Investing in property involves little more than picking out a place, paying for it, cleaning up a few odds and ends, and then kicking your feet up and letting the cash roll in, right? Although that sounds like the dream, successfully maintaining and profiting from an investment property requires extensive time and effort. Interested owners should go into the process ready to work hard and address problems, and should expect a fair number of totally unexpected scenarios to pop up over time.
That being said, smart investors and owners utilize certain behaviors that can help minimize stress, chaos, and risk when it comes to properties of all shapes and sizes.
Learn and Follow the Law
It might seem like a painfully obvious suggestion, but landlord-tenant laws vary by city and state and often come with complicated addendums. You don’t have to go to law school to interpret the rules, but you should spend some time with the documentation that will get you started on the right path. Every single action, from setting a security deposit amount to what constitutes an inhabitable property, is mandated. Though it may seem daunting up front, the best thing you can do to remove the guesswork from your business is to keep a copy of relevant laws nearby and learn them front and back.
Work with Property Management
Property investor is one of the only jobs where one day will have you signing important legal documents and the next you will require desperately attempting to fix a leaking pipe before it destroys an entire room of hardwood. You’ll likely get dirty over the course of your property investing career, and the number of items on your to-do list may feel overwhelming. This is especially true if you live far away from your property, or if your portfolio includes multiple residences.
It’s freeing to realize that you don’t have to do it all alone. Sometimes it’s simply impossible to be in enough places at once. Instead of letting details slip through the cracks and spreading themselves too thin, many landlords elect to outsource some logistics to experts in property management like Onerent, which simplifies the process for landlords by listing your property across real-estate platforms, conducting a home inspection, screening tenants and setting up showings, and even handling the payment and maintenance process through a centralized online platform.
Accept the Right Tenants
You don’t want to rent to someone who routinely blasts their music at 2 a.m., waking neighbors and inciting a neighborhood-wide conflict. You also may not want to sign a lease with a tenant who owns a pack of large dogs. Above all, you also want to choose candidates who have a high likelihood of paying rent in full, on time. How can you tell ahead of time which tenants will be a constant thorn in your side and which ones will drop into your office to share a plate of holiday cookies?
Tenant screening is an absolutely crucial part of investing in rental property. Performing diligent credit and background checks ahead of time will let you know how much someone has to lose if proceedings turn ugly. Selecting the right tenants can mean the difference between spending time in court and watching your investment portfolio grow steadily over time.
Keep Tenant Turnover Low
Once you have the right tenants in place, you want them to stay. Simply put, low tenant turnover reduces your paperwork, how much you need to check up on the property, and the gnawing feeling that strangers could be trashing your beloved rental residence at any moment.
After spending $6,000 on repairs to property, finance writer and investor Holly Johnson learned the important lesson that “good tenants are worth their weight in gold.” She worked out a system where she keeps rent steady for tenants who have proven over time that they’re trustworthy, respectful, and diligent. While her income does not increase when their leases renew, she has eliminated worry over an irresponsible tenant causing substantial damages.
There’s no guarantee that investing in property and maintaining it will be stress free, but it’s possible to enact certain best practices to reduce some of the strain.