Everything You Need to Know About Becoming a Property Manager
Posted on February 23, 2018
Acquiring a property to rent out can be a fantastic way to earn extra cash, even if you’re not taking it on as your main source of income or professional interest. Although the initial time and expense can be quite demanding, once you’ve got tenants in, the upkeep and maintenance should be minimal, which is why some managers choose to take on multiple properties, or are able to continue with another full-time job.
If you’re considering becoming a property manager, there are a number of things you should think about to set yourself off on the right foot.
Securing the Right Investment Property
The first distinction you need to make in your mind is that this new property should be a sound business investment. Whereas before you may have been house-hunting for yourself — and your particular taste — personal preference shouldn’t be much of a determining factor in this decision.
Consider how much money you have to put into this venture, subtract an estimated amount for buyers fees and taxes (which will be dependent on how many properties you own already, as well as the value of the house you’re looking to purchase) and start searching within your achievable price range. Don’t be too limited by guide or asking prices, few properties will actually sell for this figure after negotiation.
Ensure you research the local market when deciding what type of property to invest in. If you’re looking at 2 bed apartments, but the rental market is flooded with similar offers, you may find yourself having to bargain hard on monthly rent amounts and experience a high turnover of tenants. Instead, try to stretch your budget to a three-bed condo or small house — this may attract a different clientele and face less competition in the market.
You should also assess potential properties on how much work will need to be done to make it hospitable. If you’re going into property management as a full-time career, you may be willing to take on more refurbishment tasks. If you’re trying to bring in a new source of income with minimal effort, look for somewhere that’s ready for tenants immediately.
Who do you want to rent to?
Deciding what type of tenant you want to do business with will also be a contributing factor when choosing the property type. If you feel a connection to a certain demographic — maybe single moms, or senior citizens — perhaps you could build your estate service around them.
Indeed, different clientele offer different benefits and drawbacks. College students may be content with a lower standard of decor design and amenities, yet might be troublesome with damages and paying rent in a timely manner. Young professionals will offer better financial security, but may move around more often as they decide where to put down roots. Often families prove safe tenants; the longer you can keep them in your property, the better the payback for you.
To furnish, or not to furnish
Generally, students and younger tenants will find furnished properties appealing, whereas family groups will want the space to make the house a home, with their own belongings. However, individual circumstances may break from the norm.
If you are going to offer the rental furnished, remember you want to create somewhat of a blank canvas for tenants to nest in. Don’t waste money on expensive items just because you like the design and style. Go for function over form and don’t over clutter rooms; select key items like beds, a couch and table.
As a rule of thumb though, you’ll need to supply ‘white goods’ such as a refrigerator, washing machine, tumble drier and occasionally a dishwasher. You should factor these costs in from the start. Before tenants move in, you should also check the conditions of the central heating system and air conditioning, if you’re buying in a hot and humid state. It may be that you could save money in the long run by investing in a more efficient heating and air system. A Trust Dale HVAC review will point you in the right direction for a company you can rely on.
Unexpected costs to look out for
Moving into property management can bring about a few nasty surprises. If you arm yourself with the right information, you can avoid these by asking keen questions of agents before purchasing. Ensure you get a professional survey completed on the property, to highlight any potential issues with the structure and foundations; the last thing you want is cracks appearing in walls due to subsidence.
As you view properties, look out for signs of damp from external walls. Examine windows: is the glass double glazed, and if you’re buying an older, period property check for wood rot around the edges. If you’re in the market for a house, check the current condition of the roofing: are any tiles or slates missing? If you’re in doubt about anything and think it’ll require extra work and cost for you to fix, make this clear to the seller so you can reduce the price you’ll pay to cover this.
How to be a good landlord
Once you’ve screened your tenants, and you’re happy to sign a contract with them, you’ll need to give them a way to contact you should there be any issues. A cell number will suffice, and try to encourage an understanding that while you’ll respond to issues, if you work another full-time job you may not be able to visit immediately. Have your contracts looked over by a property lawyer, and list the exact terms you’re happy with for how much involvement you’ll have in the every day running and upkeep of the property.
It’s a renters market right now, but there’s still money to be made as a property manager
The current climate is more favorable for tenants than for landlords, but that’s not to say property management isn’t a solid way to invest money. Indeed, houses accrue interest faster than a great deal of bank savings accounts. If you’ve recently come into some money, you’d do worse than investing it in real estate.