Circle PM Blog - Insight, Stats and More
Everyone knows about and is affected by high housing prices. That coupled with the raising average age of marriage, has led to an increase of people living in a group setting. It’s not just college students living in group homes, now you see a range from young professionals to couples to even some families. Whether this is a close knit group of friends or a random group of individuals, group homes all come with their fair share of nuances to navigate through. Read More
Whether this is your first investment property or your fifth, getting an investment property ready to rent can be stressful. There are many things to consider, and preparing the property for your next tenants isn’t a task to be taken lightly. Read More
Getting your home inspected isn’t just for new homebuyers. At Circle Property Management, we provide a home inspection for all our new clients. Read More
Congratulations on making the investment into a rental property. Chances are you’re excited to get started and make some cash!
Of course, purchasing your rental property is just the beginning. When you’re considering hiring a property management company, it helps to think about what needs to be done. Are you prepared to take on all the tasks of not only a homeowner but a property manager as well?
Here are some things you should know when you’re thinking about a property management company for your rental space!
What You Need to Get the Home Ready
If your home doesn’t need any renovations, you might think it’s ready to rent. Is it?
Consider that you’ll need to change the locks (if you haven’t already done so), check all appliances, clean carpets, perform any yard maintenance, and perhaps paint or at least clean inside.
Do you know how much you’ll charge for rent? What about accepting pets? After these items are determined, you’ll need to find a way to attract potential renters. Although there are certain free online options to do this, they might not attract the best renters.
After advertising, you’ll need to show the home to potential tenants. Any ones that want to follow through will need an application. Do you know which application is valid for your state and where to find it?
Screening tenants is a separate process that needs to be done to ensure you don’t end up with renters who refuse to pay the rent and won’t leave.
All this before you’ve even actually rented the house or received your first month's’ income! Getting your property ready for rent and actually signing that first lease takes a lot more work than people think.
Tasks to Maintain Your Property
The work doesn’t stop there. You’re going to have to maintain the property if you want to keep your tenants happy and fulfill your obligations as a landlord.
What does this mean?
Well, performing regular home inspections for one. You’ll have no idea what the tenants will bring into the house—unexpected “overnight” guests, pets, illegal firearms. Not only that, but you’ll need to ensure that smoke detectors are working, no fire or safety hazards are present, and that everything is working smoothly.
For that matter, any repairs that need to be done are your responsibility as well. If the tenant calls with a complaint that something isn’t working, you’ll be required to fix it in a timely manner. Should any emergencies happen—such as a plumbing problem, storm damage, or a roof leak—you’ll need to be on top of it.
Collecting the rent and handling the payments is part of your job as well. Although the tenant screening process can help ensure that your tenants will pay on time, there’s no guarantee of this and you could end up in a legal bind where you’ll need to seek representation.
And finally, when the lease is up and your tenants move out, the whole rental process starts all over again—changing the locks, cleaning, advertising, showings, screening tenants, and property maintenance.
The Risks You Need to Manage
Of course, with an investment such as this, risks are inevitable. Managing risks is something you’ll need to do to protect your investment.
These include risks of not complying with fair housing rules, accounting for guests or pets that aren’t allowed, and legal risks like lease violations. Financial risks such as property damage not covered by insurance are a concern as well.
Handling all this and more can feel overwhelming. This is why people consider hiring property management companies. Here’s how a property manager can help you accomplish these tasks and relieve the burden of taking care of every detail for your rental property.
How a Property Management Company Can Help
When you’re considering hiring a property management company, you’ll need to consider all of the things you need to do to protect your investment.
A skilled and experienced property management company can help you with all of this. They’ll help you manage your property to secure your best return on investment (ROI). Their job is to handle all aspects of your property, therefore keeping your tenants happy. Happy tenants make excellent tenants.
A property management company will also work to conduct turnovers quickly when the lease is up. This means your property spends more time occupied which provides you with better ROI.
When you have another job and you can’t keep up with everything your rental property requires, consider a property management company. The right company will be locally based to best suit your needs. You’ll still be a part of the process, but less burdened by all the responsibility.
A great property management company is an investment just like your rental property is. By protecting your investment, your team of professionals helps you be even more successful with your rental property.
Consider property management to maximize your ROI and keep your tenants happy, all while enjoying extra income!
Professional property management is like your insurance policy. You pay your landlord insurance policy faithfully every year, knowing you’re covered. When you consider the added value you receive from professional management of your property in addition to this policy, the real value you receive is a bargain for the price!
When you manage your own investment property, it’s essential to consider the risks. Whether you’re an experienced investor or a new one, no property comes without risks.
The three greatest risks you incur from having an investment property are county and city compliance, improper lease documents, and finally—as well as the costliest—a bad tenant.
There are many reasons to consider professional property management to reduce your risk when investing in something as large as a property. One of them is the incorporation of software systems to manage your property with ease.
This includes management of all the data related to tracking things like mechanical equipment, HOA rules and regulations, insurance compliance, pet compliance, and your utilities during turnovers.
Highlighted below are some additional services that’ll benefit you when taking advantage of a property management service for your investment:
Accounting reports for your income and expenses to use for tax purposes.
A pool of verified and vetted contractors with negotiated pricing.
Local resources to handle a multitude of problems.
Experience to communicate with you and the tenant to avoid problems.
Dedicated systems to help mitigate risk and maintain your property efficiently.
Property inspections which identify potential risks of the property including those in regards to health and safety.
Swift and timely processes.
Now, let’s discuss these three pitfalls in a little more detail so you can better understand your risk and take the necessary steps to get your property professionally managed.
County and City Compliance
The first pitfall we mentioned is proper compliance with county fair housing and regulatory rules and regulations. Ensuring that you comply with these standards and rules can often be a complicated task, which can put an owner into an expensive and time consuming problem-solving process.
Improper Lease Documentation
The second biggest pitfall is improper lease documentation. You’ve heard it said that getting your agreement in writing is everything—and we couldn’t agree more.
However, we’ve seen many leases obtained off of the Internet which don't comply with state coding regulations nor do they provide the needed protection for the owner.
These documents are not only incorrect but dangerous for your investment—in combination with a bad tenant and a bad lease, it can be a challenge to defend yourself in court should a problem arise.
Getting a Bad Tenant
The final and biggest pitfall for an owner managing their own property is a bad tenant. Often, tenants are not properly screened to include criminal, credit, eviction, and the ability to make payments based on many financial factors which are crucial to a successful approval process.
We are often contacted by landlords with a defaulting tenant to discover their lease doesn’t even comply with the correct code nor was the tenant properly screened. The monies lost in a situation like this could have covered property management fees for two to three years let alone the lost revenue and anxiety of an eviction.
As you can see, the idea of an investment property can quickly turn into a disaster if your property isn’t professionally managed. Even experienced property investors can make mistakes with leasing paperwork, proper tenant screening, and complying with city and county codes.
In order to ensure your investment property stays exactly that—an investment—you need seasoned professionals who miss no detail when getting you the perfect property, airtight paperwork to protect you in court, and the best tenants who’ll pay their rent and take care of your place.
Interested in finding out more about professional property management to minimize your investment risk? Find out more here.
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- 5 Tips on How to Prevent Property Damage this Winter
- What to Expect with Your Circle Property Management Home Inspection
- Things You Should Consider When Hiring a Property Management Company
- 3 Potential Pitfalls of Managing ‘Investment’ Rental Properties Yourself
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