Property Management Guide for Beginners
If you’re reading this article, you have probably been considering investing in a rental property or properties for the first time. Perhaps you have even already purchased the property and you are simply trying to figure out the best approach to start renting it out. In the following text, you will find basic, understandable information regarding property management.
Devise a Plan
It is important to have a detailed plan set in stone before you start to locate renters. Not only will a plan help you to feel more organized, but it will also show potential renters that you mean business.
First, determine who you will be renting to. Is the rental property you are investing in large enough to accommodate multiple people? If so, do you prefer to rent to a solo family or are you okay with renting each room out individually? Your answer to these questions may depend on your location. For instance, in a college town, renting out individual rooms may prove to be successful as there are always students looking for an affordable place to live.
Furnished or Unfurnished
Second, do you plan to rent out the property furnished or unfurnished? Either option has advantages and disadvantages. A furnished property may be attractive to a rental applicant who doesn’t own much of their own furnishings. It would be a much faster moving process if the renter only planned to stay for a shorter time. On the other hand, renting a furnished property could mean more potential damages to your belongings.
Rental Agreement Details
Lastly, be sure to outline the details that will be present on your rental agreement. Will you lease out your property 6 months at a time or a year? Will you allow pets? If so, will there be an additional monthly cost per pet? Will you be asking for a security deposit for potential damages that could happen? If so, how much? Will you be requiring a background and/or credit check on each rental applicant? Will you require renter’s insurance be purchased?
Property management can be risky. We often know nothing about the people we rent to or what they are capable of. They could easily damage and destroy the property or fall short on monthly payments leaving us with an expensive mess to deal with.
This is where the details we just discussed will come in handy. Remember, you can never have too much legal documentation. Consider hiring a lawyer to assist you in creating necessary documentation to have your rental applicants fill out and sign.
Consider purchasing liability insurance. Liability insurance is insurance designed to protect you if your renter were to accuse you of not following through on your end of the renter’s contract.
Require your renters to purchase renter’s insurance. Renter’s insurance ensures that your property is protected even amid great damage or disaster such as flood or fire.
Setting Your Rental Price
Setting the rental price on your property starts with researching the rates of other similar rental properties in the area. You want your rental price to be within the same price range. For simple research, check out your local Craigslist’s rental section or contact local rental agencies to see where they have their rates set.
At the same time, it is important that you make a profit on your property investment. If the rental price is exactly equivalent to what you owe each month on your property loan, you will not be making any money.
Advertise, Advertise, And Advertise!
When more people know that your rental property is up for grabs, more people will be hurrying in to apply for it. The larger your applicant pool, the more options you have in deciding who the perfect tenant might be. Choosing the right tenant means that you can count on timely rental payments and few damages to your property.
Where should you advertise? Everywhere! Today, advertising can be done online as well as in person. It can be as simple and inexpensive as posting on websites like Craigslist. You could even post paper advertisements around town. Often, public places like college campuses and grocery stores will allow you to pin your paper ads to their bulletin boards.