One way I boost the income on my rental properties is with self-management. Not only do I save thousands of dollars a year on commissions, I have complete control over who leases my properties. Managing your own rental properties isn’t easy. And as with any new job, it will be quite challenging until you are able to figure out a system that works best for you.
With 30 years of property managing experience behind me, here are my 10 best tips for home owners interesting in DIY property management.
Don’t make the mistake of renting to the first person who answers your Craig’s List posting. Have an open house instead which will give you a broader base of applicants to choose from.
Don’t show the property dirty
An open house works both ways. Prospective tenants will also be sizing you up and a home that is dirty sends a clear message that you are a lazy landlord.
Always collect a security deposit
A deposit serves two functions in that it’s both a qualifying tool and gives you a way to collect for damages once the tenant moves out. A security deposit should be equivalent to one month’s rent, slightly higher if the tenants have pets.
Always have a lease
Whether you prefer renting by the month or the year, always draw up a lease between the parties. A lease is the best tool you have for enforcing the rules of your tenancy and simplifies the eviction process if it becomes necessary.
Charge a late fee
Without a late fee, your tenants have no motivation to pay the rent on time.
Take responsibility for the water, sewer, and trash bill
In my city, you can tell the properties owned by landlords who refuse to pay for water since they are the ones with dead landscaping. Paying the water bill preserves your property value and keeps your expensive landscaping (and trees) alive.
Inspect your property regularly
Including a provision for regular inspections will lower the risk of property damage and over occupancy.
Keep a repair fund
When furnaces and appliances break down, the roof springs a leak or the plumbing suddenly goes haywire, you are obligated by law to repair these and other critical maintenance issues as quickly as possible. Maintaining a building repair fund of $1000-2000 means that you won’t have to wait until “payday” to make emergency repairs.
Sign up for a Rental Utility agreement
This free service offered by your utility company keeps you informed of payment delinquencies and will roll over the service into your name in case of shut off (which is especially important during the winter when pipes might freeze).
Drive by regularly
Last but not least, regular drive-by inspections is the single best way to see how well your renters are holding up to their end of the bargain. I drive by all my rentals at least once a week to see how the lawn looks, if things appear tidy, and that there aren’t a bunch on strange cars parked all over the drive and yard.
Being your own landlord really isn’t that tough to do. Careful screenings, a good lease, timely repairs and regular inspections is the key to maintaining the value of your rental property.
More by this contributor:
Should I hold an open house for my property?
The importance of a Landlord Utility Agreement
Why it doesn’t pay to be an absentee landlord