Managing rental properties comes with its own set of highs and lows. Whether you have one rental property with plans to acquire more or you already have several under your belt the tips in this article can help you streamline your rental business so you can continue to add to your portfolio. Take a look at your business and see if one or all of these tips can help you do things a little bit better.
The number one thing that you need to focus on is your tenant screening. Tenant screening is always important. It is important from day one, but as you expand, it becomes even more important. You’ll find yourself needing to screen more tenants and feeling like you have less time to accomplish this will everything else on your plate.
You need to have a system. What is our required documentation? Who does the checks on the rental history? How do we run our screening for credit and eviction history? Document your screening process and stick to it. Many times landlords will fall behind or try to rush and they make the decision to move forward with a tenant that either was not properly screened or does not pass the screening process. Maybe this will work out…and maybe this is a recipe for disaster…
One bad tenant can cost you months of lost rent and thousands of dollars in property damage. There are lots of great tenants out there. Do not rush! Create a system for screening and stick to your system. A week or two of lost rent is way better than months of dealing with a problem tenant.
Maintenance and Repairs
Tip number two is to stay on top of maintenance and repairs. The more properties that you own, the more maintenance and repairs that you are going to need to do. So get yourself another system. When a call comes in, who does it go to? Do we have a go-to person for HVAC (heating, ventilation, and air conditioning), plumbing, electrical, handyman? How do you make sure that repairs and maintenance are completed?
Some landlords like to take care of many of the repairs themselves and that can save you some money. But as you expand it will become increasingly difficult to keep up with the repairs and in my experience, I found that I wasn’t the best person to be completing these repairs and I wasn’t saving very much money once I factored in my time.
So what’s our system? We have developed great relationships with many of our contractors. We provide our tenants with the phone numbers of our HVAC, plumbing, electrical, and handyman contractors. The tenants can call them directly when they have an issue. If the issue has not been addressed or scheduled within 24 hours, then they notify us. We also let them know that they can call us directly for any issue, but that contacting the contractor themselves will often result in a faster repair because they are cutting out the middle man. We have a set limit so if the repair is over $250 then the contractor has to call us for approval first.
Is this system perfect, no, but it has improved things for us. Our contractors like it because they know that they will get all of our work and they are able to discuss the issue with the tenants directly so that they can be prepared to tackle the issue before they go. Our tenants like it because it usually saves them time because they don’t have to call us, we call the contractor, the contractor calls them, and maybe they miss the call so they have to try to reschedule, etc.
Staying on top of maintenance and repairs will protect your property, keep your tenants happy, and therefore help provide you with a long-term profitable investment.
There are a lot of numbers in the rental real estate game. There are rents, mortgages, taxes, insurance, repairs just to name a few. As you start to manage more and more properties, the easier it is to get behind or forget to document an expense or pay a bill. Getting a couple of months behind on documenting your finances can turn into weeks of trying to get caught up and you are much more likely to is something or make a mistake.
If you’re doing it yourself, great. As you start to grow, it is my suggestion that you look for someone to manage your bookkeeping. Why? Because it will help you keep your finances on track and it usually isn’t that expensive. This will also allow you to focus on the other parts of your business that have a higher ROI than what you are spending on a bookkeeper. However you decide to do it, make sure that as you grow, you stay on top of your finances.
The speed and efficiency of your tenant turnover can make a huge difference in your bottom line. I have seen this become an issue for many real estate investors and maybe I’ve been guilty of it myself. You have a ton going on, other parts of your real estate or maybe a separate business needs your attention, then some of your tenants move out, and you slack on getting your property turned around and rented again.
A vacant property is costing you money and any issues with a vacant property only tend to get worse, never better. Even if the property is paid off, you still have taxes, insurance, and you are missing out on rent you could be collecting.
Make a plan for tenant turnover before the tenants move out. Once you receive notice that your tenants will be moving out, you need to start preparing for how you will turn that property around as quickly as possible. How will your tenants be returning their keys? Schedule yourself a time to walk through the property as soon as possible after the tenants have moved out. Take pictures or videos to document repairs and to use for documentation in case you need to maintain any deposits. Do you have a contractor that you would like to use lined up? Do you have some recent pictures that you can use to begin marketing the property to future tenants?
If you have a plan in place before the property is vacant it is much easier and faster to execute that plan when you need to. As you complete more of these, you can adjust your plan to create a system of what you do every time that you need to turnover a property. Now all you have to do is implement your system and you will save yourself both time and money.
The final tip is to delegate, but delegate smartly. I personally do not believe that you should delegate away all the parts of your business. No one will care about your business and your properties like you do and if you try to completely remove yourself from all the tasks in the business it will be very difficult to have your business run as efficient and profitable as possible.
I do believe that you should delegate tasks that are very low value, that you are not the best person to be doing, or things that you just hate doing. When you are starting out, you will probably find yourself wearing many (or all) hats. As you acquire more properties, that success will often give you the opportunity to begin delegating things in your business.
Start with what you really don’t like doing or is just not a good use of your time. For me, I was spending a ton of time advertising properties and showing the properties to potential tenants. As soon as I found someone to help me with this, I found that it was getting done faster and I could spend more time raising private money and finding the next deal. You will need to continue to manage the people that you delegate to. Don’t be the person who delegates, then ignores it, and then wonders why it’s not working out well.
Hopefully, this article gives you some things to think about and a few tips that you can implement to help you manage multiple rental properties. You don’t have to implement everything at once, look at what will help you the most and start there. Then you can add more systems and delegate more as you need to.
Now it’s time to make a plan and take action. You can find us on the website sellmysanantoniohouse.com or give us a call (210) 201-6644.