Property Management Blog
Lots of people have financial goals tied to income from rental property. It’s often viewed as an easy way to create wealth and cash flow but the truth is it can be hard work.
Whether you currently hold income generating properties in your real estate portfolio or you've been thinking about becoming a landlord, we can help you make sure you've got your management skills and financial goals under control
Start with these six rules to help eliminate beginner’s mistakes:
Make a plan. Remember your rental homes are a business. This is not the time to “wing” it. You need to be able to pay the taxes, insurance, mortgage, maintenance, and manage potential cash lag between tenants. Jumping in without a plan could damage your credit and financial status in the long run.
Shop judiciously. You don’t have to love the rental property, you just have to identify it as a good investment. Establish a budget and a list of criteria for what you’re looking for and stick to it. Look for marketability when purchasing (location to shopping, schools, freeways, grocery stores, number of bedrooms and bathrooms, garage, central air and heat, age of the building) and add curb appeal after the fact.
Make sure you’ve got cushion in your cash flow. Create a cash reserve that’s specifically for your rental properties. Don’t let cash flow keep you from making needed repairs. You must be able to maintain your properties if you intend to attract tenants that pay on time. This is true whether you manage your own properties or you’ve contracted with a property management company.
Don’t try to do it “all.” Rehabbers like to think they can get it all done by themselves. However, creating a strong team of contractors and vendors that can provide you with timely turnarounds and reasonable pricing can help you get things done faster. The faster it happens, the sooner you’ll see a return.
Understand local housing codes, landlord laws, and federal fair housing requirements. If you don’t know what is required of you, you could get into serious trouble with local authorities. Most cities have housing and municipal codes that impact landlords, and the information is easy to find online. Federal housing information is also online.
Be ready to communicate with your tenants. If you don’t want to deal with calls in the middle of the night, collecting rent, or screening potential tenants, then hiring a knowledgeable property manager is the way to go.
Buying a property that needs some fixing up is a great way to get started, but you don’t want to overspend for the neighborhood or general area. Do your research in person. Each state and city responds differently to economic changes. Find out what’s happening in the areas you’re interested in. Talk to renters, other investors, and property managers about the best places for renters.
Thanks to Svilen Milev for the image.
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- Melissa LaRose