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About 45% of landlords in the US choose to self-manage their rental properties, proving that it’s possible to have a successful rental business without a professional to oversee operations. What these statistics won’t tell you is that some tools and services can assist with property management. Knowing what can help you with your responsibilities will further ensure your success in your venture.
Key Highlights:
- Landlords can greatly benefit from using property management software for tasks like rent collection, maintenance tracking, and financial management. They can also use rent collection apps to ensure secure and convenient transactions.
- Establishing a network of trusted, local vendors is crucial. A strong relationship can lead to reliable service and potential discounts for recurring maintenance and repairs.
- Landlords should have a working understanding of basic laws, particularly Fair Housing Laws, to avoid discrimination. Familiarity with local and state laws regarding rent, security deposits, and maintenance is also vital.
- A cash reserve, ideally 10-30% of monthly income, acts as a safety net during periods of low rental demand, ensuring the landlord can still cover essential costs like mortgage payments and property upkeep.
- A comprehensive and well-drafted lease agreement is the most important tool for preventing disputes. It must clearly outline all rules and terms, from rent payments and security deposits to maintenance responsibilities and legal disclosures.
Property Management Software
Many sectors benefit from software features to streamline operations, and the rental industry is no stranger to these technological advancements. You’ll find several products that offer the basic functions of property management software, but some have more features than others. Research different options to find the software that best fits your needs. At the very least, the tool should include:
- Rent Collection
- Maintenance Management
- Lease Tracking
- Financial Management
- Communication Channel
Advanced features you can look for are:
- Vacancy Management
- Tenant Screening
- Lease Renewal Automation
- Mobile Access
Rent Collection Apps
While this is often included in property management software, you can opt to separate the function to ensure secure transactions. Software, after all, can be susceptible to ransomware attacks. With rent collection, you can use cash apps, bank apps, or other trusted tools.
Rent collection apps offer convenience for both the landlord and the tenant due to their accessibility. All parties can view transaction histories to track payments, which comes in handy when there are disputes.
A Network of Vendors
Building a network of local vendors often pays off in a plethora of ways. One is reliable service, given the relationship between the landlord and the vendor. Another is a discounted service. When you make a deal with vendors by exclusively contacting them for needed services, some would offer discounts for continued business.
To find reliable vendors, do your due diligence and ask fellow landlords about the options they trust. Look for local vendors for faster service, and check the reviews from previous customers to verify their standards.
Basic Landlord-Tenant Law Knowledge
You don’t have to know every law concerning your rental business, or even have in-depth knowledge of common ones. You do have to learn the basic ones to avoid violating any laws accidentally. Fair Housing Laws are among the most important laws out there, since they prevent biased considerations when choosing tenants for your property.
You should also familiarize yourself with federal, state, and local laws regarding rent prices, security deposits, property maintenance, zoning regulations, and pet policies. When in doubt, it’s best to consult a legal professional.
Cash Reserves
You’ll never know when rental demand might plummet, leaving you with a negative cash flow. This is why cash reserves may serve as a safety net for your business. Even with reduced or no income at all, you will still be able to maintain your rental property and keep the lights on until you find a new tenant.
Some property owners set aside 10% of their monthly income for their cash reserve, while others can go up to 30%. You can base the percentage on market volatility or peak seasons in rental demand.
Comprehensive Lease Agreement
Every landlord is advised to draft a solid lease agreement to prevent any misunderstandings or disputes among their tenants. With clear rules, your tenants will be better informed and follow them to prevent violations.
Your lease agreement should outline the following:
- Basic Information (Landlord’s Information, Tenant’s Information, Address)
- Rent Terms
- Rent Price
- Security Deposit
- Utilities & Services
- Maintenance & Repairs
- Rules & Regulations
- Termination & Renewal
- Legal Disclosures
Signs That You Might Be Struggling
Inconsistent Rent Collection and Record Keeping
Rent is the lifeblood of a rental business. Inconsistency can lead to unstable cash flow, which in turn can keep you from paying bills on time. This will ultimately affect your financial management and lead to difficulties in balancing your income and expenses.
Negligence with Maintenance and Repair
Regular maintenance and addressing repair requests keep your investment property in good condition. Failure to follow up on these issues could negatively impact tenant satisfaction and lease terminations.
Low Occupancy
Marketing your rental property is crucial to finding tenants. If you seem to be having trouble with finding renters despite good rental demand, you might not be marketing your property correctly. Vacancy means no income, and no income means you can’t pay bills like the mortgage or utilities.
Lenient Tenant Screening
Screening applicants keeps you from renting to tenants who may not follow your lease rules, such as rent payments on designated dates or property upkeep. You might have to evict a tenant to prevent further issues, and this will be a lengthy process to follow through with.
Constant Stress
Anyone who has to oversee many aspects of property management can easily be overwhelmed, which is a common circumstance in rental property ownership. Landlords who lose sleep or end up being burned out will not be able to navigate every responsibility at 100%, which goes without saying, is bad for your business.
Ensure Success for Your Rental Business
Just because you can self-manage your rental property doesn’t mean you have to. There are plenty of professional services that can lift the weight off your shoulders, allowing you to earn passive income and focus on other profitable ventures.
Here at ES Property Management, we can assure you that we have the resources to turn your financial goals into reality. Use our real estate expertise to your advantage and gain the needed edge in the rental market.
There’s no time to lose! Contact us today, and we can get started right away.
