Most of us know real estate is one of the best investments. It is a good store of value and a reliable way to generate income.
Buying rental properties is one of the best strategies for making money with real estate. You can generate revenue from rent while owning assets likely to grow in value.
As beneficial as owning rental properties can be, there is much to consider. Landlords don’t just sit back and collect rent—they need to manage the properties. A big part of this is taking steps to protect the value of your rental properties.
Property Maintenance
Whether it is a single-family home, a multiplex property, or an apartment building, maintenance should be one of your top priorities. If you are not performing routine maintenance, the property will eventually fall into disrepair. This will not only diminish the property value, but it could also violate your legal obligations as a landlord.
Landlord Insurance
Having the correct type of insurance can offer valuable financial protection. Your lender might also require landlord insurance if you took a mortgage to buy the property. Landlord insurance can cover the property in a way that is similar to homeowner’s insurance. If there is storm damage or a fire, the policy should provide some financial assistance. It can also cover liability if a person is injured and loss of income if the property is temporarily uninhabitable.
Tenant Screening
Vacancies can be a real problem for rental businesses. However, having bad tenants can be worse than having no tenants. Take your time to carefully select the right tenants and use a thorough screening process. Protect their finances, run background checks, and check their rental history. You want tenants who will pay on time and respect your property. You just need to make sure you are not screening in a way that could be considered discriminatory.
Frequent Property Inspections
A smart landlord performs frequent property inspections. One of the top reasons is that it can be a way to ensure good maintenance. With regular inspections, you can catch issues early so they don’t get worse. It can also be a way to ensure tenants are following the terms of the lease. Drive by to inspect the exterior of the property regularly. You should also schedule inspections inside the units. However, you must respect your tenants’ privacy rights and provide enough notice before entering the units.
Build Good Relationships
You don’t need to be friends with your tenants. In fact, you shouldn’t view your tenants as friends. However, that does not mean you cannot have a friendly and positive relationship with your tenants. Landlords should try to build good relationships with their tenants. It will make issues easier to resolve when they arise. Also, tenants with positive feelings toward you will be more likely to treat the property respectfully.
Security Upgrades
As a landlord, you might have some obligations for security. Tenants should have doors with reliable locks and windows that close and lock. However, some security upgrades can help you protect the property even more. For example, surveillance cameras can prevent crime in apartment buildings. An access control system with key cards or PIN codes can prevent crimes like vandalism.
Require Renter’s Insurance
Landlord insurance is a good start for financial protection, but it is incomplete. While it might cover the property in a way that is similar to homeowner’s insurance, it does leave some gaps. For example, it does not cover the personal property of tenants. Requiring renter’s insurance can ensure tenants have this protection and prevent disputes. It can also provide added liability protection if someone is injured.
Buy a Home Warranty
On a long enough timeline, things like the furnace, dishwashers, and water heaters will all need repairs or replacement. These can be costly maintenance issues. However, landlords can get financial protection by buying a home warranty. These policies can cover repairs to these appliances and home systems, so you don’t have to pay the price all at once. For example, it could include a washer and dryer warranty or refrigerator or air conditioner coverage.
Hire a Property Manager
Doing all this work alone can be a little overwhelming for an investor. To make your life easier, you should consider hiring a property manager. These professionals can take over the day-to-day operations and make sure to take care of your properties. It can be especially valuable if you have multiple rental properties across different locations.
Rental properties are a significant investment, but it isn’t without work. With the tips in this article, you can protect your investment and get more from your properties.
