Are you planning on managing one or more of your multifamily properties yourself? If so, even though it’s always advisable to hire a property manager to manage your rentals, self-management is a decision that many owners make when they are just starting out.
In this article, we will share with you five tips for succeeding as a new landlord.
Tip #1 – Take the Time to Find the Most Qualified Tenants
The first area to focus on if you want to succeed as a first-time landlord is finding the most qualified tenants. This is done with tenant screening. By properly screening your tenants you’re going to be focusing on finding the most qualified tenants to live in your multifamily investment properties.
During the process of tenant screening, you should be focused on the following areas:
- Criminal background check
- Credit report
- Rental history
- Employment history
- History of eviction
- Late payments
Personal references aren’t as important when researching tenants because anyone can claim to be someone who they aren’t so it’s best to focus on using the four items mentioned above when researching prospective tenants.
It’s also important to remember that when you are investigating a tenant you must follow the principles of the Fair Credit Reporting Act. This means that you have to be straightforward/fair with each tenant and use caution if you decide to turn someone down based on something that you found in their credit report.
Taking the time to focus closely on tenant screening will help you to find the best tenants and eliminate the possibility of renting to someone that may result in eviction.
Tip #2 – Learn Every Rental Law for Your City and State, Including Federal Rental Laws
There’s no doubt that the rental market is changing and becoming more challenging for owners. These challenges include states embracing rent control and other legislation that can be unfavorable to owners.
With a changing rental market, it’s vital that every landlord learns the rental laws of their city and state including Federal Rental laws as well so that they can ensure that they are following the best practices and are not on the wrong side of the law.
Thankfully, help is available. Landlords in this day and age can join local landlord associations to get help with understanding local laws plus there are also plenty of resources for landlords online that they can tap into for getting the help that they need with understanding rental laws.
Tip #3 – Schedule Regular Rental Property Inspections
Even though rental property inspections may seem like a burden, the reality is that they are the one thing that will enable a landlord to know what’s really happening with their rental property.
Before conducting regular inspections, you should create a checklist of everything that you want to inspect in each unit just so that you can streamline the inspection process and follow the same checklist each time.
FYI – Your lease should clearly state which items are the landlord’s responsibility and which items are the tenant’s responsibility to maintain.
If your tenant isn’t keeping one or more areas maintained, it’s best to go back to the lease to verify that their responsibilities are easy to understand.
Some of the most common tenant responsibilities include changing air filters when needed, maintaining laundry equipment, sprinklers and any other mechanical system that’s part of the multifamily investment property.
Tip #4 – Always Enforce Penalty Fees
From the very beginning, you have to be clear with your tenants what the penalty fees are if they are late paying their rent or break their leases in any way.
Many landlords don’t like to enforce penalty fees because they don’t want to be the “bad guy” but the reality is that these fees are sometimes the only way to get a tenant to realize that you’re running a business and they have to follow your rules.
The upside of enforcing penalty fees is that any fees that you collect can be used toward building an emergency maintenance fund that you can tap into when needed.
Note – Even though we encourage you to enforce penalty fees, it’s always important to listen to your tenants, especially if they have a verifiable reason for paying late. Hardships do happen and you can form a solid long-term relationship with your tenants if you’re willing to take the time to verify their situations and not charge a fee if they have a legitimate reason for paying their rent late.
As important as late fees are, it’s also a good idea to focus on rewarding your tenants from time to time especially if they pay their rents on time and are showing that they’ve been a clean, responsible tenant.
Tip #5 – Protect Your Best Interests
Besides everything that we’ve mentioned in this article so far, another excellent thing that you must focus on doing is protecting your best interests as a landlord. This means that you have landlord insurance for your property including property liability insurance and umbrella insurance so that you can protect yourself financially should your tenant or someone else become injured while in one of your investment properties.
It’s best to periodically check the insurance requirements for your city/state so that you can stay on top of the required insurance that you may need and have confidence that your best interests are protected.
We’ve offered you a lot of tips to follow that will help you to protect your best interests as a landlord while you are self-managing your multifamily investment properties.
Always remember that hiring a property manager or maintenance employee is advisable at some point because you’re going to want to eventually have qualified people who can help you with every aspect of managing your investment properties.
In the meantime, until you choose to hire a property manager, it’s best to know that you can manage your multifamily investment property yourself especially when you follow the tips in this article.
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