Whether you’re a landlord or you simply want to make money with real estate, understanding how to manage property properly is essential to your success. You don’t just need to know how to fix things when they break. Any first time landlord/property manager needs to take on many jobs when they’re just starting out.
How you manage a property could make a big difference to your success. Short term rentals are becoming more popular, but long term rentals are one of the best ways to make passive income. The best thing about it is that even if you only put 20% down on a property, you will receive 100% of the rental income. Not having time shouldn’t be an issue, as a local property manager could take care of everything for you. However, you could save a huge sum of money if you do some of it yourself. Here, we’ll go through 10 things all property management beginners should know.
- Transparency is Key
Managing a property the right way involves a lot of hard work, communication, and transparency. Setting expectations by going the extra mile for people in the properties is a must – the only way you can land yourself in hot water is if you fail to communicate or set the wrong expectations. For short term rentals, if you list a feature not available in a property it’s not important as long as you communicate to resolve the issue quickly. If you leave it to fester and don’t say anything, it could end in a complaint. Being as transparent as possible when listing and describing the property can save plenty of headaches and complaints later on down the line.
2. Get To Know The Property and Save Headaches
Upon purchasing a property to rent out, make sure you get to know it as well as you can. Knowing what systems and elements are involved and the lifespan of those systems is key, as you need to be prepared to care for them appropriately. A lack of preventative maintenance will result in complaints at the very least, at most, a huge repair bill and even a serious accident.
3. Reinvest in the Property Before You Rent It Out
Reinvesting in the property before you rent it out could mean making it far more attractive and attracting guests who want more luxury. People will pay good money to rent a luxurious property.
4. Do The Maths – A Financial Plan Is Imperative
Make sure you have a good idea of how much revenue your home is likely to generate, taking into account the location, the level of luxury, the size, and the amenities. This will also depend on who you plan on renting it to, for instance, families looking for something long term or couples looking for a short term stay.
5. Work Alongside A Real Estate Agent
A good real estate agent can offer some great advice pertaining to the industry and property management. However, they should understand the business, so do your research to find someone suitable. This will do you the world of good during the early stages.
6. Should You Use Finance To Fund Your Purchases?
Knowing where you’re going to find the money to finance your purchases is crucial. Banks and societies will offer buy to let finance, but you may need to consider things like home loan refinancing or restructuring so you can free up capital to achieve this. A private loan, business angel, or another source of cash could also work depending on what you believe to be best for your venture.
Property is a debt driven business. You do need to take on some level of debt before you can really enter the property market. Even cheap properties are expensive commodities. Unless you have a large amount of cash in reserve, going into debt is the only way to achieve your goals.
7. Your Strategy Regarding Personal Use
Of course you can use your own property, but if you’re using it as a vacation rental then you don’t want to be there during peak times. Make sure you’re strategic about your personal use and stick to the off season if you can.
8. Think Of It As A Hospitality Business
When running the place as a rental, you should think of it like a hospitality business. Consider the care and attention that many hotels and other types of accommodation provide to their clients. It should be second to none, and the extra mile will ensure that these people consider coming back again and again. A property management company can help with this, but you do need to have a genuine desire to please the people who stay in your property. Treating them like valued friends will go a long way to making sure they give you a good review and help you to build your reputation.
9. Come Up With Realistic Pricing
One of the biggest mistakes that property managers can make, is renting out a place with the pricing set too high. Your approach should be realistic, so do your research. What are others charging for similar properties in similar areas? You need to use this information to come up with a price that people will pay. You should work hard to find the sweet spot if you want to have a high occupancy rate.
10. Build a Solid Relationship With Your Housekeeping Team
Having a housekeeping team that you can trust is essential. If you’re going to own property and rent it out, a high level of care and attention when hiring your team will make the biggest difference to client satisfaction and your reviews. A team that overlooks the details will only reflect badly on you and your service. Complaints and negative reviews will make your business suffer. Set your expectations clearly when you find a team and then work on building that relationship.
If you’re just starting out as a landlord or getting into property management, the advice above should help you to get started properly.