Real estate is one of the best ways to create a passive income from an asset that increases value over time. So, you enjoy the dual benefits of a regular income as well as long term value appreciation. However, purchasing a property is only the first step in real estate investment.
The next and the most important step is managing the property well. You must understand the complexities involved in rental property management. Remember, rental property management is much more than just fixing the things when they break.
As a fist time landlord, you may find yourself taking many different roles. That’s probably the reason why many real estate investors simply outsource rental property management to a third party. This can reduce the headaches that a landlord has to deal with and leave them with more time and energy for other important tasks.
If you decide to enlist services of a rental property management company, you can stay assured that they will get the job done. They will take care of everything-right from finding you the right tenants, collecting rent and dealing with the routine issues. In case you want to handle this important task by yourself, here are some key points to keep in mind.
Know your property wellWhen you buy a new property, the most important thing you should so is know all about its systems and features including the HVAC system, plumbing and electrical systems. Try to gather all the details pertaining to the lifespan and service requirements of these systems. This can help avoid any surprises and unpleasant situations with the tenants in future.
Learn landlord and tenant regulationsBefore you start your tenant search, you must make yourself aware of the landlord and tenant regulations where you live. You must understand and follow landlord-tenant law as it will provide a structure to follow and will streamline the rental property management process.
Remember, landlord and tenant regulations vary across Canada. Different ministries or government departments, in each province and territory, oversee these laws. You must learn about responsibilities and duties of both the landlords and tenants, tenant privacy rights and tenant complaints.
Keep Up with Maintenance
Property maintenance is probably the most important task you will have to undertake as a landlord. As a landlord, it is your duty to ensure that your property meets certain healthy and safety standards. Also, regardless of the location of the property, you can have a very hard time finding and keeping the tenants if your property is not well maintained. No one would like to live in a property that has persistent plumbing issues or is roach-infested. It is a good idea to have annual maintenance contracts in place for the key systems such as your HVAC system.
Screen your TenantsOnce your property is ready for the occupants to move in, the next major step is to find the right tenants. Screening the tenants properly can save a lot of stress and financial hardship in future. Some key things to keep in mind when screening the tenants include:
· Current employer
· Current income
· Credit history
· Criminal records
· Public records
It is essential to perform a complete background check because you don’t want a criminal living in your property. It is a good idea to ask for a reference letter from the current landlord. In case a tenant is unable to get one, you may want to run a more thorough background check.
Avoid tenant turnoverThe last thing you want to do is keep looking for new tenants every now and then. An important step in good rental property management is to avoid tenant turnover by keeping them happy. Make sure you address all their concerns and repair requests promptly. Having the same tenants rent your property for a long term keeps vacancy rates to the minimum and you don’t have to spend your time and effort finding and screening new tenants frequently.
Pay the taxesWhile you earn money from your real estate investment, you also nee to meet some financial obligations. Paying your taxes is the largest financial obligation. As a first-time real estate investor, you might find the taxes confusing. There are several deductions allowed, which you should be aware of.
Be professional but tough on bad tenantsIf the tenant has not been paying rent, you must be tough and evict them. Every tenant who does not pay the rent in time has an excuse, but you must stick to the rules. Set a reasonable deadline and if after three days they have not paid the rent, send out an eviction notice.
Rental property management can be tough unless you have the experience and you have the time and resources to spare. If not, it is always advisable to enlist services of a professional rental property management company.
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