Landlords have goals, concerns, and challenges they face daily, different from hotel managers.
Getting into property rentals and management is challenging because there are many things to learn and issues to overcome. And you’re probably also juggling the rental-related responsibilities with a full-time job and handle all the issues that arise without asking for help or assistance. But this can overwhelm you in the long run because this role requires a lot of time and effort on your part. You need to run the rentals, attract and retain quality tenants, maintain and manage the property and ensure this side-gig contributes to your overall financial well-being. Overcoming the above challenges isn’t easy, especially if you make some mistakes that can cost you money and time.
Beginner property managers often face two hazards.
– They have legal disputes with the renters. Sometimes beginner property managers or landlords break or violate a law because they have no knowledge of it, and the tenants take them to court. Other times there is no violation but a fight that escalates into a legal battle and the landlord needs a legal expert to support them.
– Losing money. When they lack experience, property managers can underestimate the actual cost of a rental and end up losing money. Also, they cannot find quality tenants to fill the vacancies and get a steady drain of income.
The following guideline should help you avoid the above issues.
Set expectations and prices
After you renovate the property and decide it’s ready to be rented, there still are a couple of steps to complete before attracting tenants. You first have to set your expectations and prices.
Research the local market to determine the average rental price for similar properties and find out how many available rentals are available. By knowing who your competitors are, you can determine how much you can ask. When you research the market, focus on the following aspects.
– The average income in the region
– The average family size
– The average rental price
– The location (does it provide extra perks than other areas?)
You can even visit other rentals to understand what your competitors offer.
Once you set your expectations, find out what your ideal client wants. In addition to the price they’re willing to pay, you should also try to identify their needs and preferences. By creating your ideal client’s portrait, you have better chances to attract them.
Make a list of the target client’s characteristics, and remember it’s illegal to discriminate against tenants. Here is what you should look for:
– Past rental history
– Minimum income
– Smoking or no smoking
– Pets or no pets
– Employment requirement
Determine what your property management metrics are
Managing a rental property works similarly to running a business. Therefore, you need to know what the building’s key performance indicators are to use them to your advantage. Here is a list of the main property management metrics you should track.
– Occupancy rate. When you manage multiple properties, you must know how many units are occupied vs the ones available. This metric allows you to improve your business’ performance because your goal is to have the property 100% occupied.
– Property maintenance cost. Property maintenance is a necessary expense when renting buildings, but you also need to track how much you spend on repairs and maintenance to determine if the property is profitable.
– Renter turnover. How many tenants decide to extend their lease? And how many decide to leave once it’s over or even before the established term? When managing multiple properties, it’s impossible to retain all tenants, but a high turnover rate indicates an issue.
Keeping an eye on these management metrics can help you identify possible issues that trigger high maintenance costs.
Learn the local laws
National and local regulations can quickly become a significant property management challenge, especially when you violate them because you don’t know them. Before you list the property for rent, check the rental property management laws to ensure that you are doing it right. There are multiple ways to get informed; you can visit the state and municipal sites to read the regulations, consult with a property management specialist to provide you with guidelines and join the local property management association to collect information.
Hire a letting agent
It may be tempting to try and reduce the costs of managing your rental properties, but sometimes spending a little can be beneficial in the long run. As a beginner landlord, you can think you save money if you don’t hire a letting agent, but there are many reasons why this decision can cost you more.
There are a couple of reasons why hiring a letting agent is an intelligent choice. This is what they do. You don’t service your car because you don’t have the skills, but you take it to a specialist who has the knowledge and tools to do it. So, if you don’t service your car, why would you handle this task when you don’t know how to do it? A reputable company is a good example of letting agents in the area you can trust with your assets. They know the market, trends and can easily attract clients. They don’t guess how much your property costs because they have the needed tools to evaluate its value.
Rent the property
This is the most exciting and challenging step because you need to find quality tenants. You need to advertise the property and promote it as their ideal house. Talk with potential clients, identify the good ones that will respect your property, pay the rent in time, and don’t damage the space. At the beginning, it isn’t easy to discern reliable clients during the interview, but in time you’ll develop this skill. You can find online questionnaires that help you filter potential tenants and find the right fit.
It’s the time to be the best landlord.
Don’t allow this task to overwhelm you. Learn how to do it and use all the tools at hand to ease your job.