For those who don’t, owning a rental property can seem like this great asset that’s going to bring you residual income month-in, month-out. However, for those who do own rental properties, you know this isn’t the truth. Rental properties are more in a category of their own when it comes to types of investments. You’re not only dealing with an asset that you purchased for X and expect Y as a return, but instead you’re dealing with an asset closely tied into others lives as their home. We don’t blame you if you’re in it for the money - a rental portfolio is still a great way to build wealth – but never forget that to your tenants your investment is home.
So, you’ve decided you’d like to start building your rental portfolio. The first step is getting that first property. Then what? Our Austin property management team has thrown together these 6 tips for owning your first, stress-free rental property.
Hire a Property Manager
Of course we’re biased; we’re a property management company after all. There is no denying the return on investment a great property manager can bring to an owner. Effectively putting your investment on auto-pilot, a property manager allows you to be as hands off as you’d like with your property. It doesn’t get much more stress-free than that.
A property manager can custom tailor solutions to fit your property's needs
Property managers provide many benefits to you compared to self-managing your rental property. They have the systems and practices in place to run your property like a machine. From leasing your property to handling the midnight maintenance calls, a good property management doesn’t cost – it pays. A to Z, partnering with an experienced firm can have you earning residual income for years to come with little to no responsibility.
Be wary though, not all property managers are the same. Some charge a percentage, some a flat fee – but chances are if the deal seams to good to be true, that’s because it is. We regularly talk to owners who have burned by a property manager in some way or form. Always shop around your market for a property manager and don’t go with the first company you contact. Instead, go with what you feel is best for you and your rental property. If done right, this first step can render the next 5 steps useless as a property manager would take care of them all!
Undecided on whether a property manager is right for you? We've covered this topic in our blog before and you can read it here!
Accurately Price Your Rental Home
Accurately setting your rental rate is an important factor in owning a successful rental property. Set your price to high and you’ll be passed up by quality tenants, set your price to low and you could be in for earning significantly lower than your property’s worth for the next 12 months. Every owner we’ve ever dealt with wanted to try getting more for their property than realistically possible, it’s human nature. If self-managing owners made up the majority of the market it would be interesting to see the fluctuations of prices by neighborhood alone.
Every single property manager you come across is almost definitely offering a ‘free rental analysis’ – as a hook to get you in. Use this to your advantage and get comparisons from them all. Property Managers, at least in the state of Texas, are required to be licensed Real Estate Brokers. They have a suite of tools they use that gives information not made available to the general public.
Put yourself in the position of the tenant. No one likes paying a large sum of money every year, relative to their income, just to live. Tenants are looking for the best deal in whatever neighborhood they want to live. If you’re competitively priced you’ll have more luck shorter vacancies and less stress knowing you won’t have to float the mortgage while you get passed up by every tenant on their search!
Maybe you own properties in Texas! You can visit here to learn what your property's rental rate is.
As an investor you know you have to stay up to date on your investments, especially a rental portfolio. This investment wasn’t a cheap one so don’t treat it as such. Always have an idea of what’s going on at the property and perform regular inspections. However, if the property is leased, avoid being intrusive of your tenant’s privacy. No one likes the crazy landlord who won’t leave them alone – avoid this stereotype at all costs. If you’ve elected to go it alone and self-manage your property, emailing your tenants every once in a while to check on things isn’t a bad idea, and can show them your dedicated to providing them with a quality living experience. Tenant’s talk and this can do you some real good down the road.
Things are going to break, there’s no way around it. As the owner of this rental home, if your tenant’s AC goes out in the middle of the hot summer then you’re up to the plate. You’re human, and sometimes you want to put things off, but be wary of doing so when it comes to your tenant’s maintenance issues. A happy tenant allows for a stress-free rental. No matter what you do, if they aren’t taken care of you are in for a bad time.
Vendor relationships are vital for the longevity of your property and wallet.
Vendor relationships are also a high priority. If you utilize a property manager, they’ll normally have established relationships with local vendors at a discounted rate that they pass on to you. However, if you’re thinking of self-managing it’s important to build these relationships early on. Having reliable vendors in your rolodex is a must. These companies or individuals will be your saving grace on those hot, AC-less days.
Make Everyone’s Life Easier
In a world dominated by tech, we now have software that helps us with practically anything! This most definitely applies to you and your rental property. From accounting to rent collection software, the tools to make your rental property even less stress exist. Again, if you’ve chosen to follow tip #1, your chosen property manager should have a complete suite of tools they offer. If you self-manage, these types of software systems are available to you on the open market.
Your tenants will be offered the time-saving abilities to pay rent and request maintenance online, and you’ll have systems that make the backend of your investment a breeze. You’ll be able to track expenses and reports with accounting software making tax time a breeze. However, once you stack a couple of these software costs on top of one another you’ll be close to approaching the monthly fee of your property manager as well as being left to do all of the actual work.
Owning an asset such as a rental property can be a greatly rewarding experience if done right. Consider these tips to make this venture as stress-free as possible! You can join large online communities such as Bigger Pockets, ActiveRain, or Let’s Talk PM and connect and interact with individuals across the nation within the real estate industry. Within no time you’ll be a real estate pro with connects across your industry and market. Still, we recommend hiring an excellent property manager, essentially rendering your properties as a source of passive income! If you have any questions about property management or getting started with a rental portfolio contact us! We’re really passionate about what we do and helping others out!