5 Tips For Managing Your Rental Property To Maximize Profit

Now, before we begin, I want to clarify a common misconception about self-managing. Just because you're self-managing doesn't mean that you're doing everything by yourself. Think of it like being a CEO of a business. Just because you're the CEO, it doesn't mean that you're doing everything for the company, right? 

You hire financial advisors to handle the finances, and you hire professional developers to handle your codebase. So, the same thing applies to property management. You may be the manager, but you're not necessarily the one who's going to be going out there to do repairs yourself. Now, this allows you to focus on aspects of property management that are most important to your business while letting you delegate tasks to other people.

So, the first tip to self-management is to build a solid list of contractor contacts. Remember how I talked about in the scenario where a tenant may call you at three in the morning and let you know that there's a leak in their kitchen or bathroom? Well, instead of you having to wake up, put on your clothes, and arrive during the middle of the night, you should be able to call one of several plumbers on your list and have them go out to check out the issue. 

So, one great way that we use to populate our list of handymen and contractors is by using local Facebook contractor groups. If you live in a major metro city, there's likely a very large chance that there's a Facebook network of contractors and handymen who will offer their services. 

So, you can just join the group and let them know that you're a property manager and you're looking for some plumbers or electricians that can be on call when you need them, and people are very likely willing to respond to your post and be on your list. So, that when an issue comes up, they can come and take a look at the problem. 

Of course, with all contractors, I do recommend that you find the ones that are reasonable with the pricing, are good at communication, meaning that they're responsive, and someone who actually has experience and has a good reputation. So, what we do is we like to ask for some references that we can call to see if their past clients are satisfied with their work. 

We also like to look at photos of their old jobs so we can see some of their examples of their craftsmanship. So, make sure you can create a list of reliable contractors that you can call on at any time.

Now, tip number two is making sure that you have a solid "boots on the ground" team. A major hassle when it comes to managing your own properties is you having to physically be there, whether it be for a maintenance request or to open a door for a tenant, or something like that. But what happens if you're on vacation? What if you don't live in the area?

 Then, you know, it may be impractical if you'd be going out there to show all these homes. So, what you want to have is a runner, someone who could go to the house and help you do some things on your behalf. These people need to be someone that you trust because you're going to be giving them access to your property. 

So, we recommend finding these people from referrals, or if you need to, possibly online platforms like Craigslist, and build a relationship with them, and then pay them $25 to $50 every time they go out and look at a property for you. Some real estate agents are actually able to do this for you as well, for a small fee. 

Typically, realtors are a little bit more professional, and there's a little bit more accountability with them versus a random stranger. So, you'll have to pay more for that kind of service. Having a dedicated runner is great because unless you have another set of eyes that can be on your property to make sure your property's in great shape or not.

Tip number three for self-managing is to make sure you take some amazing photos. Take a look at these two photos. Which one would you pick? Picture A is probably taken with some crappy phone camera, whereas picture B is taken with some nice DSLR. 

Having great pictures and marketing a property properly can increase the amount of rent you can charge and increase the chances of finding a tenant as soon as possible. We highly recommend hiring a photographer who knows how to take good photos, has a good camera, and knows how to make everything look great. 

And make sure to stage the property so that tenants can imagine what it looks like when there's furniture inside. And we also recommend doing some light touch-ups to the photos and making them look more enhanced. These will allow your properties to rent at a premium and get more interest from people checking out places to rent in your area. 

If you take better photos, you'll make more money, so make sure you have amazing photos when you put your property on the market.

Tip number four is to screen your tenants properly. Choosing the right tenant is the most important part of running your property because a bad tenant can end up costing you tens of thousands of dollars. You know, I've even heard of a horror story of an owner who owned a property in the Bay Area who had a non-paying tenant who just refused to pay rent. 

It happened during COVID times, and during COVID, there was a moratorium that said that you cannot evict people during this time. So, this ended up causing them to lose so much money on their property that they ended up losing the home because they couldn't afford the mortgage payments anymore. But a lot of these issues may have been avoided if they screened their tenants properly. 

Screening the tenant involves doing a background check, you know, checking if their credit score is good, and seeing if they had a history of being evicted in the past. You want to make sure that they meet the qualifications for renting your property, like making sure they have a steady job and making sure that the rent is less than a third of their income because if it's too high, then they're gonna have a hard time coming up with the rent every single month. 

You also want to make sure that they have a clean rental history and that they have good references from their previous landlords. Let them know that you're going to be calling those references to check. Now, red flags from a tenant can include having a violent criminal history, you know, if they've been evicted in the past, if they have a history of damaging property, or if they have inconsistent rental history, like they're moving very frequently for very odd reasons. 

So, that being said, when you're picking tenants, you also have to be sensitive to who you can and can't rent to. You need to make sure that you're not discriminating against a tenant based on their age, race, gender, or sexual preference because that's illegal in the US, and you can be sued for doing it. As a recap, make sure that you screen your tenants properly because the last thing you want to do is rent your property out to a shady tenant who could cost you money instead of giving you passive income.

And finally, tip number five is to make sure that you have all of your paperwork in place. The reality is that real estate is one of the most litigated industries out there. You want to make sure that you have your rental agreements in place, make sure that you're only taking the appropriate amount of security deposit to cover legitimate damages from a tenant and not just taking their money without having good reason for it. 

Don't do other shady things like evicting them for no reason or raising their rent for retaliation purposes. You know, you basically want to avoid a lawsuit and make sure that everything you do is on the up and up because no matter how much money you think you can make from renting your property out, you could lose ten times that amount from a bad lawsuit. So, make sure that all of your legal structures and contracts are in place and that everyone agrees on how everything is done. 

Part of this is also having a robust move-in checklist for the tenant. You got to make sure that they do their own inspection, take photos of the entire place in its current condition, so that when they move out, you could take another round of pictures and make sure that the property hasn't deteriorated beyond any normal wear and tear. 

In your contract, you should also clearly state the expectations of when rent is due, how much you charge for a late fee, and common expectations of keeping the property well-maintained and how it should be in similar condition when they leave as when they came in. You also want to make sure that you're keeping detailed documentation of all the transactions related to your property. 

Any expenses or income that you made from the rental should be tallied up somewhere so that when you file your taxes at the end of the year, everything is clean and ready to submit. Now, if you have any questions about getting the right documents, we recommend that you consult with a real estate attorney who specializes in landlord-tenant laws. 

Having a solid contract not only reduces your risk of eating food but it also helps you avoid any misunderstandings and potential disputes with your tenants going forward.

Now, after hearing about all of this, you may think that managing your own properties can be a large hassle, but in reality, software exists today that can help you do all of this in one place. And a great example of this is today's sponsor, Azibo. 

Azibo is a free-to-use property management software that's designed for landlords who want to self-manage, and it gives you all the tools you need in one place. With Azibo, you're automatically able to collect your rents, perform background checks, and view the status of all your properties on the dashboard. 

And even for landlords like myself who have most of our properties managed by professional property managers, we still use this Azibo to consolidate all of our rental properties' performance in one place, so we can see how all of our rentals are doing. Azibo also offers top-of-the-line accounting tools and bank consolidation so you can make sure that all the numbers lined up, and the best part is it's free to use. So, you can check it out at azibo.com, or to the link in the description below.

To summarize, managing rental properties on your own is similar to running a business. By managing your own properties, you'll be able to keep more money in your pocket and ensure that your rentals are being well taken care of. If you have any other questions about self-managing your properties, feel free to let me know in the comment section below. 

And if you guys want to learn more about real estate investing and how to analyze rental properties in the first place, then check out this new section on the website  labeled “Real estate investing” that I made right over here. Thanks for ready guys. I appreciate you, and I'll see you soon. Take care.