If you purchased a second home or an apartment building, it's important to get the maximum return on your investment. When managed properly, rental properties can be a lucrative long-term form of income. Keep the following 12 tips in mind to get the most out of your rental property:
- Ensure the property has curb appeal. Prospective tenants are far more likely to want to rent from you if the building looks nice from the outside. Ensure that windowsills and doors are painted, the roof is well-maintained, and any grounds are neat and tidy.
- Maintain the property. You also need to make sure the interior of the building is in good condition. This includes everything from the plumbing system to the carpets and from the communal areas to the heating, ventilation and air conditioning systems. Doing so will help ensure that you get good reviews online ━ and that can help attract good tenants.
- Address small issues before they become big ones. A small leak can become a major mold issue ━ and an expensive headache ━ if you don't take care of it as soon as possible. That's why you should fix any problems as soon as you become aware of them.
- Have onsite or on-call maintenance staff. If you're unable to make repairs yourself, hire one or more maintenance technicians, depending on the size of your property.
- Be familiar with housing laws. It's always a good idea to be up to date on all applicable housing laws.
- Be aware of tax issues. You have to pay taxes on rental income, but there are also tax breaks for expenses associated with your rental property. Discuss your situation with your accountant or tax advisor so you know how renting out your property will affect your taxes.
- Work with a real estate agent to find tenants. Depending on your area, it can be challenging to find tenants. However, if you work with a real estate agent, you might have to pay some commission ━ but you'll probably have less trouble finding tenants.
- Do background checks on tenants. Nolo recommends checking prospective tenants' credit history, criminal background and references. This will help you find people who are trustworthy and respectful of your property.
- Maintain high occupancy. The more units that are occupied, the more income you'll enjoy. Do your best to maintain a 90% or higher occupancy.
- Always use contracts. Put your lease terms into writing, and have an attorney review your lease agreement to ensure it's correct. Make sure that all of your tenants sign their lease agreements. This is critical in the event there are any disputes further down the line.
- Minimize turnover. The more people you have moving in and out of your property, the more wear and tear it will suffer. Additionally, people who rent long-term are more likely to take good care of your property.
- Use an online property management portal. Tenants will find this extremely convenient, as it will enable them to pay rent, contact your office and schedule maintenance appointments ━ regardless of where they are.
Keep these tips in mind to effectively manage your rental property, and you're likely to be able to keep it in good shape while at the same time maximizing your income. And don't forget to discuss insuring your rental property with your independent insurance agent.
