When all is said and done, property management is a business, even if you’re doing it on your own (and even if you only have a couple tenants). Here are a few tips to help maximize your earning potential and make more with your rental business.
One of the best things you can do to save both money and future headaches is screening your tenants… and screening them well. You don’t want to hand over the keys to a portion of your investment to just anybody.
You need to access your applicants’ background information to get a better understanding as to whether or not they’d be a suitable candidate for your property. Check their credit report and obtain a report for renters’ history. Ask for employment and personal references, too! The last thing you want is a tenant who has a consistent periods of unemployment or someone who won’t be able to reliably pay rent on time—a surefire way to lose money.
It’s also a good idea to run a background check to assess any criminal history they may have. Most renters are very sensitive about living near convicted felons and will often check out the National Sex Offender registry (especially those with children) before selecting a place to rent.
You don’t want to hurt your chances of filling vacancies if you later find out one of your tenants has a criminal record. The good news is that many of these services can be done online in matter of minutes.
Screening well also helps reduce tenant turnover—one of leading causes of lost profit when it comes to rental properties. There are several tactics you can take to help reduce turnover.
First, getting good tenants is a must. Once you do that, you need to make sure you take care of those people. Remember their birthdays and send cards on holidays. Take the time to let them know you appreciate them! Maintain your property and make sure to be both responsive and available when any issues arise.
You may also want to consider offering incentives to tenants who help fill vacancies or reward tenants who consistently pay rent on time with an end-of-the-year bonus. Little things can go a long way to ensuring good tenants stay!
Be strategic about rent cost
At some point you’ll likely find you need to raise rent in order to keep pace with the market. It’s not the kind of news most landlords want to deliver, but unfortunately, knowledge of your property’s value relative to your competition is what the business end of property management entails.
Approach rent raises strategically. Always make sure you have a handle on the competitive rent costs in the area by researching sites such as Zillow before sending those rent raise notices. You may also want to consider taking a top down approach when it comes to raising rent. Tenants who’ve lived there longest should be the first to receive these types of notices, staggered by those who are more recent. You typically shouldn’t raise rent on tenants who have lived there for only six months to a year.
Most tenants expect their rent to be raised periodically, but allowing renters at least a year or longer before doing so will work wonders on those retention rates.
Treat tenants like customers
It’s only natural that you’d likely develop some kind of relationship with your tenants, but it’s important to keep in mind that your tenants are not your friends. Maybe in special circumstances they actually are (and if so, tread carefully) but in general, tenants should be treated as customers—not as buddies.
For the sake of your business, it’s important you set firm boundaries and that you set them early on. Even the nicest and most easy going of individuals will sometimes try to break the rules or ask for exceptions. Getting too chummy with your tenants may put you in a tough and awkward spot should someone ask for just a little extra time on the rent.
Set a firm precedent, especially when it comes to timely rent pay. Make sure all your signed rental agreements outline the stipulations surrounding when rent is due, the acceptable forms of payment, and any fees or fines that may be incurred for late payments.
With these tips in mind, you’ll be able to squeeze the most possible profit out of your rental business and stay well within the green.