Whether or not you want to bring in a property management company or remain a self-managing landlord can be a difficult decision.
One study found that an estimated 51% of rental property owners already work with a property management company and another 24% were considering making that transition.
In the end, your decision comes down to the kinds of investments you want to make, both in regards to your finances and your time. If you’re on the fence, learning more about how to manage a property can help.
Read on for our guide to managing your rental property on your own in the latest installment of our landlord tips.
Step 1: Preparing Your Property
Whether you’re buying an investment property or putting your own former residence up on the rental market, you need to prepare your property for future tenants. Oftentimes, this includes making repairs that increase the value of your property.
First, focus on ensuring that your property is up to code and provides safe livable conditions. Then, you may want to bounce ahead to step two before deciding just how much you should invest in value-add repairs.
Step 2: Setting the Price
Why should you think about your price before you begin value-add repairs? You need to make sure that the rent you intend to charge is affordable and competitive in the region in which your property is located. What you don’t want is to invest in value-add repairs without being able to make that money back in rent.
Consider the following when establishing a realistic monthly rental fee:
Average income in your region
Average rental price for comparable properties
Competitive amenities your property offers, such as guest parking, in-unit laundry, or pool access
Ultimately, you don’t want to set a price so high that your property remains vacant, but you also don’t want to sell yourself short.
Step 3: Renting Your Property
Renting your property takes time, patience, and effort. To begin, you will need to start marketing your property, taking advantage of commonly searched sites like Zillow as well as more localized websites and publications.
Once you begin generating interest, it’s time to find the right tenants. It can be helpful to perform background checks and enquire about an applicant’s income and previous tenant relations. However, you must keep the Fair Housing Act in mind; discrimination against tenants based on things like race and gender is not acceptable.
Once you’ve found your ideal tenant, it’s time to draw up the lease. If you’re new to this process, it may be advisable to work with a real estate professional or attorney. That way, you cover all of your bases and don’t leave yourself vulnerable to legal problems.
After the lease is drawn up, you will need to review it with your tenant and make sure that both parties are on the same page. Finally, it’s advisable to conduct a walkthrough with your new tenant to establish the current condition of the property and reiterate any relevant stipulations of the lease.
Step 4: Maintaining the Property and Tenant Relations
If you are self-managing your property, you are going to be responsible for maintenance and tenant relations. That means that if something needs to be fixed on the property (ie the plumbing or the electrical wiring), it will be your responsibility to find the right contractor for the job. You will also want to focus on building a positive relationship by responding promptly to maintenance requests and any other complaints a tenant may have.
It is also expected that a landlord will maintain common areas in multi-family residences. That may include the landscaping as well as any shared amenities such as a laundry room or pool area.
You may also choose to perform rental visits. These are similar to the initial walkthrough, although they tend to happen halfway through a lease term. Make sure that you notify your tenants beforehand so that they are not surprised or put off by your arrival.
Step 5: Collecting Rent
How and when you collect rent should be established in the lease. Using an online portal for rent collection is a great way to streamline payments, encourage automatic payments, and look professional. However, there’s nothing wrong with collecting a physical check as long as you and your renter agree on things like when that check needs to be in the mail versus when it needs to arrive at your home or office.
Step 6: Handling Evictions
One of the least glamorous aspects of being a landlord is handling evictions if and when they arise. Evictions are only permissible under specific circumstances involving the violation of the lease.
Due to the outbreak of COVID-19, the eviction laws in Colorado are temporarily altered. We are staying on top of these changes as they come and compiling that information in this article. We regularly update this article so that you don’t have to go hunting for the current and ever-changing rules regarding evictions.
Step 7: Managing Your Accounting
Accounting is one aspect of property management that is harder to learn as you go. If you are not working with a property management company, we recommend hiring a professional accountant who can keep track of (and file) your taxes each year.
Make sure that you keep a thorough record of any maintenance costs, as these are deductible. We also recommend opening a separate bank account for all of your property management finances so that your personal financing does not get bogged down with business financing. Finally, it is advisable to prepare an emergency fund for unexpected maintenance payments, fees, or other large and unexpected costs.
Learn More About How to Manage a Property With Our Landlord Tips
Deciding whether or not you want to self-manage your rental property or work with a property management company isn’t always easy. Learning how to manage a property is the first step in making the best decision for you.
As always, Colorado Realty & Property Manage, Inc. is here to help. To find out more about property management, including the services we offer, feel free to contact us. In the meantime, stay tuned for more of our landlord tips.