Are you struggling to manage your rental properties profitably? Many first-time investors attempt DIY property management to maximize profit margins. However, this strategy tends to cost more than it saves.
Starting and managing a successful residential rental business requires attention to customer service, communication, marketing, and more. As a busy investor, you don’t have time to attend to all of these needs and grow your portfolio. That’s especially true when you’re running a vacation rental business, but even traditional rentals require active management.
If you want to run your investment properties as an income-generating enterprise, you should enlist in services and tools that will help you along the way. Cottage & Co Real Estate recommends the following resources for tips and guidance.
You need help running your business, but where do you find it? Here’s what to know about finding quality hires for your company.
● Bad hires are costly for small businesses. The Realty Medics notes that’s why many investors opt to work with property management companies.
● Vacation rental companies, in particular, need a reliable cleaning crew. Outsourcing to a third-party cleaning service avoids coverage problems related to personnel turnover. However, larger businesses may opt for in-house cleaning staff.
●You should keep some professionals on a steady schedule, including those who can provide pest control, HVAC tune up, and lawn service, as well as those who need to be on standby (repairmen, plumber, electrician, roofer, etc.).
● Work with a trusted real estate agency like Cottage & Co Real Estate, who specializes in vacation cottages as well as traditional real estate, to help you find your ideal property.
●Take the necessary steps before hiring employees. Employers are required to register with their state, apply for an Employer Identification Number, and establish a payroll system for withholding taxes, among other legal requirements. Check with the state of Maine to see wh
at’s required for forming your business.
● Some companies hire independent contractors to circumvent payroll processing; just be sure to but avoid misclassifying employees as independent contractors if you don’t want trouble with the IRS.
Payroll software is something every business needs. However, there are some tools that are specific to managing rental properties. Here’s where to invest your tech dollars to build an efficient rental business.
● The leading property management systems let landlords manage all aspects of a rental property, including tenant screening, maintenance and inspections, and financial tracking.
● Avail notes that evaluating prospective tenants is critical to the success of traditional residential rentals. RentPrep and TransUnion SmartMove are among the leading screening services today.
● In order to remain profitable, it's wise to invest in software that lets you monitor your cash flow. Specifically, you can look at cash flow forces and trends, make trend comparisons based on different reporting time periods, and quickly spot changes to your cash flow.
● Vacation rental hosts have no shortage of choices when it comes to software. These tools make it easy to manage listings across multiple channels, process bookings and payments, and automate routine tasks like guest communication and housekeeping.
Reputation matters in real estate. Whether they’re staying for a year or staying for a week, tenants want to know that a property manager is looking out for their best interests and not just the bottom line.
● Start by setting the right rate for your rentals. Looking at comparable properties is a reliable way to estimate a long-term rental’s market rate, but pricing vacation properties is trickier. Understand what makes your rental unique, and Evolve suggests using dynamic pricing to maximize revenue throughout the year.
● Building a strong business requires more than getting customers in the door. You also need exceptional customer service to keep your best tenants coming back. That includes attending to maintenance requests in a timely manner and asking for (and responding to) feedback.
Managing rental properties requires more than an eye for good investments. Like other businesses, the success of your rental investments depends on your ability to streamline business operations, surprise and delight customers, and preserve your business’s reputation.