Investing in real estate, especially rental properties, is a rewarding endeavor. The revenue you generate from rent can be extremely profitable, not to mention the fact that your property will likely appreciate over time.
With that said, being a landlord comes with many responsibilities. Purchasing the rental property is only the first step. There’s a lot to be done from there.
Here’s what you need to do when setting up a new rental property:
Make Repairs and Improvements
After you purchase your property, you must perform an inspection to ensure it’s in safe and livable condition. Hire a property inspector to review your property’s water, heating, appliances, sanitation, electrical wiring, structural integrity, and other important standards. After the inspection, you need to make any necessary repairs recommended by the inspector.
Once everything is in working and ordinary condition, you should hire someone to clean the property. You should also give the property a fresh coat of paint.
Finally, it’s up to you to decide if you want to take on larger renovation projects such as remodeling, installing hardwood flooring, or adding smart technology. Improvements like these will increase your property’s value, which allows you to charge more for rent.
Determine an Appropriate Rent Rate
To maximize your profits, you must decide on the perfect amount to charge for rent. While you want your rate to be competitive for what your property has to offer, if your rent rate is too high, you’ll have trouble filling your vacancy.
To come up with your rent rate, you should research similar properties in your area. Find out what local landlords are charging for their properties and organize your research on a spreadsheet. Be sure to keep track of all the factors that influence price, such as square footage and amenities. From there, you can determine the value that each feature adds to a property in your market, which will help you arrive at an appropriate rent rate for your own property.
Advertise Your Property
Buying rental property with existing tenants is one of your options when looking for a new property, and doing so will save you from having to find tenants. With that said, more often than not, you’ll be purchasing a vacant property that you’ll have to fill yourself.
Step one of finding tenants is creating a property listing. A listing includes a single-line headline with key information about your property, high-quality photos, and a description with more specific details.
While making an appealing listing is important, you must also know where and how to advertise a rental property if you want to have success with filling your vacancy. Today, the best way to market your property is on listing sites like Apartments.com and Zillow. Posting your listing to as many sites as possible will increase your chances of finding a quality tenant quickly.
It’s imperative that you screen every applicant thoroughly. The last thing you want is a tenant who doesn’t pay rent on time or respect your property. On your rental application, be sure to ask for proof of income, residence history, employment history, and a list of references.
The next step of tenant screening is to run credit, criminal history, and eviction history checks. Even if a tenant looks perfect on an application, you need to review the information from these sources to know for sure if they’re qualified.
When deciding whether to accept or reject a tenant, you should make sure to adhere to a tenant scoring system. This allows you to objectively determine if a tenant meets your standards, and it also protects you if you get accused of discrimination.
Manage Your Property
Once you’ve prepared your property and found a tenant, your job isn’t over. As a landlord, you have daily responsibilities to stay on top of, including lease management, rent collection, and maintenance management.
The good news is you don’t have to do everything yourself. There are rental property management companies you can hire that take on these responsibilities for you. A alternative option that has become popular recently is cloud-based software. Software allows you to manage your properties yourself without having to stay on top of the tedious legwork manually.
If you’re a new landlord who has recently acquired a rental property, there are several tasks ahead of you that you must complete before you can start collecting rent. By following this rental property set-up guide, you’ll have your property up and running without much difficulty.