A well-managed property is the most reliable way to bring a 10% Return on Investment (ROI). But if a rental property is so reliable, why are there so many horror stories from property owners?
It wasn’t the property’s fault.
Many first-time property owners make the mistake of thinking a new coat of paint and a “for rent” sign are all they need to start seeing a profitable return. That might be enough to do the bare minimum of finding a tenant, but it’s not nearly enough to protect their investment.
As one of Florida’s most detailed residential property management companies, we know what it takes to bring in a consistently high and stress-free ROI. Keep reading to get decades of experience in just a few short paragraphs.
Property Management is not a hobby.
You’ve probably heard it said by now that you should treat your property investments like a business. But what does this actually mean when it comes to the long-term management of your asset?
Organizational systems are what separates a business from a hobby. Without systems in place to guide your business, you can end up in hot water with the property neighbors or even your significant other at home.
You shouldn’t try to run a business by the seat of your pants. Act like a professional. Imagine what actions you’d take if you had 100 properties to manage, and then take those actions. Above all, that means staying up to date on your bookkeeping.
Offer a great property.
Making sure that a property is fixed up before renting will reduce the need for repairs in the long term. Not only do repairs cost time and money, but they also give a poor impression to tenants.
Not only does investing a little bit of capital upfront make your job easier in the long run, but it also gives you a way to increase your property’s rent.
As all property managers can attest: a high-quality property attracts high-quality tenants.
By not putting in a little bit of work into your asset upfront, you run the risk of attracting less-than-ideal tenants. You want great tenants that plan to stay for a long time because that means more profit for you.
Screen All Tenants For The Best
Finding a great tenant is the single most important factor in ensuring a profitable rental property. Failing to properly screen tenants could result in you living in a nightmare for years and beating yourself up.
There are four general areas to look into when screening tenants.
- Make sure their income is 3x the rent. This way you don’t have to worry about rent not being bad on time due to unforeseen accidents.
- Confirm they have a stable job. They don’t need to have a 30-year stint with their current company, but more than just a few days is a must.
- Check their credit. Obviously the higher the credit the better, but even the bare minimum of 600 signals some level of responsibility.
- Review their rental history. You want to hear positive reviews from previous landlords and no evictions. Based on our experience, how a tenant has been in the past is how they’ll be in the future.
No screening your tenants is an option if you’re seeking to quickly rent out your property, but it’s a big risk. It’s a risk that you should leave to others. Property management shouldn’t be a gamble.
Be Mindful of Discrimination Laws.
Managing your property means making lots of decisions, some of those decisions require discrimination. As an example, you might decide against renting to heavy smokers in order to preserve your property’s value. You might also choose to turn away someone with a history of evictions or someone with 63 cats.
There are many things that you should not and cannot use as a reason to refuse housing. On the national level, laws protect from discrimination based on race, sex, disability, national origin, and religion. Florida’s own law expands on the national list with the addition of marital status.
Although they may seem like innocent questions, do not ask a potential tenant if they’re married or how many kids they have. Asking these questions is the same as asking for a lawsuit.
Sign a Great Lease
Rules exist to help keep everyone on the same page and keep everyone happy. Rules make the world go round at a uniform speed. That’s why a lease is so important.
The lease spells out the terms of the agreement and rules that govern the relationship between landlord and tenant.
Having a rock-solid lease in place helps prevent shooting from the hip when making decisions. It also provides a powerful resource to refer to when passing decisions down.
The tenant wants to leave early … what does the lease say?
The tenant wants a new English Mastiff … what does the lease say?
The tenant refuses to cut the grass … what does the lease say?
A properly prepared lease will not only guide you through these situations but will also protect your property in the case that something goes wrong.
But remember that leases are state-specific and should not just be randomly printed off from the internet.
What if This Is Too Much Work?
Let’s be honest, you didn’t buy a rental property to give yourself a second job — you bought it to make money. By hiring a full-service property management company, you get the best of both worlds.
✓ You don’t have to waste your valuable time.
✓ You see a higher ROI than doing it yourself.
We may be biased, but our 20 years of experience back us up when we recommend choosing our team to manage your property.