Rental property management can swallow every hour you’ve got if you let it. Everything from plumbing catastrophes to late rent payments can keep you up at night. Fortunately, you can take steps that will make your rental management experience go a little smoother. Here are three steps you can start implementing today.
Tighten Up Candidate Criteria
After you bought your first couple of rental properties, your main goal was probably to get tenants into them as fast as possible. It makes sense. You just sank a pile of money into those properties. You’d want to start recouping on that investment. Unfortunately, getting tenants in fast usually means accepting things you didn’t really want, like tenants that smoke or own pets.
The rental market has been very competitive in recent years, which means you can be a lot choosier about applicants. For example, you can ask for a higher credit score. If a 650 used to be good enough, raise it to 700 or 750. This reduces your overall risk and brings in applicants with more reliable work and bill-paying habits.
You can also tighten less obvious criteria. You can ask for a better debt-to-income ratio. People with less debt tend to have less trouble making their rent. You can also ask for a better income-to-rent ratio. If you use the standard 40x the rent standard, make it 50x.
Systematize and Automate Processes
When you start any new business, there is a high percentage of hands-on activity. You handle the books and probably enter rent payments manually into a spreadsheet. You write checks to cover your mortgage and insurance payments. You maintain a mental “move in” and “move out” list of things to check. Then, you check them yourself. While all of this hands-on labor is probably necessary early on, it becomes an unsustainable time drain as you add properties.
These kinds of tasks can be systematized or automated. You can develop formal checklists that an assistant or property manager can go through when people move in or move out. Your bank will automatically issue checks for mortgage payments or withdraw the funds directly from your account. You can set up automatic payments for insurance and utilities.
You can lean on technology to help you automate tracking rent payments received. For example, you could use subscription management software to accept rent payments. That keeps an automatic record for you. Many will even export records in an Excel or CSV file for long-term record keeping. Depending on the features of the software package you pick, some will even send out reminders for failed or missed payments.
Hire Staff and Outsource
You simply can’t do it all yourself beyond a certain number of rental properties. Even with systematizing and automation, some things need a human touch. A human being must physically look at properties to make sure nothing is damaged. A person must actually show up and mow the lawn, fix plumbing issues, and repair HVAC problems.
Once you find yourself falling behind on routine tasks like lawn care and showing properties, it’s time to bring on some staff. At the very least, you need a property manager to deal with day-to-day affairs. If you own rental properties with multiple units in each building, you might even need more than one property manager.
It’s also worth your time to find a reliable lawn care service, plumber, HVAC service, and an electrician. Develop them as your go-to service providers so that you’re a priority client. These kinds of solid outsourcing relationships can save you a lot of headaches.
Rental property management can try the most patient soul, but it doesn’t need to be unbearable. You make the job easier by tightening up applicant requirements, systematizing and automated processes, and hiring the right people. These steps will free up a lot your time to focus on the business of finding and buying new rental properties.
