Successful rental owners follow these guidelines to ensure the success of their rental, and maximize their owning experience.
13 KEYS OF RENTAL SUCCESS
Welcome to our comprehensive guide, “13 Keys of Rental Success.” In the ever-evolving landscape of property management, understanding the intricacies of rental success is crucial for landlords and investors. This guide will provide you with thirteen essential keys to unlock the full potential of your rental properties.
1. Treat your rental property like a business… because it is a business!
2. Have a financial reserve set aside for the “unexpected.” Placing 3+-months rental income into a separate bank account can build a safety net around your rental property.
3. Expect the “unexpected.” At some point, something will happen that disrupts your monthly cash flow. It’s inevitable – whether it’s a major repair, capital improvement, or a tenant that loses their job. If you’re financially prepared, with funds set aside, it’s not a big deal.
4. Budgeting: Savvy investors put 10-15% of the annual rental income back into the property. Think of it as investing into your retirement account. Except in this case, it’s upkeep, maintenance, tenant turnover, etc. It is recommended in this industry that investors budget 10-12% of their rental income for management fees and leasing costs. Any discount property managers will likely give discount services. Savvy investors recognize that professional property management is a critical part of having a successful rental property.
5. Plan on maintaining the property. Attractive well-maintained properties allow your property manager to quickly place high quality tenants and keep them happy. Long-term tenancies and low vacancy rates are simple ways to maximize income and eliminate expenses that occur each time a property is turned over to new tenants.
6. Pay the mortgage a month ahead of collecting rent. If there is an underlying mortgage, use June’s rental income to pay July’s mortgage payment. Staying a month ahead is simply financial common sense. Being setup on “Full-Month Accounting” is a great way to follow this guideline.
7. Maintain a good Rental Liability Insurance policy that additionally insures your property manager. A homeowner policy does not offer the protection you need. Oftentimes, insurance premium discounts are available for having a professional property manager in place.
8. Keep Landscaping Simple. Remove anything that’s a hassle for tenants to maintain. Flower and vegetable gardens can be replaced with bark or rock. This simplifies turnovers and reduces costs for you and your tenants.
9. Clean Slate: Don’t leave stuff behind. Owners sometimes think that tenants will want to use the hutch, the couch, the washer/dryer (some markets allow this), or other items in or around the house for the tenant’s “benefit.” The truth is, it’s usually an inconvenience and those items will most certainly be lost or damaged over time.
10. Disconnect emotionally from the property. This can be difficult if you have lived there at some point. In order to make the best financial decisions, remember that your former home is now a money-making business.
11. Allow your property manager to do their job. When you sign the agreement with your property manager, they become the landlord and are now responsible for the day to day. They free you of this burden and allow you to enjoy passive rental ownership. Trying to manage your property manager is a recipe for a failed management strategy. Remember why you hired them in the first place.
12. Focus on results – not details. As the owner, you should know the key financial and performance metrics. Let your property manager handle the rest. Learn to be okay with not knowing every detail.
13. Remember that your property is subject to Fair Housing and other laws. Professional property managers cannot discriminate against protected classes. The same set of qualification criteria must be used to screen all applicants for your property. Your property manager will know the laws surrounding the leasing and management of your property.
Following these 13 Keys will lead you to success.