Rental properties are one of the best ways to earn passive income and build wealth, but “passive” is a little misleading—it can still be a substantial amount of work. However, with a little planning and dedication, you can run your properties efficiently while also keeping your tenants happy.
Treat it like a business Successful businesses have plans and procedures that keep things running smoothly, and the same should be true for renting and managing your properties. That means committing to customer service, outsourcing work appropriately, and paying close attention to income and expenses. Don’t just assume that you’ll collect a check each month and everything else will be a breeze.
Thoroughly vet your tenants Collecting applications, interviewing tenants and checking references mean a lot of legwork up front, but it’s worth it in the long run. Choosing the right tenant could mean going years without incident—no late payments, no legal issues, and no property damage. Choosing the wrong tenant could mean monthly calls and visits to collect late rent, expensive property damage and repairs, eviction processes, court dates, and a whole lot of stress.
Make sure your lease is rock solid Lease agreement laws vary from state to state, so don’t cut corners—find a lawyer who specializes in lease agreements. You’ll be glad you were thorough if you ever have legal issues with a tenant.