If you are thinking about buying a rental property, you already know how incredible this investment can be for your finances. Even if you haven’t actually experienced it yet, you’re interested because you know the power of cash flow, and of a tenant paying for the house you own. Rental properties are one of the best possible investments in 2017 - if not the best. But rental properties aren’t 100% passive income. Properties need management, and that’s something that not every rental property owner can handle. Here are some things required of owner/managers.
1) Finding Tenants. This might sound easy, but it isn’t. If you get a good tenant, you might have smooth sailing for months or years. If you don’t, your first gig as a landlord could be a nightmare. To get good tenants, you must advertise widely. This includes professional photos and listings everywhere potential renters might see them. This will get you the biggest pool of applicants. When it comes to deciding on who to allow to live in your property, certain rules apply. You can’t discriminate against renters based on things like race or religion. But you can choose people based on financial attributes, like quality of employment and credit score. The more people you have interested in your property, the more chances you’ll be able to choose a great tenant.
2) Evicting Tenants. At some point in the life of every landlord, some tenant must be evicted. This can be emotionally draining and legally challenging, involving multiple trips to court and help from lawyers and police. Property managers can handle all of this for you. If you opt to do it yourself, have an eviction lawyer on speed dial to help make this difficult process as seamless as possible.
3) Replacing Tenants and Making Repairs. Occasionally, a tenant may break a lease and disappear, leaving you in need of a new tenant as soon as possible. In other cases, you may find yourself strapped with sudden repair bills, when the water heater or furnace suddenly breaks. These moments are times when you will thank your lucky stars if you have a property manager handling these difficulties for you. If you’re the one picking up the phone in the middle of the night, you’ll be the one who has to solve the problem.
4) Collecting Payments. At first glance, this doesn’t sound hard. But payments are often missed. In a situation like this, what do you do? A good system is to have payments automatically drafted from the tenant’s bank account. A secondary line of defense is to have the tenant’s credit card number on file, to take the money if the draft fails. If you don’t do this, you’ll be knocking on doors and asking for checks, and nobody wants to do that.
These are just a few of the things you’ll have to handle as a landlord. If you don’t want to do it, a property manager can take a lot of this stuff off your plate, without taking too much of your profit along with them.