Managing a rental property demands time and effort. If managed correctly, it can be a secure and profitable investment; however, if managed irresponsibly, it can become a costly headache. If you’ve decided to self manage, you’ll want to be familiar with the responsibilities associated with running a rental property.
Here are some important aspects of managing a rental property every DIY landlord should know.
Find a Tenant
The first step in managing a rental property is finding a tenant, so that means you’ll need to advertise your property.You could advertise by writing a rental ad, hosting an open house, scheduling individual showings, or sending rental applications to interested parties.
When determining your rental price, look at similar properties in your area to get a sense of the average price point. Adding new appliances or other amenities will raise the price of your rental as well. You can also use our Free Rental Analysis.
Screen Potential Tenants
Before signing a lease, it’s important to screen every potential tenant. A tenant that pays rent on time and is respectful to neighbors and your property makes management much easier. You also won’t have to deal with costly evictions. Running background and credit checks will help you find a good tenant and put you in the best position to run a successful business.
While screening and speaking with potential tenants, make sure you abide by California’s Fair Housing Laws.
Create and Sign the Lease Agreement
Once you’ve found an applicant who meets your qualifications, you’ll have them sign a lease agreement. After you’ve drafted the lease, run it by a legal advisor. Make sure the lease includes when property inspections will take place and repairs on the property fixed. Then, review the lease with your tenant before both of you sign. Provide your new tenant with a copy of the lease and store your own copy securely.
Keep Up With Maintenance
It is crucial to keep up with maintenance for your investment property. Under landlord-tenant laws, you have a legal obligation to keep your property up to certain health and safety standards.These include staying up-to-date with pest inspections and making sure tenants have somewhere to throw their garbage. Keeping up with property maintenance is more cost effective as well. If you only deal with issues on an emergency basis, then you could end up paying tens of thousands of dollars in repairs that could have been avoided if properly maintained.
If you don’t maintain your property, you will have a difficult time finding and keeping tenants. No one wants to live in a rat-infested, moldy house.
Here are some tips for best maintaining your property:
Perform routine maintenance - We recommend having your property inspected yearly for any issues that may not be readily identifiable. Check for pests, water damage, inspect the roof after bad weather, clean the gutters and test smoke alarms.
Handle emergency maintenance promptly - Some issues require immediate attention. Take care of these as soon as possible to reduce damage. Emergency maintenance could include a gas leak, electrical issues, or water leak.
Supervise all hired personnel - If you’re handy, you may choose to repair some smaller issues yourself, however, there will be many times you need to hire personnel to inspect or fix a problem. Whenever someone is on the property performing maintenance, make sure they are supervised. This includes contractors, maintenance workers, plumbers, electricians, etc.
California requires a landlord to give at least 24 hours written notice to tenants before entry onto their property for non-emergency repairs. You are not required to give written notice before entry for permissible emergency purposes outlined in California’s landlord-tenant laws. As a landlord, it’s important to familiarize yourself with California’s landlord-tenant laws, so you know your, and your tenants’, rights.
As a DIY landlord, you will interact with your tenants beyond the initial lease and monthly rent payments, so it’s important to understand the basics of how to manage tenants. Here are some tips for handling tenant responsibilities like a pro.
Respond to tenant complaints promptly - Whether it’s a leaky sink or a broken pipe, respond quickly to tenants and follow up with them once the issue has been resolved. Addressing issues in a timely manner will not only reduce potential repair costs, but it will keep your tenants happy and wanting to stay.
Communicate with tenants regularly - Communication and flexibility goes a long way with attracting and keeping tenants. If you are approachable and easy to reach, tenants will feel more comfortable talking with you, asking questions, or reporting minor property issues they might not have otherwise. If you manage multiple properties, a property management tool is a good way to keep track of when you communicate with your tenants and how they prefer to be contacted. If you manage a single unit, calling or texting might be the easiest way to manage communication.
Send rent reminders - One of the best tips for new DIY landlords is to give formal notice when rent is due. These reminders are helpful for tenants, but they also make your expectations clear. Maintaining a friendly relationship with your tenants helps them feel comfortable, but don’t forget this is your business.
Rental Property Accounting
Self managing your rental property means you’ll need to handle property income, expenses, and other financial details.
Rental property bookkeeping includes:
Collecting rent - There are many ways to collect rent, but the most common, and often the easiest, is doing it online.
Managing security deposits - Security deposits can help cover any damages or issues when a tenant moves out. Make sure to securely store deposits while the tenant is renting your property and become familiar with California’s security deposit limits and return obligations. If your tenant has a pet, account for pet damages as well.
Filing taxes and reporting expenses - You might want to hire an accountant who can help you understand the tax obligations for rental properties. Accountants can help you maximize your deductions and report your expenses properly.
Here are some common rental property expenses to consider when filing taxes:
Maintenance and repair
Rental licensing, mandatory inspections, and annual registration fees
Property and rental income tax
Basic utilities like gas, electric and water if you pay for them
Marketing or advertising fees
If you have more than one rental property, you may be required to complete additional tax forms. Talk to an accountant to verify your rental property income and expenses are reported properly.
If you have additional questions about property management or would like to talk about your management options, give us a call. We look forward to speaking with you!