Owning an investment property, or a rental property, is a major commitment, but can be a tremendous source of passive income. Whether you’re a beginning investor jumping in with both feet, or a seasoned investor with multiple properties, there are some key principles that will help you succeed with rental properties. Here are our top five tips for succeeding with rental properties:
Hire a property manager. Not everyone needs a property manager, but a lot of people do. If you don’t live within an hour of your rental property, don’t have time or tolerance to deal directly with tenants, or don’t have any experience managing a rental property, we would strongly suggest you consider hiring a property manager.
A good professional property manager can reduce vacancies, get you better tenants who stay longer, and help you increase the income from your rental property. And, they deal with those middle of the night phone calls so you don’t have to!
Secure long-term, quality tenants. Many landlord problems can be eliminated with a consistent and quality tenant screening process and background check. It’s absolutely critical to the success of your rental property!
If your tenants turn over every six months, there is a lot more risk of you losing money on your rental property. Ideally, you want to find those tenants who want to stay long-term, pay their rent on-time, and treat your rental property like their own. Finding this type of tenant is not easy, which is why your tenant marketing and screening processes are extremely important.
Location. The old adage “location, location, location” is definitely true. Location is probably the most important factor for success in real estate investment. Proximity to amenities, a safe neighborhood, easy transportation access, and increasingly, walkability scores, are all major factors for a successful rental property.
The location of your rental property will not only affect demand, but also the rent price. Always remember that even if you get a great deal on a property, if tenants don’t find it appealing you may not get the return you anticipate.
Keep it maintained. The quality of your rental property is directly correlated to the quality of the tenant who will rent your property. Maintaining the curb appeal of your property and providing a higher-than-average quality rental will go a long ways in attracting good-quality tenants.
In addition, keeping your rental property maintained and fixing any issues quickly is a super important part of keeping your tenants happy. Also think about having a proactive maintenance schedule, which will help you stay on top of issues before they actually occur. Don’t forget, happy tenants typically stay longer!
Determine the optimum rental price. There are several schools of thought about pricing your rental, but let’s start with the easy stuff. An overpriced rental will hurt your success as an investment property owner. Why? Because it wills it empty. The quickest way to drain your profits is to have an empty rental property.
At the same time, if you price your rental property too low, you might be losing money or even leaving money on the table. Minor adjustments in rental price make a difference, regardless of the city or state your rental is located in. The key is absolutely to find the sweet spot. Make sure to do a thorough rental analysis before pricing your rental property!