How to Effectively Manage a Rental Property

How to Effectively Manage a Rental Property

You have just invested in a rental property. Congratulations! You have taken the first step towards building up a real estate portfolio. But your work doesn't stop there. For this investment to be profitable, you need to know how to manage your property effectively. Good management will allow you to optimize your rental income. You will also need to know that you can ininvest in real estate without buying property

In this article, I will give you my best advice to calmly manage your property.

Finance de Demain will detail the different aspects to be mastered: the relationship with your tenants, the maintenance of the accommodation, the accounting, the prevention of unpaid bills, etc. If you follow these recommendations, you can enjoy the income from your rental without worry.

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The management of a property requires time and effort. But it's worth it when you see the rents coming in month after month! With organization and method, everything will go well.

Keep the objective of offering quality housing to your tenants, in a win-win relationship. Here are 5 tips that Finance de Demain offer you.

Let's go !!

🌿 Choose your tenants well

Choosing the right tenants is essential. Reliable tenants who pay their rent on time and properly maintain the unit.

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To find these rare gems:

  • Conduct a detailed interview with each candidate. Ask questions about his job, his income, his family situation.
  • Ask for official documents : payslips, tax notices, bank guarantees.
  • Fill out a form with personal information and references from previous accommodation.
  • Add a solidarity clause in the lease to make the roommates responsible. 
  • Require a deposit of guarantee of 1 to 2 months of rent. This will cover any unpaid bills or damages.
  • Do a credit check with the bank and check the background.
  • Prioritize tenants with a permanent contract and a net salary equal to 3 times the amount of rent.
  • Beware of potential bad payers: over-indebted, banned from banking, employees on probation.

Take the time to carefully study each file to find the right profile. Your efforts will be rewarded by tenants who respect your property.

🌿 Establish comprehensive leases

Once your tenants have been chosen, it's time to write the leases. It is a legal document which establishes the rights and obligations of each. A complete and detailed lease is essential to prevent any dispute.

Here are the clauses to include:

  • Precise identification of the parties: names, addresses, marital status.
  • Description of the rented property : address, surface, number of rooms, equipment.
  • Monthly rent and terms of payment: due date, method of payment, late payment penalties.
  • Lease term and conditions of renewal or termination.
  • Amount of security deposit and return conditions.
  • Obligations of the tenant : routine maintenance, rental repairs, home insurance.
  • Obligations of the lessor: major works, property tax, management of common areas.
  • Termination clause in case of successive unpaid after formal notice.
  • The liability clause event of damage or disaster.
  • Clause on the conditions of entry into the premises and inventory.

Reread the signed lease carefully to check that no important point has been forgotten. Do not hesitate to consult a lawyer in case of doubt. A full lease will protect you in the event of a dispute.

🌿 Maintain the accommodation well

The regular maintenance of the accommodation guarantees the longevity of the property and the comfort of the tenants. Make a detailed inventory at the entrance and keep it carefully. This is your reference in case of dispute.

Have an overall technical diagnosis carried out including insulation, electricity, gas, plumbing. Correct defects before rental. Draw up a maintenance log listing the equipment and its inspection date: boiler, VMC, smoke detectors, etc. Respect the legal frequencies.

Plan an annual budget for minor repairs and the replacement of obsolete equipment: faucets, switches, small household appliances. Encourage your tenants to report any anomaly, even minimal. React quickly.

Make regular visits at least twice a year. Check the general condition and the risks of abnormal wear. Call on qualified professionals: plumber, electrician, painter, gardener as needed.

Well-maintained accommodation can be rented out more easily and at higher rent. It is a profitable investment. Your tenants will be more respectful of an apartment in good condition.

🌿 Ensure rigorous administrative follow-up

Administrative management is time-consuming but essential. Systematically register leases with the tax authorities on time and keep all supporting documents: inventory, invoices, rent receipts, letters from tenants.

File documents by tenant in dedicated folders, physical or digital. Relaunch them quickly in the event of non-payment: email, SMS, registered letter with AR.

Edit the monthly rent receipts: payment received, date, signature of the tenant. Declare precisely your rental income and charges in your tax return. Keep the supporting documents.

Pay the property tax and condominium fees by the deadline. Avoid penalties. Also take out unpaid rent insurance and non-occupant owner insurance. Respect your legal obligations as a landlord: housing decency, urgent repairs, etc.

You can subscribe to rental management software to centralize all the data. Perform regular file backups. The meticulous administrative follow-up will protect you from unpleasant surprises.

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🌿 Prevent and manage outstanding payments

Despite all your precautions, unpaid rent may occur. React immediately so as not to suffer too great a loss of income. What are the best practices ?

In case of delay, contact the tenant quickly by phone to understand the situation. A temporary personal or professional problem may have arisen. Be understanding but firm about the obligation to pay.

Si the delay exceeds 8 days, send a follow-up letter with AR. Claim payment within 7 days and the late payment penalties provided for in the lease.

At the 2nd incident of unpaid bills, demand an appointment with the tenant to find a solution: payment schedule, financial assistance from a loved one, etc.

In case persistent arrears, send a formal notice with AR and issue an order to pay. Enter the over-indebtedness commission if necessary.

Start eviction proceedings if the situation persists. The tenant must leave the accommodation following the eviction judgment. Call a bailiff if necessary.

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Use the security deposit to offset unpaid rent and re-let quickly. Report the accident to your unpaid rent insurance. You will be compensated according to the terms of the contract.

Thanks to your responsiveness, outstanding payments will remain occasional and limited. Learn from each negative experience to improve your procedures. Over time, you will become a seasoned rental manager!

🌿 Closing

Serenely managing a rental property requires method and rigour. But it quickly becomes second nature when you follow good practices.

By choosing your tenants carefully, by drafting complete leases, by regularly maintaining the accommodation and by ensuring rigorous administrative follow-up, you will minimize the problems.

Of course, unforeseen and unpaid can always arise. The key is to react immediately to limit the damage. Have the right reflexes thanks to well-honed procedures.

Effective management of a rental property requires work, but it will allow you to serenely enjoy the rents generated, month after month. It's an investment profitable in the long term that contributes to your wealth.

You now have all the keys in hand to become a model landlord ! However, it doesn't end there, you need to learn how sell your real estate property.

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FAQ

Q: How to choose a property with good rental potential?

A: Choose popular neighborhoods, close to transport and amenities. Check the profitability potential. Estimate renovation costs and charges.

Q: What are the key points of the rental lease?

A: Clearly define the duration, the amount of rent, the obligations of the tenant and the owner, the conditions of termination. Carry out a detailed entry and exit inventory.

Q: How do I set the rent amount at the right level?

A: Analyze the surrounding rental market. Set a rent slightly lower to ensure the competitiveness of your property. Update the rent when the lease is renewed.

Q: How to properly select your tenants?

A: Ask for solid guarantees (deposit, guarantor). Verify income, rental history and recommendations. Show to motivated and respectful tenants.

Q: What insurance should I choose for an empty rental?

A: Unpaid rent insurance is essential to protect against unpaid debts. Complete with non-occupant owner insurance and rental guarantee.

Q: How do I manage maintenance and repairs?

A: Anticipate by carrying out a complete check-up and regular maintenance work. Establish a contingency fund. React quickly in the event of a problem.

Q: How to optimize your taxes?

A: Declare your rental income. Deduct charges, work, loan interest. Opt for the real regime to optimize deductions.

Do not hesitate to seek professional support if necessary. And most importantly, keep the end goal in mind: offer quality housing to your tenants. Before you leave, here's how Live from your website in 3 months

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