know about how to manage your properties well.
Tenants
Managing your tenants is the most immediate part of property management. It’s not as simple as just collecting rent. Tenant management covers many things, and it starts even before you accept them into your properties. With that said, you should create an organized system and a strategy that you can follow for all situations where the tenant is involved. Having that will help you become a successful landlord. So here are the things you have to manage:
- Rent and Collection: In a perfect world, you’ll have all the best tenants that live harmoniously together and pay their dues on time. But that’s unfortunately not the case. From the beginning, you must establish due dates and collection dates that every tenant needs to follow. Add grace periods that can help some tenants who need more time to make their payments and late fees to penalize tenants who show habitual disregard of the due dates. It’s also in your best interest to set parameters on how to deal with delinquent tenants.
- Contract Agreements: Make sure that your landlord-tenant lease agreements meet the requirements of the latest version of the law in your local area and verify with your lawyers if they are legally binding. Also, take note in detail of the start and end dates of each tenant’s lease agreement. These will help you avoid any legal issues and disputes in the future.
- Tenant Acquisition: After you’ve established your landlord-tenant agreement and your responsibilities as a landlord as well as the responsibilities of your tenants, the next step you should take is acquiring the tenants of your properties themselves. And that involves running ads for your vacancies to attract potential tenants, screening them, verifying their applications and credit scores, informing them of your terms and conditions, and the requirements they need to fulfill before moving in as well as moving out.
Maintenance
Now we get to the focal point of property management, managing the property itself. There’s more to it than just fixing a broken faucet and other similar odd jobs. And a lot of it has to do with prevention and upkeep. We can break what property management is into two general categories, which are inspection and maintenance. And here’s what you have to do for each:
- Inspecting: Before handing over any space to your tenants, you must do your due diligence by inspecting every part of the area you are renting out to them. Take pictures, create a checklist, and record the condition of every area of the rentable space. And do the same once the tenant leaves. It’s because having records of how it was before the tenant moved in and after will make it easier for you to find any damages that may have occurred during the tenant’s stay. If any problems arise, ensure that your space is insured beforehand to avoid costly disputes and ugly landlord-tenant legal battles. Aside from your inspection, you’ll also have to deal with the town’s inspector. They’re responsible for making sure that your space is following all the requirements of the local health and safety codes. So make sure that your property is always following them to avoid running into problems with your local health inspector.
- Maintaining: This is the part where repairs and upkeep are. Make sure that you’re always maintaining both the indoor and outdoor spaces of your property. Make sure that you quickly address complaints and respond to calls for repairs from your tenants. Make it a point to provide high-quality services and maintenance that reflect how much you charge for rent, but it should also be within reason. The easiest way to spot problem areas in your property that needs fixing is by hiring a home inspector to do it for you. That way, you’ll have every issue with it handed to you in a professionally detailed way.
Finances
The last part of managing a property is its finances. Keeping a record of the cash flow that goes in and out from renting out your spaces will help you identify if you’re making a profit or taking a loss. It’s easy to get lost in the excitement of starting your new business but later find out that you’re operating it in the negative. So take everything into account, from your operating expenses to the rent you collect each month. These will help you understand your figures better and help you make the necessary adjustments before you start. Doing these beforehand will ensure that you’re making money from renting out your property and not losing money from it.
Final Thoughts
As with any new business owner, the idea of having a business you can call your own can give you all the excitement in the world. But don’t get too carried away and start too hastily. Always make sure that you have a clear mind before making any business decisions. And that’s even more important when it comes to renting out your properties. Take these tips and strategies to help you in your adventure into real estate. Because if you get your property management right, the profits will be incredible.