If you’re new to property management, entering this world might feel a bit daunting. There are a lot of details to remember, and there is often a lot at stake. A rental property, after all, is meant to be an investment.
However, when broken down into smaller chunks, managing rental properties can be done without the stress and headaches.
To help you do that, we’ve identified all of the most important things you need to know about managing rental properties.
To be able to properly manage your rental property, you need to be sure you’re clear about what type of rental property you have. In particular, distinguish your property as a “short-term” or “long-term” rental property.
The reason for doing this is because different rules and regulations often apply to each property type. And as a rental property manager, it’s your job to make sure the property is in full compliance, at all times, with local regulations.
In general, short-term rental properties are those that are leased out for less than 30 days at a time. But this number can be different based on where you live. Every city and town deals with these types of rentals a little bit differently.
If you list your property on sites such as Airbnb, VRBO, or Booking.com, then there’s a good chance it qualifies as a short-term rental.
Many municipalities require you to register these types of properties, often in the form of applying for some sort of license or permit and paying a fee. And there may be other things you must do to follow all the regulations set out by the local government.
Head to your city or town’s website or local clerk’s office to find out what you need to do to be in full compliance with local ordinances.
Long-term rentals are generally described as those that extend beyond 30 days. But again, each city or town may define this differently.
If you rent out your property seasonally, for example, some places may consider you a short term rental and others a long-term. It’s important to check local guidelines to make sure you’ve correctly qualified your property.
For those who own property in a town in which they do not live, you may need to do something with the city. Again, this is not the case in all places, but it’s best to check to see if your local authorities make this distinction.
As a property manager, you are responsible for making sure the landlord fulfills their duties and obligations. This applies both when you own the property and also when you’re managing it on someone’s behalf; if they’re paying you to maintain their property, they don’t want to face trouble down the road.
Therefore, if it’s not your property, it’s important you learn to treat it as if it were, which means following through on the following responsibilities:
Most state governments require landlords to keep their property in conditions that could be described as “safe and habitable.”
That’s a pretty low bar. And we want to aim much higher. But it’s important to remember this; if something happens on your property because of neglect on your part, you can be held liable.
It’s much better for you to be on top of issues as they arise rather than to wait until they become catastrophes.
In a similar line, you are also legally required to keep the basic components of the property up and running.
If you are managing a long-term rental, you can delegate some of this responsibility to the tenants. They should contact you when there’s a problem. But you should also check in throughout the course of the lease to check how things are going.
When it comes to short-term rentals, you may need to up the frequency with which you test everything. People aren’t always as, well, gentle when they rent a place for a few nights, and they’re also less likely to see and report burnt out bulbs or leaky pipes.
Therefore, as you’re changing the property over, it can’t hurt to test things to make sure everything is in proper working order so that you can spot problems before they become too serious.
One thing that is extremely important to remember is that, as a landlord, you are held to a higher standard. You must follow all local regulations, and you must also make sure your construction projects are 100 percent approved.
If something happens on the property and you failed to get the right permit or follow local codes, you can not only be fined but also be held financially liable for whatever happened. That would include any medical bills and possible relocation fees, which can get expensive fast.
All this to say, is that the stakes can be high. But all you have to do is make sure you’re in full compliance. Then, all of these risks go away.
Moving on from legal responsibilities, one of the key duties of a rental property manager is to find people to rent the space.
Whether it be through vacation rental websites or other long-term rental classified sites, you may be the one who needs to advertise the property, vet tenants, and get them set up on the property.
Some property managers prefer to team up with a realtor for this part. Tuned into the local real estate market, these professionals, for a fee, can help you find renters more easily and let you focus on screening.
One other key responsibility of a property manager is to be a point of contact with tenants. You are the one they will come to when there is a problem, and you are the one who must reach out to them when the owner wants to send someone in to fix the back staircase railing.
It’s a simple thing. But property managers who try to do too much at once often let communication slip and this can hurt the dynamic between you and your tenants.
If you’re doing short-term rentals, communication is key. If people show up and something is wrong or they have a question, they will usually want an answer quickly, or will at least appreciate one and will keep that in mind when they go to write a review later on.
To understand how to properly manage a rental property, it’s important to come to terms with the less pleasant side of this activity. Once you do, you can take a different approach that will ultimately make managing your property much, much easier.
The key risk areas in rental property managements are:
Maintaining a home is a fairly costly thing to do. And depending on how quickly you’re turning over your property (whether it’s a short- or long-term rental), there may be a fair bit of wear and tear.
Dealing with this can be costly and also time consuming. Plus, the more often you rent it, the more often you will have to update your property, as you will need to compete in an ever-changing rental market.
All this means that you need to make maintenance a top priority.But keeping up with maintenance prevents costly repairs down the line and is always cheaper than reacting when things finally go wrong.
Doing this requires scheduling certain things, such as gutter cleanings, power washing, carpet cleaning, etc., in advance and having a plan as to how you’re going to address any long-term issues with the property.
Next to maintenance, or perhaps right alongside it, at least when it comes to concerns for a property manager, are vacancy and turnover rates.
No matter if you’re doing a short- or long-term rental, the more time it sits vacant, the more money you lose.
Now, this isn’t always true for short-term rentals. For example, properties in a beach town might go vacant all winter, but they make up for it when they're booked at premium prices all summer.
In either case, as a property manager, you may be responsible for making sure the property doesn’t go vacant, or is empty for the least amount of time possible.
No matter if you’re doing short- or long-term rental, keeping your unit occupied requires competitive pricing, good advertising, and a little bit of sales.
Perhaps the most unpleasant part of being a property manager is having to initiate and/or oversee evictions. Ultimately, the decision to evict comes from the property owner, but you may have to get involved.
In addition to being terrible, evictions are also extremely costly for everyone involved. You want to avoid this at all costs, which you can do by following a number of best practices.
Now that you have a better idea of what’s expected of you as a rental property manager, here are some things you can do to make sure things go smoothly, or as close to it as they can!
In general, the better you do at screening your tenants, the better the experience you will have managing property.
Good tenants pay their rent on time, report issues when they become aware of them, take care of the property, respect the neighbors, follow the rules, etc.
And while you can’t always tell what someone is going to be like when you first meet them, taking the time to talk with them, learn about what they do, check their references, and perhaps talk with some past landlords can go a long way towards helping you figure out what it would be like to have them as tenants.
Of course, if you’re doing short-term rentals, you don’t always have this opportunity. But even if you’re renting out for a month, it’s still worth it to get to know someone.
For short-term rentals, it can also be worthwhile to check out the reviews other hosts have left for them on sites such as Airbnb and VRBO. Again, the nature of this market is going to prevent you from really learning much. But anything you can find out can be helpful.
Obviously, short-term rentals don’t need leases. But if you’re going to be renting for more than 30 days, it might be worth it to have some sort of contract drawn up, especially if you take a security deposit.
You can find samples of good leases online, including paper templates and e-sign agreements. But each lease is going to be slightly unique. Consider having a lawyer look over whatever lease you draw up, or perhaps a real estate agent. This is a binding contract, so make sure it covers everything you need it to.
One really simple way to make sure your tenants pay on time and also to make their lives easier is to accept online payments. This way you don’t have to deal with checks. And, in many cases, tenants can set up autopay so the money gets deducted right away, making sure you never have to track anyone down.
No matter if it’s a short- or long-term rental, make sure to inspect the property regularly. If you have a long-term renter, you will need to coordinate with them, and you can also rely on them more to report issues. But even so, you should still plan to do a proper inspection of your own at least once a year if not twice.
Regular inspections of the property don’t do a whole lot if you don’t act on issues when they come up.
Remember, maintenance is something you do before something breaks. And repairs are something you do when the damage is already done.
Inspect regularly and be proactive about maintenance and you should be okay.
Also, make it easy for your tenants to report problems. Set up a maintenance request system, or use some other form of communication, such as email, and be sure to check in regularly so that you can deal with problems as they arise. This will save you money and keep your tenants happy.
Short-term rental property managers will need to check more often, and also rely on tenants less. But because of the higher turnover rates, you also have more chances to get in there and do an inspection.
Identifying maintenance issues as they come up is just half the battle, you must also find someone who can come and actually do the work. In the vast majority of cases, you’re not the one doing the maintenance.
Therefore, who you work with makes a big difference. Find someone you can trust and also who will make time for you. If you need some plumbing work and they tell you three weeks, that could be a problem.
The owner of the house, whether that’s you or someone else, should have at least a few people. Stick to these known contacts, as familiarity can often be your friend.
Finding good contractors can be hard, so when you do get someone, make sure you hold onto them as this will make your life managing properties much easier.
If your job as a property manager includes keeping the place rented, then you’ll want to make sure you’re staying on top of the local rental market.
Competitive pricing is a huge part of marketing property. If you’re charging too much, you could be missing out on good tenants, but if you’re charging too little, you could be missing out on money.
In many places, the rent you can charge changes throughout the year. So make sure you’re updating your prices often to stay in line with local trends.
When it comes to longer-term rentals, you may be able to raise rents over time without causing too much trouble. But your tenants are so important that many property owners wind up forgoing higher rents to maintain the stability and security they have with current tenants.
Whether or not you’re managing a short-term rental or long-term rental, there’s always a lot to do. This is the kind of job that never quite feels finished.
Therefore, being clear on what’s expected of you and what you need to do is essential to staying on top of things and creating the best possible situation for not only your tenants/guests but also for yourself.
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