If you are a landlord or a property manager, you will have many decisions to make some of which might even get you into trouble. If you have not read the rules of property management, lack necessary experience or skills of handling tenants, you may end up losing money or worse getting sued! Being a property manager can be very difficult at times, but with necessary effort and skills it can turn out to be easy.
In my opinion, there are seven (7) cardinal rules every successful property manager should know to effectively manage their resources. If you follow these rules, you will probably have less trouble with your tenants and other people you work with. The rules are:
1. Screen your tenants well and don’t discriminate
When you need to rent out your property, carryout thorough screening on potential tenants to reduce possible problems in future. When you set high standards and screen your tenants well, you will be able to have a lot of information about them and probably you won’t end up with more problems in future. You should not discriminate the screening process on basis of sex, race, occupation or any other factor whatsoever. You should inquire the original documents e.g. visa or ID card among other necessary documents to get as much details of the tenant as possible. To make the screening process a success, you should already have a structured screening process which is strictly followed by all potential tenants.
2. Make rent payments easy and automatic
You should have a regular flow of income regardless of the circumstance. Therefore, you should make your tenant understand that rent should be prompt and automatic by the end of each rent period. In fact, most property managers are preferring rents being paid through the bank or online to ensure that they get their full amount of money on time. Online rent payment method is fast, easy and convenient to most people and this makes it very popular today. To have a successful online payment method you should:
• Require it in the lease
• Use a reputable online company to avoid losing money
• Check with your state if online payment method is allowed. Ideally, the method is allowed in most states except California which requires only one extra method of payment
You can lose a lot of money when you choose the wrong online company to work with. You should take your time, get referrals from other investors and professionals to avoid making a selection mistake.
3. Have a rock-solid lease and stick to it
Mostly, tenants tend to defy from the lease and this should be the main reason why you should have a reliable lease. To become a successful property manager, you need to have a fair lease which is in written form. Irrespective of the method you used to do the arrangement with your tenant, you should have the lease in writing for future use. You can only be able to defend yourself in court if you’ve a high quality lease which is designed for your state. If you don’t have one, you should get one immediately before things get out of hand. In case of a problem or a disagreement, a written lease is the only document which can help you in the court. Otherwise, a word of mouth can change at any moment depending on prevailing circumstances.
4. Be there to inspect your property once a quarter
Even though you hire a contractor regularly to carry out maintenance or repairs, you should find time to inspect your property to make sure that the repairs were properly done. In addition, you will be able to check the entire property to identify any problems or further repairs or replacements which should be done. You should not stay away from your property for a long period of time to avoid getting more additional costs due to negligence. As a good manager, you should regularly visit your property.
5. Be fair, honest and make timely repairs
When you are fair and honest to every tenant, you create a good relationship with them making them love being in your property and hence they can’t move out easily. Just like business people treat their customers with respect and professionalism, you should also do the same to your tenants to keep them happy and on your property. Ideally, when you treat your tenants better by fixing the problems they present, doing timely repairs and maintenance practices, you show them how you care for their well-being and consequently get them to stay in your property for long. They even get a word out to other people telling them how good you are and how comfortable it is living in your property. This will automatically get you new tenants easily when you’ve more space or you’ve further invested.
6. Know how and when to use ‘notices.’
As a landlord or a property manager, you will have to use notices to pass information to your tenants. You should know how to do it properly and when to do it. With each state having its own requirements, you should find the right moment and method to give notices to tenants before visiting the property or terminating a lease. Work on how to give proper notices to your tenants to become a successful manager or landlord.
7. Withhold tenant’s deposit only for damages caused
In a normal circumstance, a tenant and a landlord/ property manager will get into a disagreement due to various causes such as failure to give proper notice of leaving, tenant abandoning lease or damages caused by the tenant when he or she was living in the property. As a good manager, it is important to withhold deposit for the actual damage caused either in form of rent, late fees or the cost to repair excessive damages caused by the tenant. Avoid withholding tenants deposit because you are frustrated or mad about the tenant moving out or finding a loophole on your lease. When you withhold a deposit, you should be able to prove the damages with either a receipt or a contract/lease. To have a good relationship with tenants, avoid taking an advantage because you’ve their deposit and they can do nothing about it! This could ruin your name and it’s not good for business.
Property management involves a lot more than these seven (7) cardinal rules. However, these rules are basic to successful management, and they may help you make the right decision and choices when it comes to managing your property. If you don’t know how to handle a problem, you don’t have to face it alone because many experienced professionals and investors can help you fix it. Don’t hesitate to ask for help from other professionals e.g. lawyers, realtors, mortgage brokers, property managers, other property investors, etc. if the need arises.