Having rental properties is a wise investment. However, it can take too much of your time since you have to cater to many things. This includes maintenance, listings, paperwork, and the like. You may have heard that having rental properties is a great way to earn passive income, but it’s not a completely passive investment where you only wait for renters to pay their dues. This venture also requires hard work, effort, and time so you can get the most out of your rentals. Let’s see REITs vs rental property which one is better investment.
Is DIY Rental Management Better?
While managing a rental property on your own is possible, it would certainly consume more of your time. If you’re a full-time rental owner with no other engagements or jobs, then that’s not much of a problem. However, it’d be best to check the following factors if you can’t commit full-time to it:
- Availability: Yes, you need time to manage your rental properties, and you need lots of it. You need to be available and accessible any time of the day since incidents may arise at any time, requiring your immediate response and presence. It’d be a hassle if you’re working and your tenant suddenly needs urgent repairs or requests maintenance work. Or if a potential tenant wants to view the property, you’d better be available so you won’t lose the chance of making a contract in case you’ve delayed the viewing. Thus, you may need to be available 24/7. Or else, you either lose a potential tenant, or you need to sacrifice some more of your time to attend to such urgent matters.
- Repairs And Maintenance: As mentioned, you need to immediately respond to the needs of your tenants as mandated by the law. This means that you have to provide them with hot water in case the heater malfunctions. And you can’t dispute it since this is part of their tenant rights. If you violate their rights, you’re more likely to face lawsuits, which can cost you hundreds of dollars.
- Advertising: moreover, you need to know how to advertise your rental properties. It’s not enough to post a sign outside your property because it cannot reach potential tenants. Nowadays, consumers find their needs online, so it may be hard to maximize your earning potential if your property isn’t advertised correctly.
What Solutions Are Available To Manage Your Rentals?
Being a hands-on landlord would prove to be quite a handful, but there are ways to manage your responsibilities more efficiently. You don’t have to quit your daytime job to manage your rentals. Instead, you can maximize the potentials of your properties with the help of the following solutions:
1. Hire A Realtor To Fill A Rental Vacancy
Most property owners can agree that looking for tenants can take a long time. So, hiring a realtor to take over the job can be a complete life-saver. Other benefits of having a realtor for your real estate business includes:
- Convenience: One of the most apparent benefits of having a realtor is convenience. Typically, realtors will take the information you give them and try to match you with clients. This means that they’ll bring the clients to you. They sort of act like the middle-man between you and the client. When you have a realtor, you can say goodbye to calling or sending multiple emails to potential tenants one by one. They’ll take all of the admin work from your shoulder in exchange for a small fee once the job is done.
- Organized Schedule Of Viewings With Clients: Another responsibility of realtors is scheduling client viewings. It may not seem like it, but client viewing can be a time-consuming task. This is because it includes back-and-forth communication with a prospective tenancy. Transferring this responsibility to realtors will not only take away big chunks of responsibility from your plate but also keep the process more organized for your tenants.
- Larger Database And Network: A large chunk of a realtor’s job is to network. They must continuously build a database of clients to work with. This includes buyers and tenants for listings they’re currently working on. Working with a realtor can open the door of prospective tenants by simply interacting with the current network, which means you no longer need to scour the internet and your neighborhood for potential renters.
2. Use A Maintenance Management Software
To streamline property management tasks, you can try looking for tools that automate the job for you. One powerful software you can use is a computerized maintenance management system (CMMS). It’s designed to simplify all the tasks included in property management, including the storing and tracking of essential data like maintenance history, tenant information, and so much more. You’ll need all this data to improve future management decisions.
Going digital also paves the way for increased productivity. Since data is stored within the software, there’s less time spent on rummaging through various filing cabinets to find what you’re looking for.
If you’re still debating whether you should go digital, here are some CMMS benefits you might want to know:
- Data Analysis: As mentioned, you can make sound business decisions when you carefully analyze data. Manual gathering and analysis of data contain a lot of risk for human error. However, with property management software, you can mitigate those risks by storing vital information in the system. The software allows you to pull out historical data and derive more accurate assessments from there.
- Automation: This is probably the most significant benefit of using maintenance management software. You can set automated reminders for recurring tasks such as property inspections and preventive maintenance programs with CMMS, and they’re available in calendar view. That way, you can easily check the upcoming activities you need to attend. Thus, you won’t forget when an inspection is due.
- Communication: CMMS allows you to simplify tenant communication by storing all of your tenants’ information in one place, including your tenants’ contact information. Apart from that, CMMS software also allows tenants to reach you automatically using their desired messaging channels. This way, tenants have an easier way to contact you whenever they want to make service requests. Lastly, since maintenance software comes with mobile apps, maintenance technicians can directly update the tenants about their concerns while on the go. This makes things simple for all parties involved.
3. Have A Lease Agreement
Lease agreements are binding documents for property owners and building occupants. It works by laying out all the agreements you and your tenants agreed on, including rules, policies, and conflict resolution procedures. On top of that, it clearly states all the responsibilities of the landlord and the tenants.
Having a leasing agreement is crucial because it not only protects you and your tenant by putting everything into writing, but it also saves you a lot of time. By having a paper agreement, you can prevent future disagreements and misunderstandings. If all terms have been written down, you no longer need to remind your tenants about their obligations. Last but not the least, it also makes resolving matters quicker if you ever find yourself arguing in court.
When drafting a leasing agreement, make sure that you cover everything required by law, including the terms you want to include. If you’re managing the rental property yourself, you can look for a lease agreement template on the internet. But don’t forget that you’ll need to tweak a few things to comply with your local state or municipality laws.
4. Outsource What You Can’t Do
Real estate investment can be very hectic, especially if you’re managing multiple properties. You can outsource tasks that you don’t have time for or don’t want to do to solve the problem. If you’re managing multiple locations, you can outsource areas that don’t fit your expertise and then focus on those you feel comfortable with.
The good thing about hiring other professionals is that you can have a lot of free time. You’ll have more time on your hand if you’re not obligated to do all the work yourself. You can then use the freed-up time on more important matters. Another advantage to outsourcing is you’re hiring experts with proficient knowledge to handle the work for you. You’re giving up control and delegating it to people with more skills and knowledge about the matters on hand.
A significant part of rental property management you can outsource is legal matters. Several legal issues arise when managing rental properties. Some legal issues you’d face include breaches or violations of lease agreements and even tenant evictions. If you don’t feel comfortable handling these matters, it might be better to hire a lawyer who can write clear leasing agreements for you. This not only frees up your time but also ensures that you’re complying with all state laws regarding rental property management.
One more aspect you can outsource is maintenance. Inevitably, maintenance issues will occur, and when they do, you can hire a handyman or a building superintendent to do all the hard work for you.
5. Hire A Property Manager
Another outsourcing option is to hire property managers. Their main task is to take care of your rental properties’ operation, control, and maintenance, which can significantly lighten your management responsibilities.
Hiring a property manager has a lot of benefits, and one of them is avoiding time-consuming tasks. You won’t get better returns if you don’t exert a lot of time tending to your properties. And if you happen to be a busy person, you might not be able to maximize profits as much as you’d want. But by hiring a property manager, they can take over most of your responsibilities.
Another benefit of having a property manager is streamlined contact with outside vendors. Sure enough, most rental businesses have preferred maintenance management companies and contractors. Maintaining a good relationship with these vendors ensures that you’ll be first in line for maintenance technicians if problems occur.
However, keeping in contact with them can eat away more time. With a property manager, you don’t have to worry about getting a fair quote or worrying about a technician’s availability. Your manager can do all of that for you.
Lastly, property managers can also be in charge of conducting background checks on your prospective tenants. If you’re looking to ensure the security and safety of your properties, then you’d want to properly screen prospective tenants. But competent property managers can take over this responsibility for you, so you don’t have to worry about it.
If you find it hard to handle all the obligations of renting out a property, hiring a manager might be the best solution. Since your manager will handle most of the daily rental operation, you won’t have to run around all day with heaps of tasks to do.
6. Work With An Advertising Agency
As mentioned, you need to expand your marketing efforts to attract more tenants. The best way to do this is to hire an advertising agency that specializes in real estate marketing. Doing this may seem like an additional expense, but it can yield better results. They know how to market your property without additional burdens on your part. And this is better than having an empty property.
In addition, you’re more likely to grow your rental property because your rentals could be occupied throughout the year with the agency’s help. Since marketing is their forte, they can use strategies that fit your needs.
If budget is a concern, you can do the marketing yourself. It does not have to be complicated; it could be as simple as promoting your properties on social media or listing them on online marketplaces. Networking with the right people in your community is also a good idea.
Nowadays, the mantra of work smart is very much applicable when you own rentals. You can live your life and spend most of your time without worrying about rental management matters as long as you know how to delegate them. You can benefit more from your rental properties without exhausting all your time by considering the solutions above.