How to manage your rental property
Listing Your Property on the Market
As soon as your rental property is available for showing, you should list it on the market. If you hire a real estate agent, they can help you list a rental property for lease in the MLS system which automatically syndicates the listing across a few different websites. If you want to do it by yourself, you can get a landlord account on zillow and list the property by yourself. Getting it into MLS will get it maximum exposure.So it's best to let an agent do the listing work for you. In addition to the zillow network of sites and MLS system, you might also want to list it on facebook marketplace. While Facebook brings a significant amount of traffic based on our experience, the quality of the traffic is relatively low. Many of the inquirers are not well qualified or serious enough. For multi-family units with lower rents ($1400 or lower), you might want to try listing on the apartment listing sites as well such as rent.com.
Price It Right
After your property is listed, you will start to get applications coming in if you price it right. If you don't get a single application in a week and it's not winter, that means the price is too high and you should adjust the price immediately. Normally you should expect at least 3 tours and one application per week. If you get three applications on the first day, that means price is low and you might consider pricing it a little bit higher. If you want to be quick, you can adjust price in $50 steps. If you want to be patient and accurate, you can adjust it in $25 steps. Keep in mind the cost of prolonged vacancy. You don't want to wait for 2 months just to get a $50 higher rent. $50 in 12 months is just $600. That's much less than the cost of a single month's vacancy. Adjust price weekly and try to get someone moving in in 30 days.
Now you are getting applications. If you hire an agent, your agent will run the credit check for you. If you rent it yourself, there are a few online credit checking services you can use. Usually, you pay something like $30 to run credit and background check on an applicant. Many newbie landords are paranoid about stellar credit and find it difficult to find someone who is really qualified. That is actually not wise from an investment point of view. People with good credit usually don't rent for too long. They usually rent a year so that they have time to get ready for buying a house. Also, some of the people with excellent credit are more picky about the conditions of the house since they can easily find a house to live in based on their credit. It'd be painful to deal with a tenant who makes a big fuss out of a nail hole in the wall. If tenants makes a long list of nifty requests on the move-in condition part of the lease, that's a red flag and you should really think about if it's worthwhile to work with this tenant. Based on our experience, we usually prefer to work with tenants with credit score in the range of 550 to 650. Usually it is hard for them to buy a house based on their spending habits. Therefore, they are good potential long-term tenants. Do make sure they have solid total household income (at least three times the monthly rent). If their credit score is on the lower end of the acceptable range, charge a higher deposit, such as two month rents or 2.5 month rent. A lot of them might not have three month rent just for move-in. It is ok to let them pay part of the deposit a few weeks after move-in. Tenants with good income and shaky credit are actually better options than you think.
Normally, you would want to accept pets since most tenants have them. If you insist on a no-pet policy, you will have a much smaller market to work with and the amount of rent you can get will be about $100 less. If you have a very nice home which you will put it for sale next year, then it's not worth it to accept pets.
Preparing Lease Agreements
Your agent should be responsible for preparing the lease contract for you. If you do it yourself, you can download a public lease contract template and fill it out. If you have anything special maintenance requirements you expect the tenant to perform, list it clearly on the contract. These requirements include mowing, move-out cleaning, periodical replacement of AC filters, showing obligations, termination notices. It is good to put everything on the paper. And last but least, ask tenants to fill the inventory and condition form to document the move-in conditions. If you want to make sure the tenants take good care of the lawn, you need also document with the existing state of the lawn with pictures.
A lot of landlords complain that managing a rental property is too much hassle and feel exhausted. That is most probably because they try to take a lot of maintenance jobs on their own. If you have tons of free time, live close to the property and are actually pretty handy, by all means take on more responsbilities to save maintenance cost. For most landlords, it's not really worth it if you consider the cost of time driving to the property and buying materials. Many not-so-handy landlords spend 3 or 4 hours making things worse than it was and then paid more to professionals to clean it up. If you need spend an hour back & forth to get to the property, you need consider at least $50 cost for your own time. If you have a well paying job, you need consider $100/hour for your own time. You don't want to spend an hour of your own time fixing a sprinkler head. It's not worth it and makes your business not scalable. Instead, you can hand over the jobs to the professionals as much as possible.
You should spend your time and efforts finding the best contractors for your job. Labor cost is soaring every year as matter of fact despite the Fed is trying to trick you into believe that there is no inflation. There is BIG inflation when it comes to home service professionals. In Austin area, the labor price in home maintenance and remodeling has pretty much doubled over the last five years. You should hunt for professionals with the great value through all available channells. If you want to save money, you need make reasonable compromise on the job quality. Top quality professionals from high-end businesses might charge you two or three times more. It's bad economics to work with them. We are running a rental business, not a HGTV show. On the other side, cheap labor comes with a catch, i.e., low availability. Great value contractors are in high demand. You need wait for them to be available, sometimes a few days and sometimes a few weeks. For non-urgents tasks, you can afford to wait. But when the situation is urgent, you have to hire higher-priced contractors to get the job done right away. That's exactly why licensed plumbers charge $100-$200 per hour because you can't afford to wait if there is a major water leak. As a landlord, you should build a list of contractors in different service tiers as back up. You can categorize them into three tiers, like cheap, fair and expensive. Their availability normally increase with the price. Try the cheap ones first, then try the fair ones, and if you have no other options, try the expensive ones just to get the job done. If you have something covered by insurance, by all means select the highest quality professionals regardless of the price.
When you search for a contractor, Yelp is probably not the best place to go. Most of the business listings on Yelp are expensive. They survive and maybe even prosper by ensuring service quality but that comes with a hefty price tag. Even if you see 100 or 1000 good reviews, you will probably regret if you hire one of them to fix your problem. You are an investor landlord and property maintenance is your line of business. You should make sure you get the best price you can get. Nextdoor.com is a good place to ask neighbors in the same area for recommendations. But still be care that different home owners might have totally different tolerance and sensitivity to price. When a neighbor recommends someone to you, ask about the project details and price. Second option to go is thumbtack.com. You can post your project there and wait for different contractors to bid on your projects. You should be able to get some reasonably priced bids from there. Another place you can go is angieslist.com if you have some big projects and you care much about the quality. When you screen contractors on angie's list, make sure you only use businesses with the rating A on both price and service quality. Otherwise, you will be ripped off in no time.
Overall, you should most of the time doing online research, making phone calls and sending text messages. Don't travel to the property for every little thing. That will quickly get you burned out. Use contractors that you can trust to do the right job without your presence, even if they are slightly more expensive. If you use someone cheap but you have to watch them with your eyes every time, that's not worth it at all. If you ever want to retire or semi-retire with 10-20 properties in your portfolio and sleep well at night, you need have a list of contractors you can trust.
We have compiled a list of value contractors in Austin to save your time. Some of them might be top quality, but is still a good choice considering their price.