A rental property can be a remarkably sound investment. Owning a rental property combines the long-term investment of purchasing real estate with short-term profits that come with regular rent payments from tenants. So it’s no wonder that those who can afford to do so are buying rental properties or turning their old homes into rental spaces when they move on; long-term, being a landlord can be a very lucrative thing.
But being a landlord can also be a very stressful thing, as first-time income property owners soon find out. You’ll have lots of obligations under landlord-tenant law no matter where you’re located, and your plate will be particularly full (and your legal and financial vulnerabilities proportionately large) in certain states and cities that offer significant legal protections to renters. To be a great landlord and maximize your profits, you’ll need to be smart, efficient, and organized. Here’s how to accomplish those things.
Go high-tech
If you’re trying to manage a rental property without landlord software, then you’re living in the dark ages — and may be putting your property and your financial future at risk. As a landlord, software and online apps will be among your most important tools for organizing paperwork, bills, and all the things that go along with owning property.
You can find great apps for posting rental listings, accepting applications, and screen would-be tenants online. Applications like TurboTenant will help you fill your vacancies quickly while still making sure that you’re getting only the very best tenants. You’ll also want to make use of accounting software to keep track of your expenses and income.
Crunch the numbers
Speaking of accounting, you’ll need to pay close attention to your margins and your expenses. Keep careful records and use software to crunch the numbers in real time. You’ll need detailed records to get your taxes right and will want big-picture insights and detailed numbers for when you have to make key decisions about things like maintenance contracts and rent increases. Owning real estate is a business, so be sure to treat it like one!
Outsource when necessary
Running a rental property can be a full-time job — if you want it to be. But if you’re using your rental property to generate passive income while you work full-time elsewhere (or while you try to enjoy your retirement), then you’ll want to get some help.
It’s wise to outsource certain tasks related to your rental property. Maintenance contracts with reliable building management firms and contractors can help you keep up with tenant and building needs without breaking the bank. And turning to experts for help with your taxes can be well worth it when you reap a bigger tax refund at the end of the year!
Protect your investment
Outsourcing maintenance does more than take chores off of your plate. It also ensures that your property gets regular care from experts — and, therefore, stays in tip-top shape. That’s important, because deferred maintenance can be very costly, and a run-down building will lose value over time in a way that a well-maintained structure will not.
But it’s not just slow wear and tear that can hurt your investment. You also have to worry about everything from natural disasters to lawsuits!
Protect yourself. When you’re first setting up your rental property business, speak to a lawyer about legally structuring your investment in such a way as to insulate your personal legal and financial risks from those of the rental property business. And be sure to invest in comprehensive landlord insurance that ensures you won’t lose everything to a fire, flood, or a slip-and-fall lawsuit.
Being a first-time landlord can be overwhelming, but you’re not in this alone. Use software, outsourced solutions, legal assistance, and insurance to make things safer, more manageable, and more profitable for you!
