What you need to know about managing rental properties

The work required to manage a property successfully is a bit more complicated and ongoing than collecting rent once a month. 

1. Finding quality tenants

One of the most important things to consider when managing a rental is finding quality tenants. It’s essential to choose tenants carefully—as there can be many consequences associated with bad tenants—so screening tenants is key. 

A bad tenant can mean a lot of different things. They may not be able to pay rent reliably. They may not respect the property and will cause damage to it, racking up costly repairs. Or they may even pose a threat to other tenants. Dealing with bad tenants can mean spending money on lawyers or other legal fees, and even going through a costly eviction process. 

Before approval, a potential tenant should go through a rental background check that will provide crucial information about their rental history, such as if they’ve ever been evicted from a property. It’s also normal to access their credit score and income to make sure they can afford the rent. 

Once a tenant is approved, they don’t just fade into the background. Managing tenants means being available to them, being responsive to their concerns and needs, and addressing maintenance issues swiftly. Responding quickly to major issues, like a broken toilet, for instance, is key to ensuring a good relationship with your tenants. Apply good communication skills from the start to limit any issues in the future. 

2. Property maintenance and repairs

Property maintenance begins before the home is even rented. It’s important to know the local regulations about habitability and to perform thorough property inspections before move-in and after move-out. Inspection upon move-out is when you’ll note the amount of wear and tear the property has experienced while being rented, and identify any damage that needs to be covered by the tenant’s security deposit.

When a tenant moves out, you’ll also want to assess the property and determine if it warrants upgrading. Remodeling work and adding premium extras like stainless steel appliances, for instance, can merit higher rental rates. Painting the walls, updating fixtures, or landscaping can all make a property more attractive, so that the vacancy is filled quickly. 

3. Managing documentation and finances

When you approve a tenant for your property, you need to provide them with a clear lease agreement, which will specify the monthly rent, how to pay rent (check or electronic payment?), the amount of the security deposit, and the terms of the rental. It’s a good idea to have a legal professional review your lease agreements before issuing them to tenants. 

Once a tenant is ready to move in, you’ll need financial infrastructure to receive payments. Giving tenants the option to easily pay online can make the collecting of rent simpler for everyone, and creates a clear record of payment. 

There are also real estate taxes (and rental property tax deductions) along with other financial requirements that come with any property. You might choose to hire an accountant to help make sure everything is in order, particularly at the end of the year. 

4. State and local landlord-tenant laws

There are some basic landlord responsibilities that are the same in any state. But each state, and even local municipalities, have local landlord-tenant laws that are specific to the region. These include rent control ordinances, requirements of how far in advance a landlord has to give notice that a rental or lease period is being terminated, or even the percentage of interest that must be added to a security deposit when a tenant moves out. You’ll need to be familiar with the local requirements in your city and state.

Many property owners choose to hire a property manager or property management firm to take on the workload associated with rental management. There are numerous benefits to this approach, but perhaps the biggest one is expertise. Property managers are experts who know the ins and outs of managing tenants, as well as the specifics of local law. Especially for new or busy property owners, a good property manager can make running a rental property much easier. 

Bungalow offers tenant placement and property management services that keep your property fully occupied and well managed—helping you earn more rental income from your investment property. With Bungalow, homeowners earn up to 20% more rental income. Learn more about Bungalow.