Investing in a good rental property can provide a steady source of passive income and set the stage for long-term prosperity. However, you can’t simply purchase a property, find tenants and expect everything to magically work itself out. The way you manage your first rental property will play a large role in determining your success moving forward. First-time property owners looking to succeed as landlords should consider the following measures.
Properly Screen Prospective Tenants
Tenants who are habitually late with rent – or fail to pay rent altogether – are among the most common causes of lost income for property owners. While there’s no surefire way to predict whether a prospective tenant will ultimately prove problematic, thoroughly screening rental applicants can give you a pretty good idea of what kinds of tenants they’ll be. For example, applicants with a history of bad credit, non-payment of rent or evictions are often more likely to create headaches than individuals with solid credit and good references. Of course, this isn’t to say that applicants with money problems are in any way bad – they just might not be particularly timely or forthcoming with rent, which stands to hurt your bottom line.
When screening prospective renters, remember that the ideal tenant will have a decent credit score, no evictions, positive reference checks and stable employment. Holes in one’s work history needn’t necessarily be taken as a red flag, particularly if an applicant has a good explanation for the gaps and is currently employed. While a candidate should ideally have a monthly income that is thrice the cost of rent, a slightly smaller income should be considered acceptable if the property is based in an area with a high cost of living or the applicant has good credit and no history of evictions.
Employ a Full-Time Maintenance Staff
If you own a property with a large number of tenants – i.e., an apartment building or condo complex – you’ll be well-served by employing a full-time maintenance staff. This will ensure that a wide variety of electrical, plumbing and general upkeep issues are tackled in a timely manner. The longer tenants have to wait for repairs, the more likely they are to grow impatient with you or voice their dissatisfaction online. When thinking about how to invest in real estate, you can’t afford to overlook the impact negative online reviews can have on your professional reputation.
For best results, make a point of hiring rental property management services who are skilled in a variety of maintenance-related disciplines. Additionally, since your maintenance personnel will be interacting with tenants directly, look for people who are every bit as personable as they are professional. You should also be mindful of any complaints tenants raise about your maintenance staff. While some tenants may heap unfair criticism upon them, it’s best to take any concerns they raise in good faith.
Be Willing to Hear Tenants Out
It’s important that tenants feel that they can come to you with any issues they’re having with the property. In addition to making yourself available to hear their concerns, you should also address these issues in an expedient and professional manner. This is a great way to make tenants feel heard and respected and increase your odds of retaining renters long-term.
At the same time, however, you should avoid getting too friendly with tenants, as this stands to make things awkward whenever someone makes an unreasonable request or is unable to pay rent. As a general rule of thumb, tenants should view you as approachable and empathetic to their concerns but also understand that you’re running a business. By promptly addressing the issues they raise, you’re essentially holding up your end of the arrangement – and by staying current with rent and taking proper care of their respective units, they’re upholding theirs.
The right rental property can be a fantastic investment. A well-maintained property in the right area can generate a significant amount of passive income each month and set the stage for long-term financial stability. However, in the absence of the proper management, even the most desirable rental property is liable to have trouble finding tenants. So, if you’ve never owned and/or managed a rental property before, it’s in everyone’s best interest that you do your homework. Fortunately, managing your first property doesn’t have to be an arduous undertaking – provided, of course, you have the right tips at your disposal.