If you talk to experienced real estate investors, they will tell you that property management is one of the most beneficial yet toughest areas to master. Today, we’re discussing my top 7 tips for effectively managing rental properties.
Whether you’re looking to buy your first rental property or start a property management company, these 7 areas can make or break your investment. Let’s dive in.
7. Create a Rolodex of Contractors
- Managing the maintenance and unit turn side of the business is one of the most challenging areas of property management primarily because contractors can be unreliable at times - this can include communication, availability, and price. If you reach out to your one handyman to fix the toilet at your rental property but he can’t get out there for 3 days, you’re going to have a very upset tenant. I suggest creating a spreadsheet and listing all of the trades - think electric, plumbing, general maintenance, etc and then find a minimum of three contractors for each. This ensures you don’t have any weak spots and that if you’re in a bind, you already have a contractor identified and have their contact information.
6. Create Checklists
- Checklists can be used in any business but because property management has so many touch points, it makes it that much more important. You want to make sure that you’re not missing any steps and that you can replicate the process the same way every time. This is super important if you plan on scaling and hiring an assistant or your own in house property manager. One example of this is our Unit Turn Checklist. When a tenant moves out we have our inspector bring a 9 page inspection checklist and go through the whole property to document any required repairs and build a scope of work for the unit turn. We used to more or less wing this and after tenants had moved in, there were always a few items that we missed. The checklist helps to avoid that and the headaches that come with an upset tenant. It’s also very important to have checklists in certain areas such as tenant screening to avoid discrimination.
Speaking of discrimination, tip #5 is…
5. Know Your Local, State, and Federal Laws
- I can’t stress this enough - you all know we live in an extremely litigious world and there is a lot of potential liability in property management. You need to know these laws inside and out so you’re not discriminating against a protect class or breaking the law in any other way.
4. Cast a Wide Net When Marketing Your Vacancy
- We’ve all seen the “for rent” signs in the front yard - which is fine, as long as you pair that with a strong web presence. Just about everyone today has a computer or smart phone and you need to tap into this by listing your rental property on as many rental websites as possible. Leasing a vacancy is a sales process and in order to get a signed lease, you need showings. In order to get showings, you need to keep the top of your funnel full with prospective tenants. This is done by casting as wide of a net as possible. In addition to listing our vacant units on the MLS and our own website, we syndicate them out to over 80 additional websites like Zillow, Redfin, and Apartments.com. This guarantees that we are getting a ton of prospective tenants looking at our listings.
3. Make Sure Your Unit Looks Great
- As the saying goes, you only get one chance to make a first impression. While trying to rent your rental property, there are actually two first impressions that you have to nail. One being the listing, and the other being the showing. As far as the listing goes, you want to make sure all of the unit turn work is done and the unit is cleaned prior to having the pictures taken. The second thing is make sure you get professional pictures. The photographer will make sure it’s bright and the listing pictures look great, getting your listing as much attention as possible. As far as the showing goes, you want to make sure the rental property smells good and all the lights are on and blinds are open. This is often overlooked and you burn weeks of precious market time because your property smells like cat pee.
2. Focus on Tenant Screening
The second most important aspect of a successful rental property is thorough tenant screening. A lot of mom & pop landlords will review the application and maybe ask a few questions, but that’s typically the extent of the screening process. This opens the door for so many potential issues. You want to make sure you’re running a full battery of checks, including credit, background, eviction, income verification, and landlord verification - f the laws in your area allow for it. Making sure you have a highly qualified tenant will make your life so much easier over the length of the tenancy.
Alright, the number one tip for effectively managing rental property, is to choose your location wisely.
1. Choose Your Location Wisely
The golden rule of real estate is location location location. And You don't realize how important that is until you start managing property. If you are looking to buy your first rental property or looking to start a property management company, location is the most important thing you want to consider. Buying in a Class-A area versus a Class-C area could make or break the investment. I've managed thousands of units over the past decade and have experience in all types of neighborhoods - I can say first hand, managing a Class-A building in a Class-A area is extremely different from a Class-A building in a Class-C area. Regardless of which area you choose, you just need to be prepared for it - there’s going to be different systems, processes, and staffing requirements depending on your service area and specialty.
Alright, I hope this helped. As always, consider us at Landmark Property Management a resource. If you have any questions, don’t hesitate to reach out. You can find us on the web at ChicagosPropertyManagement.com or give us a call. Thank you!