Most aspiring developers don’t usually know their way around property management. They might be so talented in coming up with designs and a team behind them that helps in making the dreams alive. However, the work is not over after the construction of the property is completed. There’s a lot to deal with when it comes to rental property management, but all the activities revolve around five main things. These are what experts refer to as the pillars of rental property management.
So what are these things?
The First Pillars of Successful Rental Property Management
As a landlord or landlady to be, there are things that you’d often hear about when you approach a fellow developer. These are the factors that are of great importance in your property and your entire course of owning a rental property.
The five pillars of rental property management are;
1. Mortgage (A Home Loan)
Unless you’re a millionaire, not many landlords funded their rental property from scratch. The foundation of your journey to becoming a landlord rests on your funds. Are you able to pay for everything, from the piece of land, the material used, and the experts you’ll hire? It is wise to get a loan to help you do all these things.
A mortgage is a loan given to developers for them to fund their rental property projects. Mortgage loans come with multiple conditions depending on the loan provider. Usually, you’ll be asked for a down payment, which is generally a particular percentage of the project’s entire budget. You’ll also come up with a conducive payment strategy which you’ll use to service the loan.
Moreover, in most cases, the loaner would hold the title deed of the property until you completely repay the loan then you can claim it. The beauty of getting a mortgage loan for a rental property is that the project will repay itself. All you have to do is to get a reliable property management company, such as Local Dwelling, to ensure that all your units are occupied so that you can service the loan comfortably.
2. Maintenance (Upkeep)
Keeping the rental property in perfect condition is your task. If you want to attract as many tenants, then you have to ensure that your property is in an ideal living condition. That includes all repairs necessary for the comfortable stay of a client. Any upgrade, if at all, you need to add some extra dollars to the rent.
It is essential to know that the property upkeep is your responsibility and not the tenants’. In some cases, you might find negligence from some tenants who are deliberately not showing respect for the work you’ve done. In that accord, you’re legally allowed to take a cut from their rent deposits to sort out those repairs when they move out.
3. Insurance Cover
Life itself is a series of unknown possibilities. We can only plan stuff and hope that whatever we do, everything will be in perfect conditions. However, you never know what might occur at any given time, which is a big risk if you choose to ignore that factor.
According to the past weather data, your property might be in a location that is prone to harsh climatic conditions. You might also experience some unusual accidents within the property. Accidents such as a tree falling on the parking lot or the death of a tenant. There’s a lot that can happen, and no one can ever gather the probabilities.
In that respect, it is crucial to have insurance cover for your property. These covers vary from different insurance companies, so that is something that you should consider. The purpose of having a cover is for the insurance company to sort out any accidental occurrence on your property. It saves on time and money for any renovations or makeovers when an incident occurs.
4. Property Taxes
One fundamental issue in a rental property or any property, for that matter, is legalities. The government has to get its share of your property existence which you will pay in land rates. These land rates are paid annually, and they are the tax lied of the land. It is always wise to be in good books with the government. It’s an advantage, especially if you want to take another loan to fund another project.
5. Level of Occupancy
The occupancy rate often depends on your marketing skills and the state of your rental property. An empty rental property is not profitable, and that might make you lag in mortgage payments, and eventually, it won’t seem like a wise investment. You have to ensure that you have a tenant in your property to earn through it.
Sometimes the market might be a factor, while at times, your property might be the issue. You might find that the real estate industry is packed with a lot of rental property, which provides tenants with an alternative. You have to ensure that you stand out against your competitors. Actions such as reducing the rent to a reasonable amount that still ensures you make a profit and upgrading the property to meet the market needs are some of the tips.