While income property can be tremendously rewarding -property management it isn't for the faint of heart! Especially if you, like many other first-time landlords, are thinking of going it alone.
Sure, on the surface it might seem straightforward enough. You buy a property, find a tenant, and wait for the rent to start rolling in. But the truth is that rental management, like any good DIY project, can get real hairy real fast, especially if you're not fully prepared for what's in store.
Rental management isn't exactly a weekend project, or something that comes with step-by-step instructions, but there are a few skills that you'll want to ensure that you have before you embark on your own DIY landlording journey. Having a good grasp of the basics will help you to sidestep many of the common issues that often arise for first-time landlords, allowing you to drastically increase your chances of DIY rental management success.
Think you have what it takes? Here's a look at some things that every DIY landlord should have.
Handyman Skills
How handy are you with a hammer? What about spackling? Because you're going to need a lot of it as a landlord!
While the amount of work that's required to get a home into rent-ready shape is a lot lower if you're buying a brand new unit, most landlords get their start by purchasing a home that's in need of a few repairs.
Once the home's ready to rent, then comes the issue of required upkeep, and emergency repairs when something goes wrong. Most tenants won't want to do maintenance, plumbing, patching, and toilet repairs -and you'll be on-call 24/7 should something go wrong.
If you don't want to spend your spare time being a handyman or woman, then you'll want to make sure you have a good one on speed dial! Just keep in mind that having some basic skills can help you to save a great deal of time and money, especially when you're first getting started.
Knowledge of Landlord-Tenant Law
When it comes to being a landlord, it's important to recognize that there are rules and regulations that you need to follow -at both the state and federal level, and being aware of your responsibilities and obligations as a landlord is vital.
From rules on the eviction process, to how much notice you're required to give before entering the property, to rules on tenant screening and security deposits, there are plenty of different guidelines that landlords are legally obligated to abide by, and as a DIY landlord, you'll need to ensure that you're aware of -and in compliance with all of them.
Real Estate Agent Skills
From getting the property listed and advertising, to showing the rental, and preparing the lease documents, there's a great deal of time and effort involved with simply trying to get your property on the market.
Finding a great tenant doesn't happen overnight, and you'll need to be prepared for all the work that's required. In addition to taking images, creating listings, and showing the property, you'll also need to be able to screen prospective tenants, and run credit and reference checks -as well as employment verification to ensure that the information on their application is correct and to make sure they're a good fit for your property. Just remember to run every applicant through the same screening procedure, to maintain compliance with The Fair Housing Act.
Great Communication
When it comes to being a landlord, great communication is vital.
You need to be able to articulate your expectations for your tenants in the form of the lease, and ensure that your tenants are clear on issues like the pet policy, smoking policy, move-out procedure, and more. Likewise, good communication skills mean knowing how not to communicate as well. You shouldn't call your tenants at all hours of the day or just stop by unannounced to discuss issues with them. Instead, give them adequate notice via text or email. Likewise, prevent misunderstandings by avoiding verbal agreements. Instead, make sure everything is documented in writing.
Good Finance Management
Having your finances in order, and ensuring that your credit's in good shape, are other vital components that can make or break your rental venture.
Without a decent credit score, it may be difficult to obtain a favorable loan from the bank. Likewise, you'll want to ensure that you have enough saved up for a down payment -most banks require around 20 percent -or more, for an investment property, but there are other ways to obtain financing.
Once your finances are in order, then comes the money management. While rental property is a fairly simple business model, it's still important to have a good grasp on income and expenses, and the ability to plan, budget, and save for emergencies. You'll also want to take the time to do a cash flow forecast, taking into account projected income and expenses before buying an investment property.
Bookkeeping Skills
Speaking of money, you'll also need the ability to stay organized and keep track of your paperwork and receipts.
This makes it easier to accurately track income and expenses and will save you from a world of hassle come tax time. You'll also want to take advantage of time-saving financial tips including setting up online rental payments and getting ahold of accounting software -like Quickbooks or Freshbooks, which will make short work of billing, income, and accounts.
Business Skills
Managing rentals is a lot like starting your own company. But far too often, landlords make the mistake of treating their rentals as a side hobby, rather than a business.
If you're serious about wealth creation through income property, though, taking a business approach, and treating your rentals like the money-making venture that they are, is the first step in finding financial success. Experienced landlords recognize the importance of being goal-oriented and making decisions that'll help to increase both their cash flow and provide long-term returns. It's not just about keeping busy; rather, it's about making your time count, and putting your effort into creating passive income streams.
Determination
Finally, in order to make it as a landlord, you're going to need a thick skin -and a tremendous amount of determination.
When managing rentals, there will always be issues that arise -and potential problems that will need to be addressed, and it's important not to give up when the going gets tough. Instead, remember that success with rental property isn't a get-rich-quick venture, but rather something that requires a long-term approach. Being able to face difficulties and solve problems in pursuit of your goals will enable you to find success as a landlord.
So should you DIY it? Or enlist some help from a property manager? The answer is: it depends!
Many landlords start out managing their own properties, but as is the case for many DIY projects, sometimes it does pay to bring in the professionals. Just remember that successful income property investing isn't about trying to do everything yourself, instead, it's about leveraging options that will best enable you to reach your long-term goals. Be sure
to keep this in mind when making your decision.
Looking for help with your rental property? Get started with your FREE Renters Warehouse home rental price analysis today!
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