Category: Real Estate

Investing in rental properties can be a wise decision, but being a landlord comes with vast responsibilities. For this reason, many residential owners looking to rent consider the benefits of property management. Here are four key benefits of hiring a professional company to handle the bulk of landlord legwork.

1. Marketing the Property and Finding the Right Tenants

Top property management companies know how to market and advertise properties to find potential tenants. These entities are also skilled at tenant screening to make sure that they are a good fit for your property and that they have the necessary income to make timely payments.

Owners rarely have time to market and screen multiple candidates, but management companies have both the time and the tools to effectively handle these tasks.

2. Rental Collections, Keeping Records and Making Deposits

Under the watchful eye and strict record keeping of a qualified property manager, tenants are more likely to pay rent on time. Property managers are responsible for collecting rent and depositing residual funds into the clients account per their agreement.

If tenants are late in paying, it is also the managements duty to send appropriate notices to tenants and incite additional fees as declared in the rental agreement.

3. Tenant Management & Property Maintenance

Residential property management firms typically are the middleman between owners and tenants, so they handle the day-to-day needs and requests of tenants for maintenance, emergencies and any other property-related issues they may have. This is an ideal solution for owners who don’t live in the area but have rental property.

4. Ensuring Legal Compliance

Property management also helps owners have a better understanding of local property laws and tenant rights, and their goal is to ensure that all laws and regulations are being complied with. This helps landlords avoid legal complexities and lawsuits should a conflict arise.

One of the most important qualities of being a landlord is knowing how to recognize good tenants. A bad tenant can cause a wide variety of problems from disturbing others to being late on rent or even causing frequent damages. A good tenant, however, will be a reliable source of income, a pleasure to deal with, and will likely be reasonable about following all policies. While no method of identifying a good tenant is foolproof, there are plenty of steps you can take to increase the odds. Just make sure not to violate the Fair Housing Act, of course.

Background checks

A tenant background check should be one of the first things to come to mind when thinking about finding a good tenant. Whether you do it yourself or hire a tenant screening company, you’ll want to do a criminal background check, since this information is public record. This should show records for any federal, state, or local crimes committed. There are some exceptions to this, as certain states prohibit landlords to refuse rentals for certain offenses. Still, searching for any violent crimes is always a good idea, as a tenant with such a record could be a risk to others.

While you’re at it, it’s also a good idea to check any potential tenant’s credit score. A tenant who is financially responsible will be more likely to keep up with the rent and pay any additional fees, such as a deposit. This is also an opportunity to verify the tenant’s income. The general rule of thumb is that someone should make three times their rental costs to be stable, although sometimes factors like additional debts can come into the equation.

Check references

In addition to doing the usual background checks, it’s never a bad idea to ask a potential tenant for references. This could be an employer reference to verify the tenant’s income as well as an opportunity to learn a bit about their employer’s opinion of them.

It’s also important to get references from previous landlords. Getting more than one reference will give you the best picture of the tenant’s overall behavior as well as decrease the odds of one landlord simply wanting to get rid of a troublesome tenant. This way you can check if they have a history of paying rent on time and following proper procedures. If you discover any instances of legal action being required against them, it’s probably best to move on to another potential.

Value intuition

Of course, you can do all the screening in the world and still end up with a difficult tenant or a tenant who may seem troublesome on paper could turn out to be just fine. Don’t discount your instincts when dealing with someone. A tenant may have a great source of income and be free of legal troubles, but if you notice that they have switched jobs or moved a lot in the past, these could also be warning signs. Frequent moving is a behavior that is likely to continue, and this could leave you with a vacancy at a particularly bad time, so you may want to move on to someone you believe will be more of a long term resident.

There are also the possibilities of identity fraud or reference fraud. Both of these things are fairly common scams for tenants to use if they believe the information found in their background checks will harm them. There’s no shame in acting on the gut feeling that something is “off” about a potential tenant. Trust yourself, back your feelings up with research, and learn from your experiences.