{"id":3667,"date":"2021-10-20T08:41:00","date_gmt":"2021-10-20T12:41:00","guid":{"rendered":"https:\/\/propertyonion.com\/education\/?p=3667"},"modified":"2023-10-31T15:14:25","modified_gmt":"2023-10-31T19:14:25","slug":"managing-your-own-rental-properties-as-an-investor","status":"publish","type":"post","link":"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/","title":{"rendered":"Managing Your Own Rental Properties as an Investor"},"content":{"rendered":"\n<p>You might think of your investment property as a way to earn passive income, but a rental property takes more work than other more typical kinds of investments. A successful investment property requires an active role. Of course, becoming a landlord may not have been part of your investment strategy.<\/p>\n\n\n\n<p>Luckily, there are plenty of ways to ensure that you\u2019re getting the most out of your property. Managing a rental doesn\u2019t have to be a full-time job, but it does require some planning.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">In this Article:<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/#Why_Not_Hire_Help\" >Why Not Hire Help?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/#DIY_Property_Management\" >DIY Property Management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/#Managing_Tenants\" >Managing Tenants<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/#Managing_the_Property\" >Managing the Property<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/#Managing_Finances\" >Managing Finances<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/propertyonion.com\/education\/managing-your-own-rental-properties-as-an-investor\/#Learn_to_Be_a_Landlord\" >Learn to Be a Landlord<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Not_Hire_Help\"><\/span><strong>Why Not Hire Help?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Many property investors hire a property management company to handle the day-to-day needs of their rental properties. While this is a great way to take a hands-off approach to your property, <strong>the costs will eat into your overall profits<\/strong>.<\/p>\n\n\n\n<p>Property management fees vary depending on&nbsp;<a href=\"https:\/\/landlordgurus.com\/property-management-fees-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">where you\u2019re located<\/a>, but you can expect to pay standard fees:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>8-12% of the monthly rent payment even if the property is vacant<\/li><li>50-100% of one month\u2019s rent lease-up fee to find a new tenant<\/li><li>10% markup on maintenance and repairs<\/li><\/ul>\n\n\n\n<p>Let\u2019s say you have a <a href=\"https:\/\/propertyonion.com\/education\/why-institutional-investors-are-buying-up-single-family-homes\/\" target=\"_blank\">single-family home<\/a> for rent for $2,000 monthly ($24,000 annually). A property management company is likely to charge $1,000-$2,000 to find the tenant. You\u2019ll also pay between $160-$240 per month ($1,920-$2,880) in fees. The general rule of thumb for maintenance is 1.5x the monthly rate, so you could expect to pay $3,000 per year in upkeep costs.<\/p>\n\n\n\n<p>Overall, you could expect to pay $5,920-$7,880 annually. Of course, a long-term tenant or fewer repairs could increase profits. At the same time, tenant turnover and additional repair costs can raise the total cost.<\/p>\n\n\n\n<p>As you can see, paying a property management company is a great way to reduce your workload, but it is easily your most significant expense. <strong>The margins on some rental properties might make paying a management company unprofitable.<\/strong><\/p>\n\n\n\n<p>If you own multiple properties, a management company can be a godsend. You might find handling your investments is a full-time job. On the other hand, managing everything yourself could be the most cost-effective option if you own a smaller number of properties\/units.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIY_Property_Management\"><\/span><strong>DIY Property Management<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The good news is that you don\u2019t have to be a real estate professional, contractor, or management pro to handle your rental property. Being a landlord does require time and effort, but with a proper understanding of your role and a plan on how to proceed, you can manage your investment on your own or with minimal help.<\/p>\n\n\n\n<p>In general, three areas fall under a landlord\u2019s responsibility:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Managing tenants<\/li><li>Managing the property<\/li><li>Managing finances<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Managing_Tenants\"><\/span><strong>Managing Tenants<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Getting the right person\/people into your rental can make or break your landlord experience. The right tenant can reduce your overall costs and turn your investment into an almost passive income. Of course, a <a href=\"https:\/\/propertyonion.com\/education\/landlord-tied-up-sleeping-tenants-dumped-them-in-cemetery\/\" target=\"_blank\">bad tenant<\/a> can cost you more time and money than it\u2019s worth.<\/p>\n\n\n\n<p>To make your life as simple as possible, you need to learn how to find good tenants, create a legally sound lease, and maintain a positive landlord-tenant relationship.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Find a Tenant<\/h3>\n\n\n\n<p>The first step to managing your property is to find a renter. There are tons of ways to find the right person. You may only have to put a sign out front with your phone number in the current market. There are also countless places to list your property for rent, like Craigslist and Zillow.<\/p>\n\n\n\n<p>You might even find that word of mouth is more than enough. In a market where rentals are plentiful, you can hold an open house or invest in a photographer who can take quality photos and create a video tour to show off your property.<\/p>\n\n\n\n<p><strong>Ultimately, your goal is to get potential renters to fill out an application to ensure they meet your requirements. <\/strong>You may also want to ask about pet ownership, smoking habits, bank statements, or anything else that will help you make decisions.<\/p>\n\n\n\n<p>Always consider the applicant\u2019s rent-to-income ratio before approving them.&nbsp;Read our previous article \u201c<a href=\"https:\/\/propertyonion.com\/education\/how-not-to-attract-horrible-tenants-to-your-rentals\/\" target=\"_blank\">How NOT to Attract Horrible Tenants to Your Rentals<\/a>,\u201d where we explain important screening techniques in depth!<\/p>\n\n\n\n<p>Your application will also give you a chance to run credit scores, perform background checks, etc. There are various tools to help landlords accomplish this, like&nbsp;<a href=\"https:\/\/www.zillow.com\/z\/rental-manager\/tenant-screening\/\" target=\"_blank\" rel=\"noopener\">Zillow\u2019s Application Tool<\/a>, <a href=\"https:\/\/www.gozego.com\/\" target=\"_blank\" rel=\"noopener\">Zego<\/a>, and <a href=\"https:\/\/www.mysmartmove.com\/\" target=\"_blank\" rel=\"noopener\">MysmartMove<\/a>. It\u2019s often worth the small monthly fee for an app that does all of the work for you, but you can save some cash by completing these tasks on your own.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Sign the Lease<\/h3>\n\n\n\n<p>The next step is to sign a lease agreement with your new tenant. There are tons of <a href=\"https:\/\/eforms.com\/rental\/\" target=\"_blank\" rel=\"noopener\">sample leases available online<\/a>, but you may want to consult an attorney to make sure your lease is legal and fully protects your interests. It\u2019s not a bad idea to find legal counsel you can trust to help with issues that may arise. Each state has different laws regarding fair housing, repair obligations, eviction proceedings, and more.<\/p>\n\n\n\n<p>Your lease will spell out critical information about the property and act as a contract between you and your tenant; <strong>it\u2019s also what the courts will look at if any conflicts make it that far<\/strong>. Important information includes everything from when rent is due to how utilities are handled to how the lease can be terminated.<\/p>\n\n\n\n<p>You may decide that there is no smoking allowed in your property or that pets must be under a certain weight. You can include anything that is important to you and the care of your property. You can even negotiate with the tenant to create a lease that works for everyone.<\/p>\n\n\n\n<p><strong>Of course, in an owner\u2019s market, you have control<\/strong>. Make sure any agreements are put in writing in the lease. Finally, give your tenant a copy of the signed lease and store your copy in a safe place.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Maintain the Relationship<\/h3>\n\n\n\n<p>Most tenants don\u2019t want a landlord who is always looking over their shoulders. At the same time, they don\u2019t want a landlord who is never available to address concerns. The challenge is finding the right balance.<\/p>\n\n\n\n<p>The biggest issue landlords run into is the non-payment of rent. You want to make paying the rent as easy as possible. Accepting payment online or via an app like <a href=\"https:\/\/landlordy.com\/\" target=\"_blank\" rel=\"noopener\">Landlordy<\/a>, <a href=\"https:\/\/www.zellepay.com\/?gclid=Cj0KCQjwqp-LBhDQARIsAO0a6aKAcI_AYSI6jf9JoNySf6or5qxglYgf-OXaatVV93iyPBfUY4p9z5oaAkt8EALw_wcB\" target=\"_blank\" rel=\"noopener\">Zelle<\/a>, or even <a href=\"https:\/\/venmo.com\/\" target=\"_blank\" rel=\"noopener\">Venmo<\/a> is a great way to simplify the process.<\/p>\n\n\n\n<p>You can also set up reminders that tell your tenants rent is due. This could be as simple as an e-mail, text, or contact through an app like <a href=\"https:\/\/www.textyourrent.com\/\" target=\"_blank\" rel=\"noopener\">TextYourRent.com<\/a>. Using late fees is another way to motivate tenants to pay on time. No one wants to pay more for something than they have to, but check with your local laws to ensure your late fee policy is appropriate.<\/p>\n\n\n\n<p>You can also schedule regular inspections. These inspections can happen a&nbsp;couple of times a year&nbsp;and serve as a chance for tenants to address any concerns they have with the property. They also give you a chance to make sure the tenant is upholding their end of maintaining the rental. <strong>Keep in mind that most states require at least 24 hours&#8217; notice before the landlord can enter the property.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Managing_the_Property\"><\/span>Managing the Property<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As the landlord and owner of the property, you have a legal obligation to maintain a safe and habitable property. If a property isn\u2019t well maintained, you\u2019ll have a hard time finding reliable tenants. More importantly, updates and repairs can increase the value of your property and extend the life of flooring, appliances, and fixtures.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Routine Maintenance<\/h3>\n\n\n\n<p>The landlord and tenant share responsibility for routine maintenance tasks. Make sure that your lease spells out how these duties are shared. Do you handle lawn care, snow removal, etc., or is the tenant responsible?<\/p>\n\n\n\n<p>Ensure that the property has working smoke detectors, carbon monoxide detectors, and fire extinguishers in the appropriate locations.<\/p>\n\n\n\n<p>Some other general tasks to consider:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Check for pests<\/li><li>Inspect the roof after heavy snow, hail, or windstorms<\/li><li>Clean gutters<\/li><li>Trim trees near structures or power lines<\/li><li>Change filters in your HVAC systems<\/li><li>Flush water heater<\/li><li>Clean dryer vents<\/li><li>Prompt emergency service<\/li><\/ul>\n\n\n\n<p>While regular maintenance can prevent significant issues from arising, accidents and emergencies can happen. It\u2019s your responsibility to handle these issues promptly:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Broken HVAC<\/li><li>Gas leak<\/li><li>Electrical issues<\/li><li>Water leaks<\/li><li>Clogged sewer lines<\/li><li>Bed bugs<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Prepare a List of Contractors<\/h3>\n\n\n\n<p>If you\u2019re handy, you might be able to manage maintenance and repairs on your own. Some states have laws dictating that certain tasks must be performed by a licensed professional. In that case or in areas where you are less skilled, it may be necessary to <a href=\"https:\/\/propertyonion.com\/education\/you-need-to-keep-your-contractors-on-budget-heres-how\/\" target=\"_blank\">hire a contractor<\/a>.<\/p>\n\n\n\n<p><strong>It\u2019s always a good idea to create a list of reliable contractors who can help with common issues. <\/strong>You don\u2019t want to be stuck looking through the phone book late at night to find a plumber who can repair a busted water pipe.<\/p>\n\n\n\n<p>Consider creating a list of at least three local options that can handle plumbing, HVAC, electrical, and general maintenance. You\u2019ll also need a list of contractors who can help prepare your property between tenants (carpet repair, painting, etc).<\/p>\n\n\n\n<p>Make sure that all hired personnel are supervised. The last thing you want is for a tenant to claim something was damaged or stolen while repairs were being made. You also want to make sure the job is done correctly.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Managing_Finances\"><\/span>Managing Finances<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One of the most essential elements of managing your investment property is overseeing the financial side of things. Recordkeeping is critical, so you should store all documents safely. That includes a copy of the lease, property insurance, rental applications, rent receipts, and more. Some states have requirements about which documents are kept and for how long, so check with a legal expert.<\/p>\n\n\n\n<p>In general, there are three main areas that you should consider for managing your rental finances.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Collecting Rent<\/h3>\n\n\n\n<p>There are endless ways you can collect rent. <strong>The easier you make this on the tenant, the more likely they are to pay on time. <\/strong>You can also impose reasonable late fees for payments that don\u2019t make it on time.<\/p>\n\n\n\n<p>Another aspect of rent is knowing when and how you can <a href=\"https:\/\/propertyonion.com\/education\/see-how-to-increase-your-rental-profits\/\" target=\"_blank\">raise the rent<\/a>. Your lease will define the initial price, and it can\u2019t be changed without a new lease. Most states allow for a percentage increase each year so long as it doesn\u2019t violate the lease.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Security Deposits<\/h3>\n\n\n\n<p>Security deposits are funds the tenant gives to you that help cover any costs associated with restoring\/repairing the property after moving out. Security deposits are not counted as additional income.<\/p>\n\n\n\n<p>Make sure you properly store security deposits and comply with state laws regarding deposit limits and return regulations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Filing Taxes<\/h3>\n\n\n\n<p>Due to the complexity of federal and state tax laws, you should hire an accountant who can help you navigate managing your rental property\u2019s finances come tax time.<\/p>\n\n\n\n<p>Ultimately, you\u2019ll have rental income from monthly payments and any potential future payments. These will be claimed as income on your taxes.<\/p>\n\n\n\n<p>You\u2019ll also have several deductions associated with your property:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Landlord insurance<\/li><li>Maintenance and repairs<\/li><li>Rental licensing, registration fee, etc.<\/li><li>Property\/rental income tax<\/li><li>Mortgage payments<\/li><li>Basic utilities that you pay for<\/li><li>Property taxes<\/li><li>Marketing or advertising fees<\/li><\/ul>\n\n\n\n<p>You may also have deductible fees for your accountant, property management companies, and <a href=\"https:\/\/propertyonion.com\/education\/how-to-evict-a-tenant-in-5-simple-steps-yourself\/\" target=\"_blank\">eviction<\/a> costs. If you have more than one property, there may be additional forms to complete. It\u2019s best to work with a tax professional to ensure everything is completed correctly and on time.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Learn_to_Be_a_Landlord\"><\/span><strong>Learn to Be a Landlord<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Regardless of what leadership or management training you may have,<strong> it takes work to learn to be a landlord<\/strong>. It\u2019s worth taking time to read books, join online communities, listen to podcasts, and more to allow yourself to become a great landlord.<\/p>\n\n\n\n<p>If you\u2019re not interested in being hands-on with your investment property, there is always the option of hiring a property management company. This approach may cut into your profits, but it can free up your time and energy, especially if you own multiple rental properties.<\/p>\n\n\n\n<p>If you decide to manage your property yourself, make sure to focus on finding great tenants, proactively and adequately maintaining your property, and keeping accurate records. You\u2019ll find that being a landlord is not only a profitable experience but an enjoyable one.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You might think of your investment property as a way to earn passive income, but a rental property takes more work than other more typical kinds of investments. A successful investment property requires an active&hellip;<\/p>\n","protected":false},"author":36,"featured_media":3669,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[46,82,239,370,240,256],"class_list":["post-3667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-articles","tag-contractor","tag-how-to","tag-landlord","tag-property-management","tag-rentals","tag-tenants"],"_links":{"self":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts\/3667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/comments?post=3667"}],"version-history":[{"count":2,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts\/3667\/revisions"}],"predecessor-version":[{"id":5563,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts\/3667\/revisions\/5563"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/media\/3669"}],"wp:attachment":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/media?parent=3667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/categories?post=3667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/tags?post=3667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}