Investing in real estate can be a great way for someone to build long-term wealth and even increase their monthly income. There are several tips to follow that will help you manage your rental property and maximize your investment returns.
Treat Your Rental Property Like A Business
One important tip to follow with a rental property is to treat it like a business. Many novice investors will take a casual approach to their rental properties. However, you need to ensure that you are actively managing all aspects of it. This includes finding tenants, making repairs, keeping financials and taxes organized, and complying with any local regulations.
Set The Right Rent Price
As you are looking to lease your investment property, setting the right price is very important. If you try to lease it for too much, you may not be able to find a qualified tenant. If you lease it for too low, you could be leaving money on the table. Due to this, you should always do your diligence and make sure you know the market rent for a property such as yours.
Create And Follow a Tenant Screening Process
The most important choice that you will need to make when you are investing in real estate is when you select a tenant. In many cases, having a bad tenant can be worse than having no tenant at all as a bad tenant could stop paying rent or cause damage to your property. Because of this, you will want to have a formal tenant screening process to validate that you are leasing to someone you can trust.
A tenant screening process should always include a full tenant background check. This will include completing a criminal background check, running a credit check, verifying employment and income, and getting references from past landlords. This information should give you comfort that you are selecting a quality tenant to live in your property.
Know Local & State Laws Pertaining To Rentals
Depending on where you live, there can be strict laws in place regarding rentals. These can include both state, country, or local laws. If your property is part of a home or condo association, there can be additional laws as well. Due to this, it is important that you understand all restrictions and regulations before purchasing the property and follow them moving forward.
Have A Written Rental Agreement
One mistake that new property owners will make is not having a formal lease in place. While this might seem easier, it can be a significant mistake. You should always have a formal rental agreement signed with the tenant. The lease agreement will spell out all terms of your agreement including the rent amount, due date, penalties, and responsibilities of each party.
Collect Rent Payments Online
Accepting online rent payments is also a good idea. Online rent collections is convenient for both you and the tenant, which can reduce the likelihood of late payments. Further, it provides an electronic record, which is ideal for record keeping and when you need to pay taxes.
Keep Good Tenants
Having a good tenant is an asset that you should never underestimate. If you have a tenant that pays on time, takes good care of your property, and is trustworthy, finding ways to keep them should be a top priority. This could be done by not increasing rent each year, making improvements to the property, and doing what you can to keep your tenants happy.
Owning an investment property can be a great idea for anyone looking to invest and diversify. For those that are new to owning an investment property, you could find that the process of owning or managing it can be difficult. By following these tips, you can properly manage your investment property.