When it comes to investing in real estate, good management is the key to success. It’s the difference between real estate being a daily stressor in your life or an avenue to financial freedom. But rental businesses have many moving parts, and it can be difficult to prioritize your landlord duties when you have other responsibilities, such as family or a day job.
Fortunately, it’s possible to automate much of rental management. With the right tools and a few crucial management principles, you can run your real estate business like a pro. Here are seven tips for managing your rental real estate business:
1. Delegate Responsibilities
Operating a rental business requires expertise in maintenance, accounting, tenant screening, legal, marketing and other areas. As a landlord, you can’t know everything. And that’s okay—even if you manage your properties independently, you should still leverage the expertise of others to fill in your knowledge gaps.Delegating responsibilities to those with more experience and expertise than you is the most effective way to limit stress and make sure tasks are done right.
For example, if there’s a problem with your property’s infrastructure, appliances or utilities, you would call your maintenance contractor. Likewise, you can delegate staging and showing to a real estate agent, accounting to a tax professional and leasing to a leasing agent or employee.
2. Prioritize Tenant Needs
As a landlord, one of your jobs is to prioritize tasks. What is the most important thing to accomplish this week, this month or this year?Time and time again, tenant needs top the list of priorities for most landlords. Think about it: If your tenants’ needs aren’t met, you'll quickly face complaints, poor reviews, vacancies or even legal repercussions. In fact, if you fail to maintain standards of habitability in your rentals, your tenants may even have the right to withhold rent or start making repairs themselves.
3. Build an Emergency Fund
Many new landlords make this fatal mistake: They believe they generate positive cash flow because their income exceeds their immediate monthly expenses. But unless you’re regularly putting money away in an emergency fund, you don’t actually have cash flow.A proactive landlord recognizes the potential costs they might incur unexpectedly down the line: a sudden natural disaster, loss, accident or eviction. When the worst-case scenario happens, having an emergency fund will help eliminate pressure. You'll know you have resources available and a plan for getting back on track.
4. Digitize Records
In 2023, there’s no longer any reason to keep files and records exclusively on paper. Digital records are more secure, accessible and convenient—especially for busy landlords.For example, digital leases allow the use of eSignatures, which can be tracked with extra security measures like encryption, timestamps and IP address recording.
Digital accounting lets you quickly compare finances across months or years, in addition to easing the much-dreaded tax preparation process. You can even import your company’s finances directly into tax form templates.
5. Automate Your Applicant Pipeline
Whether you manage five properties or 50, automation is your friend. Automating most of your applicant pipeline can save you time and money during the leasing process.For instance, by using listing syndication, you can write one listing and post it to multiple listing sites across the internet, increasing exposure while limiting the time you spend on the task. Similarly, most listing platforms allow you to set up automated email follow-ups or automated tour scheduling for renters interested in learning more about your property.
6. Invest in Landlord Insurance
Just like every landlord needs an emergency fund, landlords also need landlord insurance.Landlord insurance protects you from property damage, liability, and other losses (like income loss from evictions). Without the financial protection of landlord insurance, any unexpected tragedy could send your previously revenue-generating business scrambling for funds.
Purchasing landlord insurance is not only an investment in your business, but also a courtesy to your tenants and employees. If funds are short, tenants still want to know that repairs will be made promptly, and employees still want their paychecks on time.
7. Use Property Management Software
The single biggest thing you can do to ease your landlord management duties is to use property management software.Property management software is your one-stop shop for everything related to rental management—tenant screening, online rent collection, leasing, listing, accounting, maintenance and more.
Investing in software to manage your rentals gives you access to a range of landlord tools and resources you can use to streamline processes like rent collection, leasing and tenant communication. You can also use your software to automate late fees, lease renewals, and other repetitive tasks. If you don’t already use property management software, doing so will be the best decision you make for your business.
Building a real estate empire is a management challenge, no matter your level of experience. The more properties you acquire, the more you'll have to rely on your teammates and tools. The tools and suggestions described here in this article are some of the most important steps you can take to manage your rentals like a seasoned pro.
