Many people think about rental property investing as passive income, but it’s a lot more work than first-time landlords might expect. Successfully managing a property requires you to have skills across various areas – marketing, interpersonal communication, building maintenance, finance, landlord-tenant law, and more.
Juggling all of these responsibilities can be stressful, and it’s not for everyone. Your ability to manage a rental property on your own largely depends on the amount of time you have to dedicate to the business, the number of properties you manage, and how much you want to be involved in the day-to-day operations of a landlord.
If you’re wondering whether you’re better off managing your property vs. hiring a property management company, keep reading. We’ll cover all the responsibilities of renting a home, everyday issues that landlords encounter, and how property management companies can work with owners to make the renting process more straightforward.
What’s Involved with Renting a Home?
There is a significant amount of upfront work that needs to be done for you and your property to be tenant-ready. Before anyone can move in, you will need to pass a rental property inspection, set your rental price, advertise the property, find a good tenant, and draft a leasing agreement.
After that, your job as the landlord will mainly involve managing your tenants to make sure rent comes in on time, handling maintenance requests and complaints during the lease period, and finances.
Upfront Maintenance & Repairs
It’s your legal responsibility as a landlord to ensure that your property is safe and structurally sound. In most cases, you will need to schedule an inspection of the property to confirm that it passes all health and safety standards to be considered habitable.
When was the last time the plumbing and electrical wiring was inspected? Do the locks work on all the doors and windows? Have you checked the home for mold? These are just some of the things you’ll want to check and fix before scheduling a final inspection.
Setting Rent Prices and Tenant Requirements
Once the property itself is ready to be rented out, you can set your rent prices and decide on tenant requirements.
What you should charge for rent depends on a combination of factors, such as average income and rental price in your area. You should also consider how your property compares to other homes nearby. Features that make your property stand out, such as extra parking or upgraded appliances, will allow you to ask for a higher rent price.
As you decide on your tenant requirements, think about the type of person you want to move in. At minimum, you will want to confirm that an applicant has stable employment, sufficient income, positive references from employers or former landlords, and no prior evictions. These qualifications are meant to help you determine whether they will pay rent on time and respect the terms of the lease.
Keep in mind that there are specific topics you cannot ask prospective tenants about:
- Sex & Gender
- Familial Status
- Arrest Records
These types of questions are off-limits and could be considered discriminatory according to Fair Housing Laws.
Advertising & Finding New Tenants
Before anyone moves in, they will need to know your home is available for rent. Whether you choose to publish your listing on a real estate website like Zillow, post on the Facebook Marketplace, or just stick a sign in the front yard, there are many advertising options at your disposal.
Naturally, you will be the main point of contact for these ads and have to organize property showings for potential applicants. Once they apply to move in, you’ll need to verify the information on their application and determine whether they meet your tenancy requirements.
When you find a good tenant, you’ll need to provide a rental contract. Hiring a lawyer to help write and review these contracts is generally a good idea, especially when you’re just starting out. They will have an up-to-date understanding of the law and be able to catch small details you may miss on your own.
After a prospective tenant is accepted, all parties have signed the lease agreement, and you’ve received their security deposits along with the first month’s rent, you can prepare for move-in day.
You should complete a final walk-through of the property before they move in. This is your chance to document little details about the home in order to keep track of damages as well as normal wear and tear.
Once someone has finally moved in, your job will mostly involve collecting rent and maintaining the property.
You will need to have a process in place for collecting rent and enforcing late payments if necessary. Some landlords still prefer getting checks in the mail. Electronic services are both convenient and expected by many tenants.
There are a number of services available to landlords for collecting rent. It will be up to you to choose the right one based on your needs.
Your responsiveness when it comes to communicating with your tenant is also extremely important for high retention rates. If your tenants feel like they can’t get a hold of you whenever they have a question or request, that will put a strain on the relationship and they will be less likely to renew their lease.
Managing the Property
Tenants will rely on you for property maintenance and repairs that are agreed upon in the lease. Depending on the terms of the lease agreement, you may be the one responsible for organizing lawn maintenance, trash removal, routine safety inspections, and more.
Aside from fulfilling specific requests, it’s in your best interest to be proactive about maintaining the property. A couple times a year, and with proper notice, you may want to visit yourself to make sure everything is in order. Even if your tenants don’t mention anything, you may discover tasks that need to be completed, like changing air filters and checking smoke detectors.
For every month of rent you receive, there are several more types of expenses you will have to pay on a regular basis. These include your mortgage, insurance, property taxes, and sometimes utilities.
Staying on top of all these expenses will also help you determine whether you need to adjust your budgets or raise rent for the next leasing period.
If this sounds like a lot to handle by yourself, consider hiring an accountant. They can help you track deductible expenses, set up bank accounts specifically for rental income, and plan ahead so you aren’t scrambling around tax time.
What Issues Come Up When Renting a Home?
When it comes to rental real estate, the things that can go wrong are often time consuming and costly. Frequent repairs, heated tenant conflicts, and long vacancies are all issues that landlords have to deal with from time to time.
Costly Repairs and Home Damage
Purchasing an investment property is already a hefty upfront cost. Tack on the price of remodeling, upfront repairs, and code inspections, and suddenly your wallet is feeling a lot lighter than you’d like.
Even a home you might consider to be in good condition is likely to need work done in order to pass inspection. If you don’t have the DIY skills to handle these tasks yourself, you’ll have to find the right local contractors to do the work.
After someone’s moved in, you need to be prepared for the unexpected. Emergency repairs rarely come at a convenient time or at a low price.
The worst case scenario is if a disaster renders your property unlivable. In these cases, it will be your responsibility to help the tenant find and pay for alternative housing until repairs are complete.
Late Payments and Evictions
Missing rent is a landlord’s most common fear. Even if you have a clearly outlined late fee policy in your lease agreement (which you should), missed payments do happen. Even good tenants slip up every once in a while.
If you’re not comfortable confronting tenants about late rent, you may not be ready to be a landlord. Letting tenants get the better of you will only make things worse in the long run.
Ideally, you and your tenant should be able to work through conflicts personally. However, you should be prepared to begin the eviction process if they constantly miss payments or violate other terms in the lease agreement.
Evictions are messy, expensive, and take time. Even if you manage to kick your tenant out for good, you’ve still lost out on rent payments and have to go through the whole process of preparing the home and finding a new tenant to replace them.
If you’re unfamiliar with the tenant-landlord law, you’ll want to call your local tenant lawyer. They’ll help guide you through each step of the eviction process so you save as much time and energy as possible.
You not only have to deal with conflicts between yourself and your tenants, but also between tenants and other tenants.
Conflict resolution skills are critical in these cases. Whenever a tenant files a complaint with you, you have to jump in and play referee. This means listening to each side, coordinating communication between both parties, documenting everything, and serving consequences if necessary.
Your ability to help tenants work through these issues can mean the difference between tenants who happily stick around to pay rent for years to come and unhappy tenants who make your job harder until they eventually leave – or worse, angry tenants who threaten others’ safety and need to be evicted.
Sometimes landlords have to deal with a property that is just sitting there collecting dust.
Maybe you don’t have enough time to advertise properly, or for whatever reason none of your efforts are getting attention. Maybe you’re just taking a long time to turn over the property to be tenant-ready. Maybe your property is in an undesirable area.
Whatever the case, every month you don’t collect rent affects your cash flow and return on investment.
How Does a Property Management Company Make Renting a Home Easier?
If you’re more interested in rental property investing as passive income, property managers are an excellent choice as they can handle most of your day-to-day responsibilities. They also have a wealth of knowledge and experience developing processes that make the renting process painless for both you and your tenants.
Property management companies offer a wide range of services:
- Marketing: determining rent price, photographing the home, and listing the property online.
- Leasing: showing properties, screening tenants, and collecting security deposits.
- Maintenance: responding to maintenance requests and scheduling preventive maintenance to avoid future problems.
- Accounting: collecting rent, keeping track of internal expenses, and providing documents for filing taxes.
- Legal Assistance: managing evictions and drafting lease agreements.
- Limiting Vacancies: retaining current tenants and preparing properties for new tenants.
Property management companies are especially helpful if you live far away from your properties or own many rentals across a large area. Rather than spending time traveling to and from your properties, a property manager visits in your place.
Why Ameritex Property Management Should Manage Your Rental
When you work with Ameritex Property Management, you’re able to spend time on what matters most to you, whether that includes finding more properties or focusing on life outside of real estate.
We’ve streamlined our internal processes to make renting a home fast and easy for both owners and renters across Texas. Whether this is your first time renting out your home or it’s your 100th time, our full-service solutions will help you maximize your portfolio while giving you peace of mind.
Ready to simplify the renting experience? Find out your earning potential with a free rental analysis of your properties.