Being a landlord can provide you with a large income source, but it is imperative to properly take care of your investment.
After all, if you let the property fall into disrepair or fail to pay your bills, you might end up losing a lot more money than you gain.
It is also vital to keep the satisfaction of your tenants in mind, because having vacant apartments is the fastest way to turn an investment into a drain on all of your financial resources.
1 . Verification
Always Run a Credit, Criminal and Landlord Verification Screening on Potential Residents.
One of the easiest ways that you can protect your property is by making sure that you take steps to reduce the possibility of renting to an undesirable tenant.
Although a person’s previous performance cannot predict their future actions with 100 percent certainty, it is fair to assume that an applicant who has a spotty background in regards to their credit, criminal or landlord history is not going to be the most responsible resident.
Therefore, you should always run a background check, and you will need to put guidelines in place for denying people to ensure that you remain compliant with the Fair Housing Act.
Maintain an Appropriate Level of Insurance.
If you do not have property and liability insurance, you could easily end up losing your investment after one incident.
Therefore, you should make sure that you have at least the minimum level of insurance that is legally required for your industry.
It is also a good idea to consider getting business interruption insurance to help you deal with the income loss that can accompany natural disasters, fires and other major issues.
Insurance companies, like Monkey Insurance, can give you lots of advice on the appropriate level of cover.
3. Repair Account
Keep a Repair Account at all Times.
The apartment industry is similar to maintaining your own home, but you need to consider the necessity of keeping everything properly maintained for a much larger quantity of people.
For example, if the water heater for an entire building goes out, you could have several angry residents contacting you on a regular basis until the issue is fixed.
Because most properties need large water heaters, it can cost $5,000 or more to replace each one. If you do not have a repair account with the proper funding in it, your residents might end up waiting several days to get hot water, and this will cause big issues when it is time for them to renew.
Make Good Usage of Refinancing Loans
It is common for property management companies to refinance their loans when they need to do a lot of repairs or upgrades. However, you should closely read over all of the terms of each loan before you agree to anything.
After all, you do not want to end up over-leveraging the property to a point where you will be unable to pay for your monthly bills.
As long as you avoid this potential issue, you can use the refinancing process to bring some much-needed capital into the property, and this will let you perform the necessary repairs and upgrades that will make it easy to raise your rental rates.
Keep an Eye on any Deferred Maintenance Issues.
The older a property gets, the more likely it is to have a long list of deferred maintenance problems. However, letting units sit vacant because you have not properly taken care of them is counterproductive.
Therefore, you need to stay on top of all of the necessary repairs on a regular basis.
As an added bonus, if you repair each small issue as it occurs, it will be much easier and cheaper in the long run to get apartments ready for new renters.
Get an Adept Staff and Let Them Work for You.
There are several other ways to help your investment remain profitable. For example, it is vital to hire a professional and experienced staff because it will be easier for them to keep your units full.
You should also give your staff a good marketing budget that includes money for resident activities.
Keep in mind that turning an apartment is much more expensive than keeping a current resident happy.
By following these simple property management guidelines, you can reduce your turnover and vacancy loss, and this will have a huge impact on your bottom line.