“I want to become a landlord so I can work a second job!”
Said no one ever.
People buy rental properties because they want to build passive income. Emphasis on passive.
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.
But the ultimate goal of all landlords is to minimize that work and keep their rental income as passive as possible.
How can landlords keep their property management more hands-off? Glad you asked.
Here are six of the tips, tricks, and hacks that we teach to help keep your passive income, well, passive!
6 Hacks for Making Tenant Management More Hands-Off
1. Screen tenants for longevity and respectfulness, not just likelihood of payment.
Nearly everything written about tenant screening practices center around one question: How likely is the tenant to pay the rent?
Don’t get me wrong, that matters. A lot.
But it’s not the only thing that matters.
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.
No muss, no fuss, just the rent in your account every month for the next five, 10, 15 years.
Make sure you look at applicants’ 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?
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.
2. Set reminders for lease renewals, and raise the rent!
Every state has laws specifying how much notice landlords must give their tenants, before non-renewing or raising the rent.
Set automated reminders up in your calendar, for every tenant!
If the tenants have not proven as low-maintenance, high-ROI as you’d like, you can send a non-renewal notice. If they’ve worked out well, you can send them a lease renewal notice – with a slightly higher rent.
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%, depending on your local market.
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’s not fair to them to hit them with it all at once, and it’s likely to drive them away.
Which means a turnover, which means work and expenses. No bueno.
3. Build a relationship with a handyman who can do almost anything.
Most maintenance calls are mundane. They don’t require an expensive general contractor or specialist.
Start collecting references from other investors and property managers for…