The 5 Pillars of Successful Rental Property Management
If you were to talk with most property landlords about rental property management, there are 5 things which will always be brought up.
These are known as the pillars of managing a rental property, and are applicable everywhere, no matter where you are in the world. If you are able to understand each pillar and how it can benefit you, then you will make large strides to becoming a successful landlord.
This article will explore these pillars in further details.
It’s impossible to ignore this pillar. Unless you are already multi-millionaire many times over and can pay with cash, you will have a mortgage on your rental property. As a result, the amount of money you pay back to the bank will depend on the interest rate. You need to be sure that you will be able to deal with a variety of interest rate levels before choosing to invest in a property. Of course, there is always a risk that other things can go awry which could cause you to default. You can never predict the events in life. Nevertheless, you should also do everything you can to minimise the risk using what you know.
You never know whether you’re going to have a good or 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 must be prepared to cover any costs resulting for such neglect. In addition, there will also need to be repairs as a direct result of the house’s aging. You can be certain that tenant will point out things that need some fixing. It’s in your interest to keep the property well maintained as an unsatisfied tenant will only mean that they leave and this may detrimental for your cash flow.
You never know what can happen on your rental property. Depending on where you live, you may be in an area which is prone to extreme weather such as hurricanes and monsoons or freak events such as earthquakes. There may also be a house fire at your property. In addition, your tenant may suffer a serious accident or even die, you just never know. The only thing you can do is get comprehensive insurance for your property. This is important for successful rental property management.
Don’t forget to pay these every year otherwise you will have to deal with government authorities. It’s certainly more convenient to look for more rental properties instead of dealing with unpaid taxes.
Last but not least, the occupancy rate is vital for a profitable rental property. If your property is vacant more often than not, then you will almost certainly suffer a cash flow problem which could make you default. In order to attract more tenants, you may want to do a couple of things:
– lower the rent
– make improvements to the property
Either way, the market may sometimes not be in your favour. Sometimes, there is a surplus of properties on the rental market while there are shortages at other times. All you can do is be certain you are equipped to deal with both situations.
By following the 5 pillars of successful rental property management explained above, you will be well on your way to becoming a successful landlord.