As your real estate investment portfolio grows, it can become challenging to manage all the properties on your own. However, even with your first property, rental management professionals can help you get started the right way and maximize returns.
A property manager can handle tenant screening, rent collection, maintenance, repairs, and ensure that your properties comply with local laws and regulations. Hiring a property manager can also save you time and reduce your stress levels.
Additionally, experienced property managers help with critical issues and regulations to protect your properties and income. Here are a few situations where property management expertise is helpful!
Even if you prefer to only rent to women or families without kids, it's illegal to discriminate against potential tenants based on gender and other criteria.
The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status, and disability. It's important to familiarize yourself with the Fair Housing Act and other applicable laws or work with a property manager that knows these things to ensure that you are not discriminating against any protected classes.
Setting Up a Business Entity
Setting up the right real estate business entity can help protect your assets, reduce your liability, and save you money on taxes. There are several types of entities to choose from, including LLCs, S-corporations, and partnerships.
Each type of entity has its own advantages and disadvantages, so it's essential to consult with a legal and tax professional and a property manager to determine which one is best for your situation.
Letting Tenants Prepay
You might have a renter request to pay several months of rent in advance. Allowing your tenants to prepay rent can have advantages and disadvantages.
Prepaying rent can provide you with a reliable source of income and can help your tenant feel more secure in their living arrangements. However, it's important to consider the potential drawbacks, such as losing the ability to raise rent and the risk of not being able to evict a tenant who has prepaid rent.
Before allowing your tenants to prepay rent, it's essential to weigh the pros and cons and ensure that it aligns with your investment goals. A professional property management expert can help you decide if it's best for your cash flow or not.
Requiring Renters Insurance
Requiring renters insurance can provide several benefits for both you and your tenants. It can cover your tenants' personal property, liability, and living expenses in the event of a covered loss.
Renters with insurance are also less likely to hold you liable if something happens to their belongings while living in your property.
However, it's important to ensure that you comply with state and local laws and provide your tenants with sufficient notice before making renters insurance mandatory. Again, professional property managers can help you establish requirements for living in your properties while following the law.
Conducting Rental Property Rehab
Rehabbing a property can be an excellent way to increase its value and rental income. Still, it's important to be cautious and avoid over-improving the property or choosing upgrades that never pay off.
Investing too much in rehabbing a property can lead to a lower return on investment and a longer time to recoup your investment. It's essential to research, calculate all costs, and ensure that your rehab plans align with your investment goals.