When you speak to most landlords about rental property management, there are 5 things that always come up.
These are known as the pillars of managing a rental property and apply wherever you are in the world. If you are able to understand each pillar and its benefits, you will take big steps towards becoming a successful landlord.
This article takes a closer look at these pillars.
It is impossible to ignore this pillar. Unless you’re already a multi-millionaire and can pay cash, you have a mortgage on your rental property. As a result, the amount of money you pay back to the bank depends on the interest rate. You need to be sure you can handle different interest rate levels before deciding to invest in a property. Of course, there is always a risk that other things could go wrong and you could default. You can never predict life events. Nevertheless, you should also do everything possible to minimize the risk with your knowledge.
You never know if you’re going to get a good or bad tenant. In any event, tenants generally do not treat a rental property as if it were their own home. There is always some level of neglect going on. You must be prepared to bear any costs incurred as a result of such omission. In addition, repairs will also be required as a direct result of the aging of the house. You can be sure that the renter will point out things that need to be fixed. It is in your interest to keep the property well maintained as an unhappy tenant will only result in them leaving and this can be detrimental to your cash flow.
You never know what can happen on your rental property. Depending on where you live, you may be in an area that experiences extreme weather conditions such as hurricanes and monsoons, or extraordinary events such as earthquakes. A house fire can also occur on your property. Also, your renter could have a serious accident or even die, you 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’ll have to deal with the authorities. It’s certainly more convenient to look for more rental properties than to deal with unpaid taxes.
Last but not least, the occupancy rate is decisive for a profitable rental property. If your property is vacant on a frequent basis, you will almost certainly have a liquidity problem that could put you in default. To attract more tenants, there are a few things you should do:
– lower the rent
– Make improvements to the property
In any case, sometimes the market is not in your favor. Sometimes there is a surplus of real estate in the rental market, while at other times there is a shortage. All you can do is be sure you’re prepared for either situation.
If you follow the 5 pillars of successful rental property management outlined above, you are well on your way to becoming a successful landlord.
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