Purchasing an investment property is only the first step as a property investor. The next step is actually managing the property. There are very specific management requirements you will have as a rental property owner. Here are five tips to make your investment a success.
Keep Up With Maintenance
One of the most important things you should do with your investment property is to keep up with the property maintenance. This is important for two reasons. First, under landlord-tenant law, you are legally responsible for keeping the property up to certain health and safety standards. This includes keeping the common areas in good condition and making sure the tenants have somewhere to throw their garbage. Second, if your property is not maintained, you will have a hard time finding and keeping tenants. People do not want to live in a rat-infested rental with constant plumbing issues.
Avoid Tenant Turnover
The next important way to successfully manage your rental property is to keep your tenants happy so that they will want to keep renting from you. There are simple things you can do to keep tenants happy, such as quickly responding to repair requests and making an effort to place other good tenants in the property. One of the main reasons tenants move is because they are not happy with their neighbors. Having strict tenant screening procedures in place will help you weed out the good from the bad.
Follow Landlord-Tenant Law
Understanding and following landlord-tenant law will help you manage your rental property and your tenants It will provide a structure for you to follow, which will lead you to make fewer mistakes and therefore streamline the management process.
For example, you will learn the rules for how much you can collect as a security deposit, when you must return a tenant's security deposit, reasons you can evict a tenant in your state, the process of evicting a tenant, and reasons a tenant may be able to legally withhold rent. You need to be familiar with the statewide landlord-tenant rules, but you must also check with your local town to see if there are additional laws that may apply.
Hire a Property Manager
Managing a rental property can be overwhelming and time-consuming. Hiring a property manager is the right way to solve this problem for some property investors.
You can hire a property manager to do as much or as little as you want. Some landlords only want them to collect the monthly rent, while others want property management companies to do everything from filling vacancies to handling all repairs.
Hiring a property manager is a big decision and it is not cheap. You need to weigh the financial pros and cons to determine if it might be the right choice for you. Keep in mind that there are many bad property managers out there who can completely destroy your rental property, so you need to screen property managers very thoroughly, just as you would prospective tenants.
Pay Your Taxes
Finally, to make money as a property investor, you need to make sure you are properly managing your financial obligations. One large obligation every investor has is to pay their taxes.
Paying taxes as a rental property owner can be confusing. Since it is a business, you can often deduct home office expenses and since it is property, there are many deductions involving depreciation that you are allowed to take.
It is often in your best interest to hire an accountant who is skilled in investment property tax law. They can help you to understand the deductions you are allowed to take, as well as the deductions that could raise a red flag with the IRS.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.