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How to Manage a Rental Property
Owning property and being a landlord can offer you many benefits — it’s a stream of income, offers tax breaks and has the potential to help you build wealth. But being a landlord carries a lot of responsibility and there are rules to master. The following landlord tips can help you manage your rental properties more efficiently and get on the road to landlord success.
Expert Property Management Tips
In the world of property management, the contract is king. The good news is that many of the contracts you’ll be using as a landlord have already been created and are readily available. But you’re also going to be held to your end of the contract, and it’s really important that your agreements conform to state and local requirements. Take a look at these property management tips and responsibilities to keep in mind:
Custom-build your tenant agreement online. Groups like LawDepot.com and RentalLeaseAgreements.com have created a good resource for landlords seeking to create a custom lease. Some even offer a free trial period. You’ll be prompted to confirm the state where the property resides — because different states have different rules and regulations — though it’s still your responsibility to verify that the contract conforms to the laws in your area. Rental applications, inspection reports, eviction and lease notice templates are available for you to create as well.
Screen tenants. You want tenants who pay their bills on time, respect your property and, if you have other tenants, live harmoniously with others. Screening potential tenants will help you get a better idea of their past tenant activity and financial situation. Also, we’ve partnered with TransUnion's SmartMove to provide you a discount on comprehensively screening tenants, so you’ll be able to make an informed decision when it comes time to select your tenant.
Make a paper trail. From the application process to the move-out walk-through, you’ll want everything in writing. Developing a library of landlord forms at the outset will save you time and hassle and will prompt you to get it in writing.
Know the laws. There are laws in place to protect landlords and ones to protect tenants. While some laws are universal, others may vary depending on your location. It’s a great idea to stay on top of all of them for everyone’s protection.
Develop a team. You’re going to want to have a handful of professionals that you trust to help you manage and maintain your rental property business. Consider finding an attorney, accountant, insurance agent, banker, electrician, carpenter, etc. Make a list of people you think you’ll need regularly and, once you find one you trust, add them to your team of experts.
Financially Managing and Insuring Your Investment Property
Carefully insuring your rental property and planning for the unexpected should be high on your list of priorities when managing an investment property. You’ll be handling a wide range of financial issues, from processing rent payments and dealing with security deposits to ensuring that you comply with state and local regulations. Here are a few other things landlords should consider:
Collect the rent. Spell out your expectations in your lease identifying when rent is due and what fees will be added if it’s late. Many tenants are weighing the ability to pay rent online as a priority when considering a place to stay. Offer that option if you’re up to the task. Scheduled payments that deduct right from the tenant’s checking account on the same day every month can offer payment consistency that’s hard to match.
Manage fees and fines. In addition to charging tenants penalties for damages or late payments, you may face fines against your property for many reasons. For example, take into account the cost of building inspectors to verify construction codes. You’ll also need to maintain your property well or you could face penalties from local authorities.
Pay the mortgage. Try to schedule your mortgage payment so it’s at least a week after the last day that rent is due. That way, your mortgage will have a few days before it’s due if your tenant should pay late one month.
Purchase insurance. Consider checking in with your agent to make sure you have the right kind of landlord insurance for your property. This is also the perfect time to be sure your insurance is bundled so that you’re saving as much as you can.
Pay the taxes. Paying your property taxes in monthly installments can help you spread the financial burden across the whole year. If you have a mortgage on your property, consider escrowing your taxes and insurance to ensure these bills are automatically paid. If not, a savings account can act as a safe place to keep that money until tax time comes around.
Manage utility payments. If your lease offers certain utilities that are included in the rental price, you’ll need to stay on top of your utility payments. See if your utility offers the option to pay on a “budget plan” which estimates the total annual amount and then spreads that into monthly payments. Using this method will help keep this payment predictable across the year.
Manage lawn maintenance. If your lease provides lawn services such as lawn care or snow removal, make sure you have these services scheduled.
Plan for the unexpected. We all know that problems happen — from simple repairs to tenants not paying rent. Preparing in advance and having an idea of what to do when rental property problems arise will reduce stress and get you back on track more quickly.
These tips for landlords are just a starting point. Our Landlord Toolbox will give you even more information and support in your mission to become a successful rental property manager. American Family Insurance is here for your insurance needs — and so much more. From making sure you’ve got the coverage you need to helping you pursue your dreams, we’re going to be with you every step of the way.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal advice. You should contact an attorney for legal advice specific to your situation.
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