If you have one or more properties to rent out, now is as good a time as any. The rental markets are growing stronger by the day all over the nation as a steadily increasing number of people are opting to settle for the convenience that comes with the rental lifestyle. No mortgages, no taxes, and often no repairs or insurance either.
So, as a property owner or investor, things already look bright for you. And it’s even better for owners of single-family rental homes. In 2019, National Multifamily Housing Council (NFHC) reported that as many as 43% of current tenants lived in SFRs, i.e., single-family rentals. This is a sharp rise from how things were before the housing crisis of 2008. However, ever since the crisis took place, most people, and millennials, in particular, are wary of investing in a house of their own.
And this has opened up a great opportunity for rental property investors. You can now generally bank on securing a steady and sizeable income through their rental investments. That said, while owning rental properties is generally known for being a source of passive income, it is usually not passive at all if you are managing your properties on your own. No matter whether you’re renting out SFRs, multi-family units, or condos, there are always a lot of things to take care of as a self-managing property owner. You can’t simply sit back and expect the money to come rolling in on its own!
In this article, we’ll cover all the essentials relating to managing a single-family rental home, including property maintenance, tenant screening, finance, preparing the lease agreement and outsourcing.
Property Management Tips for Single-Family Rental Homes
There are a lot of advantages to renting out a single-family home but managing an SFR comes with its own set of challenges as well (just as multi-family units come with their own). In fact, those very advantages we mentioned may at times turn into a source of headache for the landlord or the property owner.
To cite an example, SFR occupants usually make for much more reliable candidates when it comes to proper upkeep and maintenance of a property. This is since tenants renting standalone houses typically intend to stay there for an extended period of time. As such, it is normal that they will look out for the property and will do their best to keep it in good shape. With this, however, comes a feeling of entitlement towards the property, which is somewhat natural, after all. If someone is staying in a house for, say, eight years, he ought to feel a certain freedom in and around the property. As such, for the property owner, it then becomes somewhat difficult to raise objections regarding certain issues, behaviors, or requests.
For instance, if a long-time occupant of your SFR requests to perform a paint job on the house and is willing to bear all the expenses as well, it might be difficult for you to turn the request down. Now, it could be that the paint color he chooses is not to your taste and what is more important, you believe that it’ll also run counter to the taste of most people. Now, what this means for you is that potential future tenants may object against the color and you may then have to apply a fresh coat of paint all over again.
This is just one example, but it shows the necessity for you, as the owner, to be ready to act strictly when the occasion requires so. You are, after all, the owner of the property and you always have the last say regarding any changes that can be made to the property. Do your best to stay on friendly terms with your tenants, but at the same time, try not to flinch from exercising your rights. In addition, the above example also points to the necessity of drawing up a tight and foolproof lease agreement that can save you a lot of potential trouble and unpleasantries down the road.
However, it’s high time we got down to the details.
So, what exactly are the key responsibilities when it comes to managing single-family rental homes?
Well, we can break them down into three sections (that pretty much cover all the other associated areas and responsibilities as well):
- Choosing Your Tenants
- Managing the Tenants
- Managing the Property
Choose Your Tenants Wisely
When it comes to rental investment, the quality of tenants plays a crucial role in the success of your business. Finding the right tenant for your property is even more important for SFRs than it is for MFRs or multi-family rentals. This is directly related to the important issue of tenant turnover. The people renting SFRs typically want to stay there for a long time, which makes it all the more necessary for you to weed out all the bad and potentially troublesome candidates and pick only the best ones.
And this is one area where you don’t want to budge an inch, even if it means prolonging the vacancy period of your property. Problem tenants can mean all sorts of troubles in the future. And we’re not only talking about extreme measures such as evictions and the like. You may get into skirmishes in relation to all sorts of smaller issues as well, such as repairs, maintenance, upkeep of your yard, and the like. And last but not least, you may run into repeated troubles even in securing the monthly rent at times.
So, choose a reliable tenant screening service (you can find a good many of them online) and check any applicant’s past rental habits. Check rental credits, references, eviction history (if any). In short, keep all your bases covered on this point so as to avoid any unnecessary trouble in the future. You can also hire a property management company to do tenant screening for you. Here at Specialized Property Management Fort Worth, we have a tried-and-true screening method that can help you get only the best tenants for your property.
Managing the Tenants
Once you’ve chosen your prospective tenant, the next step is to prepare a properly drawn-out lease agreement detailing all the restrictions, prohibitions, etc. that you want your tenants to abide by. However, you need to strike the right balance here. Keep in mind that people renting single-family homes typically pay higher rentals compared to multi-family rentals. As such, they also expect a good amount of freedom and mobility around the house.
This means that putting too many restricting and prohibiting clauses in your agreement may actually turn off potential quality tenants. On the other hand, being too lenient comes with its own risks as well, as we’ve already discussed earlier.
We suggest that even when you permit certain activities, make sure to include provisional clauses that will safeguard you against potential troubles or damages in the future. For example, if you permit pets on your property (which may be a good idea, since a Zillow report informs us that 76% of millennial renters own pets), make sure to either prepare a separate pet policy or include additional clauses that will ensure that the tenant keeps their pet(s) under control.
Also, make sure that you’re well informed of landlord-tenant laws (these include state and local regulations as well as the federal Fair Housing Act) before you draw up your lease agreement. If you don’t feel too confident doing this all by yourself, we strongly recommend that you hire the services of a lawyer, or a property management company, such as Specialized Property Management Fort Worth. We are always up to date on all legal issues regarding rental property investment, and we know how to help you understand and stay on top of them.
Finally, you may also want to check whether or not the tenant has a Renter’s Liability Insurance. This is not a make-or-break issue. However, as a property owner, it is a lot safer for you if the renter does carry some kind of renter’s insurance policy.
Managing the Property
This is by far the most essential job and covers a number of different topics as well.
First of all, managing your property involves the essential task of property maintenance. We suggest that you plan a regular inspection routine (ideally performed every 3-6 months) with your tenant at the very beginning of the occupancy. This will ensure that you’re not getting in their way when you come to visit the property for inspection.
Keep a lookout for all the older appliances that may need a repair job. For older properties, we especially recommend that you check and, if needed, replace the drain lines, supply hoses, and water valves. Water-related damages usually result in expensive repairs, so you don’t want to procrastinate this. Also, make sure to properly inspect the yard. Watch out especially for larger and older trees and ensure there are no overhanging large branches (either on or around your property) that may break off, thereby causing damages to your own property or to that of your neighbor’s.
Hiring A Professional Property Management Company
Finally, if you don’t have time enough to devote yourself to managing the property or if you live out of state, you’ll need to hire a third party, such as a property management company, who will handle the job for you. Some are reluctant to do this because they believe it will diminish profits, but trusted professional property management has the potential to increase your overall revenue. You also enjoy a number of advantages when you engage in the services of a property management company.
Keep in mind, though, that all property managers are not created equal. So, when it comes to choosing the property management service for your single-family property, you must exercise as much caution as when selecting your tenant. Do your research, ask for references, and only settle for property management with a great track record, such as Specialized Property Management Fort Worth.
First of all, we are professionals in the field and are better equipped able to handle the job than individual landlords. We also have several important industry connections, such as contractors, to help you save time on repair and maintenance jobs. Finally, you might be able to deduct the property management company cost during filing your tax returns due to it being classified as a business expense.
With us handling the task for you, your rental property can truly become a passive source of income for you, and you can devote all your available time to your own endeavors. Specialized Property Management, the leading Fort Worth property management service, is a great candidate for your property maintenance needs. Get a quote today by calling us at 817-886-9220 or contact us online!
