If you were to argue with most property owners about rental property management, there are 5 things that will always come up.
These are known as the pillars of managing a rental property and are applicable anywhere, wherever you are in the world. If you are able to understand each pillar and how it can benefit you, you will go a long way towards becoming a successful owner.
This article will explore these pillars in more detail.
It is impossible to ignore this pillar. Unless you are already a multi-millionaire and can pay cash, you will have a mortgage on your rental property. Therefore, the amount you pay back to the bank will depend on the interest rate. You need to be sure that you will be able to meet a variety of interest rate levels before choosing to invest in a property. Of course, there is always a risk that other things will go wrong, which could cause you to default. You can never predict the events of life. However, you should also do everything possible to minimize risk by using what you know.
You never know if you are going to have a good or a bad tenant. Either way, tenants generally don’t treat a rental property as if it were their own home. There is always a level of neglect that takes place. You should be prepared to cover all costs resulting from such negligence. In addition, repairs will also be needed as a direct result of the aging of the house. You can be sure that the tenant will point out things that need fixing. It is in your best interests to keep the property well maintained as an unhappy tenant will only mean they leave and this can hurt your cash flow.
You never know what can happen to your rental property. Depending on where you live, you may be in an area prone to extreme weather conditions such as hurricanes and monsoons or abnormal events such as earthquakes. There may also be a fire in your property. In addition, your tenant may suffer a serious accident or even die, you never know. The only thing you can do is get full insurance for your property. This is important for successful rental management.
Don’t forget to pay them every year otherwise you will have to deal with the government authorities. It is certainly more practical to look for more rental properties instead of dealing with unpaid taxes.
Finally, occupancy is vital for a profitable rental property. If your property is vacant most of the time, you will definitely experience a cash flow problem that you may lack. In order to attract more tenants, you might want to do a few things:
– lower the rent
– make improvements to the property
Either way, sometimes the market may not be in your favor. Sometimes there is a surplus of properties on the rental market while there are shortages at other times. All you can do is make sure you are equipped to handle both situations.
By following the 5 pillars of successful rental management explained above, you will be well on your way to becoming a successful landlord.