Buildium reports that a whopping 42% of renters occupy a property for less than two years. With such massive turnover rates, effective property management has never been more vital to ensure your real estate investment turns a profit.
So, how can you ensure success in your real estate venture? Which strategies can you implement to retain tenants and generate profits? Let’s unpack three traditional approaches to rental property management and the steps you can take to secure happy renters and a return on your investment.
When entering the real estate game, many property owners aren’t sure how to best manage their rental units. Let’s look at three approaches landlords can take with rental property management.
Many new landlords begin by managing their own properties. This is tough to get right—we’ll outline a few secrets to success later on—but it can yield high-profit margins if you succeed.
Managing your property solo means you carry sole responsibility for anything that goes wrong at any hour of the day. Plus, juggling a full-time job and other responsibilities can be difficult when managing your property alone.
For property owners with a few weekly hours to spare, a-la-carte rental management services can be the perfect solution. This option allows you to pick and choose only the services your property needs.
For example, if you don’t want to be available at all hours of the day, every day, opt for emergency maintenance services. This way, you’re not attached to your phone on Sunday mornings, as a rental property manager can handle the emergencies for you.
The a-la-carte rental management option gives property owners the flexibility of working with a professional and the money-saving option of handling less time-sensitive tasks on their own.
A high percentage of property managers prefer to hand over everything and collect monthly checks. You’ll partner with a full-time rental property manager or management company for this convenience. Rental property management services do cost money, but the ROI most property owners see is worth it.
If you’re not sure yet what solution is best for your property, let’s outline a few success strategies for DIY property management.
Successful DIY property managers understand that property management is only one key area the DIY landlord must keep in mind when making decisions. While it may appear that property management is an all-inclusive term for what it takes to run a real estate business, the DIY landlord must also be a savvy financial and business manager and skilled in managing tenants.
If you choose the DIY rental property management route, follow these five essential steps to avoid common pitfalls.
A great rental property manager should research the neighborhood and local area to price property fairly and competitively. If you’re ready to crunch a few numbers, gather your most recent mortgage statement and get calculating.
Successful tenant management can be tricky. It includes finding the right tenants to occupy your property through a thorough screening and application process. Once tenants move in, you must oversee move-in and move-out logistics.
Remember, nearly half of all renters relocate every two years. You’ll then need to manage all requests, repairs, and complaints that arise during the tenancy to keep your occupants happy and renting for longer.
Regarding managing repairs, the DIY landlord is constantly on call regarding property maintenance. You’ll need a system to schedule ongoing maintenance, respond promptly to maintenance requests, and take proper action. Therefore, you’ll either need extensive repair knowledge or quality contractor contacts you can rely on to get the job done. Rental property management also requires proper insurance coverage and compliance with all local and state laws.
The best landlord-tenant relationships are those with clear communication. The DIY landlord will lay out expectations early on and outline the rules of occupying their property.
Throughout the tenancy, a DIY property manager must conduct regular inspections to protect the property without intruding into tenants’ lives. It’s also preferred to keep communication between landlord and tenants consistent. Discuss with tenants whether they prefer to receive communication via phone, email, or text, or choose a channel that works best for you.
As a DIY landlord, you can quickly feel as though your primary job has become property manager, rather than the reason you first started renting your property—to run a real estate business.
DIY property managers often find it challenging to continue to manage their real estate venture's business and financial elements. If you’re looking to grow your real estate business in the future, keeping an eye on ways to expand and grow is critical. Plus, you’ll need sound financial management, including meticulous accounting and setting aside a reserve fund for unexpected repairs and required maintenance that keeps your property worth top dollar.
Understanding how much work it takes to be a DIY property manager often has property owners running for the hills. But there is another way. Most property owners choose the third property management option on our list to make their lives easier: full-service professional property management.
In 2022, 63% of property owners opted for a professional property manager instead of shouldering the burden themselves.
If this interests you, here’s how to start.
When beginning your property manager search, you’ll want to arrive prepared with the perfect questions to ask. This way, you’ll use your time efficiently to narrow your search for the best property manager to fit your needs.
Property management costs vary greatly, depending on many moving parts. But they’ll generally come in around 8-11% of the monthly rent. Some property management companies don’t get paid unless you do, taking a percentage of your profit instead of sending a monthly invoice.
If you’ve decided that professional property management is the best next step for your real estate business, start a list of everything you want from a property management partnership. With clear expectations, you can create a custom agreement with a property manager who’s a perfect fit.
With your priorities at the ready, it’s time to get free quotes from local property managers today.