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How to Manage Rental Properties For New Landlords

There is not a great investment that takes little work. That includes investing in rental properties. Rental properties are long-term investments. The rentals market continues to grow and expand despite, or even more so with the unforeseen economic downturns. With this into perspective, a rental property owner should be in for the long run. One should know the entire big picture of managing a rental property. This to ensure better profit and value to the investment.

Rental property is a great investment if managed well. Today, let’s see what it takes to successfully manage a rental property investment. You can manage your own property rental or hire a property management company to do it for you. Both require you to know all the important aspects of your business that need tending.  

Work involved in managing a rental property

Repairs and maintenance

Before the property is rented, you should determine if there are any repairs to be done. Prepare a contact list of good contractors if you don’t already have a trusted contact. Get a legitimate contractor to do the repairs and the maintenance work.

There are different types of properties you can own. Each requires specific expertise needed to do a particular repair or maintenance job. There are many companies and people who can offer these services in Costa Rica. However, it is important to find reliable contractors. Have these contact persons to work with for a long time. They should be easy to communicate with in case of emergencies. Most importantly, they should be experienced in doing the particular job.

A property manager can help you get connected with the right people. He can do so prior to finding tenants. The property manager also helps in the same manner after the property has been rented.

Repairs and maintenance are crucial aspects in keeping the value of your property. We’re talking about its value in the present and for the long term.

Advertising and Marketing

Attracting tenants requires prior knowledge and a good understanding of the local market. Do your market research and decide for which people you want to offer the property up for rent.  

Usually, real estate companies have a good position to offer marketing services such as this. Because we don’t only know the value of the properties in specific places, we also have a good perspective of whom these pieces of real estate are perfect for. We have different platforms and ways to let them find you. It is important to find the perfect tenant for your property. Read why this is more crucial than you thought below.

Tenant Screening

The tenant screening process isn’t to be taken lightly. Having the right tenant can save you a lot of headaches in the future. It is also a major factor in the profitability of your investment property.  

So you may have to show the property to different tenants who are interested. You do not simply accept a tenant just because the tenant is the first one who showed interest. Don’t even go for the fact that the tenant agreed to your price. That is not all to consider when looking for a tent for your investment property. You should do all necessary checks like references and credit checks.

The wrong tenant can run you into collection problems. This can also result in property damages which means more costs to cover. This will place you at the losing end. And this can happen even for a short period of stay.  

You also don’t want your place to earn the wrong reputation that your unscreened tenant could cause. Property managers know the best way to screen tenants. They can avoid any possible issues with discrimination. We properly screen tenants to avoid possible headaches in the future.

Creating and implementing tenant guidelines

There should be clear guidelines on the rental of your property. You or the property manager should be able to strictly implement these guidelines. Tenants should agree and understand these guidelines completely.  

Tenant guidelines should foster a good tenant and landlord relationship. Have transparency for everything through a lease agreement, proper documentation, and communication.  

Good communication can also avoid misinterpretations and unpleasant scenarios in the future. Tenant guidelines should be carefully drafted. It should be created with specific rules and regulations in mind.

Collections

Rent collection doesn’t have to be a burden. If you have good tenants who are responsible for making payments on time, it shouldn’t be.  

But even good tenants can fall into a bad habit. They may not take due dates seriously if you are very lenient in collecting rent. You should have a standardized process for your collection. Carry it out in a very timely manner and with professionalism.  

There are advantages to having a property manager when it comes to collections. Collecting money yourself, being firm on due dates, talking to your tenants about delayed payments, may not be one of your best skills. Tenants get that they are dealing with a business and not just a single person when a project manager represents you.  A project manager can carry out this task for you, without you personally attending to it. As most think, the owner can easily sway the rules. It isn’t so when a manager is handling it.  

It is also good to implement charges for late payments. This is a good reminder for tenants to pay rent on time.  

Evictions

It’s definitely not the fun part, and we’d like to avoid this as much as we can. Good property management significantly contributes to avoiding evictions.  

There are risks involved in evictions and this should be done with care. Announcing an eviction can be tricky. It makes it all too easy for a tenant to do damage to the house before leaving the property. You have to strategize a way for them to leave on good terms.  

Mutually-agreed move-out is better. Prepare and layout well-thought options for the tenant. This way you can agree to handle the transition smoothly on both ends.  

Also, consider how they will be able to pay up any remaining balance. Not being able to pay rent is a usual reason for eviction. That is why it is important to have a good process for the collections of rent to avoid this.  

The worst that could happen is that you get a trashed property with no way of getting the money your tenant owes. In owning a rental property, you should always strive to maximize your profits. But equally important is diminishing possible losses when the situation arises.

Regular checks

You and your tenant can agree on doing a property inspection now and then. This must be performed regularly.  

It is not enough that your tenants are paying on time. That is not a guarantee that there isn’t anything that needs repair and fixes on the property. These things shouldn’t wait forever. The earlier you find it out, the less headache it can cause. If you leave these things unattended over time, small things can pile into a gigantic mess. That can diminish the value of your property or could cost you a lot of money to deal with in the future.  

Also, we’re sure you don’t want anything to do with anything fishy happening right under your nose. That’s in case any of your tenants get involved in anything out of the ordinary. You shouldn’t make room for this in the first place. Always uphold the integrity of your investment property.

When to hire a rental property manager?

There are a lot of tasks involved in running a successful rental property business. There are different aspects that a property owner should have a good knowledge of. Besides the operational aspect and the financial aspect, you should also develop strategies. Or you can make use of the experts’ skills to show you how.

To reiterate, it is possible to do things on your own. But there are limits to when DIY is ideal. Here are the signs when you need a professional property management company to step in.

A growing number of properties

When you have too much on your plate, it’s time to assign tasks. To reach this far, you must have learned a wealth of knowledge about this business. Growth is a sign that you are doing well. But you can only have enough on your hands.

Keep growing your investment property. We’re sure you see yourself expanding your business. So, invest time finding the right partners for your growth. A property management company will be able to help you implement successful processes. Efficiency is most needed at this stage.

Hiring a property management company is also investing in your peace of mind. It is always good to know that someone is well taken care of. From then, you can use your time simply monitoring and watching your business grow. You can also use your time to look for more opportunities to expand. Knowing that your partner company can handle it no matter how big you want your investment to grow.

Need help with getting potential tenants

When tenants aren’t easy to come by and you have too many vacancies, it’s a clear sign. You need the help of people who can navigate the local market and market your properties. If you’ve tried your luck doing the marketing yourself, you might need pro solutions to fill in the vacancies. Property management companies have expertise and knowledge in using different platforms and advertising to fill in vacancies fast.  

You’re not doing rental business full time

Many invest in real estate and rental properties. Some are doing this full-time. Some have this included in their retirement plan. But some grab this opportunity while they are taking their career success full on. These people are rather thinking long term. They are taking every opportunity to invest now while they are at their prime, which is a smart thing to do. They have the capital, but they might not have the time.  

Being a property owner is one thing while managing your property is another. This is when it is best to let the professionals do what they do, so that you can, too. They can cover the tasks that you can’t attend to. The right people for this will let you grow your business while you keep a successful career. By the time you are ready to slow down, you will have a flourishing business to attend to.

You’re a long-distance landlord and live far from your properties

It is always ideal to live near your rental properties. You need to be easily available in case of emergencies and maintenance issues arise. But living near your properties may not always be the case. Especially if you found great opportunities to invest in places that aren’t near home.  

Your proximity to these highly profitable properties shouldn’t stop you from investing in them. The solution is easy. Have somebody in the local area manage these properties. Your property manager should have quick access to your property. He/she should be able to attend to whatever needs your attention fast.

You are new to this business

Everything can be learned. But many still lack the confidence to carry out the duties of managing your own rental property. This is not good for your business.  

You can indeed be good in business but not particularly for managing a rental property. Even if managing a rental property doesn’t suit you, it doesn’t mean you can’t own one.  

Know the areas of the business where you are not good at and learn from there. You do not have to commit mistakes that could cost you a lot. Trust the experts.  

Some people are the best for this job. And you can use their expertise to work for you. Gradually, you’ll gain confidence in this business by working with people you can trust.  

Positive return of investment

Factor in the cost of hiring a property manager. Do the math. If working with an expert can scale your business and help you grow it, by all means, do so. But if your budget doesn’t permit such at this point, learn the ropes yourself. But eventually, you’d want to get to the point when you need to hire one because you are ready to scale and increase your ROI.

Rental properties take a lot of work to manage well, but it’s so great an investment to miss

Yes, it can be quite tricky to be managing a rental property without a property manager. But it is doable. Do it with caution. Always weigh in factors that will increase your gains and diminish or avoid losses. This is what good practices of management are all about.  

Each area of management is important. Marketing, booking, maintenance, repairs, tenant screening, and more. Not only do all these take time, but it also takes skills. You must consistently and firmly follow the processes of successful rental management.

You also need to learn the professionalism needed to deal with tenant problems. This is crucial to your investment. Not dealing with tenant problems properly can turn even the best investments into poor ones.

Learn more about managing rental properties and property management with Century21.

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