Granted, rental properties are not completely passive investments the way that, say, mutual funds are. They require some work to buy, to manage, to maintain accurate books, to file taxes on properly.<\/p>\n
But the ultimate goal of all landlords is to minimize that work and keep their rental income as passive as possible.<\/p>\n
How can landlords keep their property management more hands-off? Glad you asked.<\/p>\n
Here are six of the tips, tricks, and hacks that we teach to help keep your passive income, well, passive<\/em>!<\/p>\n Nearly everything written about tenant screening practices<\/a> center around one question: How likely is the tenant to pay the rent?<\/p>\n Don\u2019t get me wrong, that matters. A lot.<\/p>\n But it\u2019s not the only thing that matters.<\/p>\n Turnovers are where 90% of the work (and expenses) of being a landlord lie. That means that landlords should prioritize filling their vacancies with long-term, low-maintenance tenants who will remain an ongoing source of income for years to come.<\/p>\n No muss, no fuss, just the rent in your account every month for the next five, 10, 15 years.<\/p>\n Make sure you look at applicants\u2019 moving patterns, when screening them. Did they hop around every year or two for the last ten years? Or have they lived in one place?<\/p>\n Similarly, ask their current landlord about how they treat their unit, and how high-maintenance they are. The last thing you want is an incessant stream of whiny phone calls from tenants trying to wheedle property upgrades every other week.<\/p>\n Every state has laws specifying how much notice landlords must give their tenants, before non-renewing or raising the rent.<\/p>\n Set automated reminders up in your calendar, for every tenant!<\/p>\n If the tenants have not proven as low-maintenance, high-ROI as you\u2019d like, you can send a non-renewal notice. If they\u2019ve worked out well, you can send them a lease renewal notice \u2013 with a slightly higher rent.<\/p>\n Raising the rent is an art form, but I strongly believe that landlords should raise the rent (slightly!) every year, to set expectations. Consider raising it between 1-4%<\/a>, depending on your local market.<\/p>\n Beyond setting expectations, it also prevents you from waking up one day, realizing your rents are 15% below market rates, and then slapping your tenants with a huge rent hike. It\u2019s not fair to them to hit them with it all at once, and it\u2019s likely to drive them away.<\/p>\n Which means a turnover, which means work and expenses. No bueno.<\/p>\n Most maintenance calls are mundane. They don\u2019t require an expensive general contractor or specialist.<\/p>\n Start collecting references from other investors and property managers for good, well-rounded, inexpensive handymen. As maintenance calls come in, try new ones out. (And spare me the politically-correct tirade\u2014\u201chandyperson\u201d doesn\u2019t have the same ring, and you know it!)<\/p>\n As you find handymen that you like, start building a relationship with them. Ask after their family. Send them a Christmas card (yeah, yeah, I know you\u2019re still there PC Police\u2014send them a bland holiday card if you\u2019re unsure what they celebrate).<\/p>\n The point? When tenants call you about a maintenance issue, it will take you one phone call to solve it, if you have a strong relationship with a good handyman.<\/p>\n One call, instead of calling five different contractors, negotiating fees, and all the back-and-forth involved.<\/p>\n My least favorite line in the world is \u201ccheck\u2019s in the mail!\u201d<\/p>\n No landlord wants to hassle with chasing deadbeat tenants to pay their rent every month. It\u2019s tedious and you shouldn\u2019t have to do it.<\/p>\n Instead, consider automating your rent collection by pulling it directly from the tenant\u2019s paycheck.<\/p>\n Once again, you didn\u2019t become a landlord because you wanted to work a second job. You became a landlord to bring in passive<\/em> income. Passive like, \u201cThere\u2019s extra money in my bank account today,\u201d rather than \u201cWhat do you mean you won\u2019t have the rent for me until next Thursday?!\u201d<\/p>\n For full disclosure, my company is one of two that offers this service (called RentDeduct). So yes, I have a vested interest, but no conversation about automating your rental management is complete without addressing how to automate rents.<\/p>\n Earlier I mentioned that the overwhelming majority of rental management work takes place during turnovers. While your rental units are occupied, all you typically have to do is collect rents, conduct inspections, do preventative maintenance, and handle the occasional repair. But turnovers are a lot<\/em> of work.<\/p>\n There\u2019s an easy answer to this problem: Delegate the work of managing turnovers.<\/p>\n Consider hiring a leasing agent to handle filling your vacancies. They can advertise, advise you on any recommended repairs, show the property, screen applicants.<\/p>\n All you have to do is send your handyman to make the recommended repairs, and double check that you agree with the leasing agent\u2019s recommended tenant choice.<\/p>\n The upside? You pay a leasing fee to the agent, but you don\u2019t have to pay ongoing management fees, which are expensive and involve very little work on the part of the property manager.<\/p>\n In other words, delegate the hard part, and do the easy part yourself.<\/p>\n How often do you inspect your rental units?<\/p>\n In our property management course, we recommend inspecting twice a year. It demonstrates to the tenant how seriously you take the property, prevents them from breaking your lease\u2019s rules, and helps you catch maintenance issues early.<\/p>\n But you probably won\u2019t just magically remember the six-month anniversary of every rental inspection.<\/p>\n Set reminders on your calendar, and while you\u2019re at it, set preventative maintenance reminders too. For example, October is a good time to have HVAC technicians service your furnace. You can catch issues early, avoid a 3:00 a.m. phone call in January that the heat died, and HVAC technicians are far more flexible, available, and affordable in their off-season.<\/p>\n Want to work less as a landlord and earn more?<\/p>\n First, make it a priority to minimize turnovers. They\u2019re time-consuming and expensive.<\/p>\n Second, minimize rent defaults, and automate your rent collection. Chasing tenants for rent is a losing proposition.<\/p>\n Third, preemptively keep your tenants and your property humming along happily by doing regular inspections. This will help you prevent lease violations by your tenants, make sure they treat the property well, and catch any maintenance issues before they erupt into major headaches.<\/p>\n Don\u2019t want to do the inspections yourself? Pay an assistant to do them for you.<\/p>\n And last, delegate your turnovers to a leasing agent. They\u2019re a pain in the backside, but you can outsource the work simply and affordable.<\/p>\n Put the \u201cpassive\u201d back in passive income!<\/p>\n6 Hacks for Making Tenant Management More Hands-Off<\/h2>\n
1. Screen tenants for longevity and respectfulness, not just likelihood of payment.<\/h3>\n
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\nRelated:<\/strong> How to Generate $10,000 in Passive Income Monthly Without Quitting Your Day Job<\/a><\/em><\/p>\n2. Set reminders for lease renewals, and raise the rent!<\/h3>\n
3. Build a relationship with a handyman who can do almost anything.<\/h3>\n
4. Deduct the rent from your tenant\u2019s paycheck.<\/h3>\n
5. Hire a leasing agent to fill vacancies, but do your own ongoing management.<\/h3>\n
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\nRelated:<\/strong> How to Upgrade Your Landlording to Make Your Investment More Passive<\/a><\/em><\/p>\n![\"landlord-reviews\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/10\/landlord-reviews.jpg\" "\\"\\"")
<\/p>\n6. Create automated reminders for inspections and maintenance.<\/h3>\n
Hands-Off Rental Management<\/h2>\n
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