When my partner and I started to invest in real estate, we purchased rehab and sold properties. Then we also began holding and managing some of our own properties as rentals. As our business grew, we became advisory board members for our local real estate investment association. As a result, we met other investors who were challenged with managing their own properties. We found that managing rentals can be a hassle. Yet, because it was the core aspect of our business, we figured out how to overcome those challenges and create profitable investments. In the process, we actually uncovered seven key points that help with profitability.
- Purchase a property that will provide the desired annual rate of return, with a consideration for the cost of the purchase, repairs, taxes, insurance, vacancy and management.
- Have a sound lease agreement with clear rules and regulations.
- Market for qualified tenants.
- Once you find qualified tenants, conduct a thorough background screening. This screening should be based on previous rental history, possible evictions, credit, criminal record, non-sex offender verification, national terrorism list, reference checks and income verification.
- Have effective ongoing communication with your tenants.
- Have a strict rental payment policy. We have a less than 2 percent eviction ratio in our company. If someone is challenged, we work with them to get them back on track. We post a Three Day Notice, call the tenant to make payment arrangements and proceed with eviction only when necessary.
- Conduct regular inspections. We do a move in inspection, six month inspection and an eleven month inspection prior to lease renewal. All of our inspection reports are documented with a tenant signature.
Attempting to manage your own property can be a daunting task, and missing any one of these points can be costly, dramatically lowering your desired rate of return. Many investors hire a property management company. If this is the case for you, interview and hire a company that is effective, efficient and reputable.
If you have any questions, or you’d like to hear about our services, please contact us at Pristine Property Management.