After finally saving up enough money to use as a down payment, I decided that it was time to hit the market. I met with a lender, got pre-approved for a loan, and then started visiting different properties. However, I quickly realized that I didn't know as much about real estate as I would have hoped. I wanted to find a great neighborhood and know what to ask the professionals, but I could tell that I needed a little help. To point me in the right direction, I started working with a great real estate agent who was familiar with the area. This blog is all about educating the general public on real estate matters.
When you are a novice landlord, finding ways to manage your cash flow and profits can be tricky. It requires you to set up a great system for managing your money in order to make property management run smoothly. Here are some things that you can do to improve your money management as a landlord.
Hire a Property Manager
The first thing to do if you're concerned about money management is to hire a property manager. While they will take a small cut of your rental income, they can make your income much more reliable and problem-free. For instance, a property manager can provide a lot of authority and know-how when you're dealing with a tenant who won't pay. They can manage vacancies quickly so that you don't lose too many months of rental income. They'll also help you manage repairs, tenant complaints and other problems so that you don't lose renters and experience problems with cash flow.
Instate Strict Policies
Another thing that you must do as a landlord is to keep strict tenant policies to protect your income. This includes setting a strict late payment fee to heavily discourage late payments. A strict eviction policy is also key; evictions can take some time, and during that time you'll be losing even more rent. Your property manager can help you to enforce these policies using phone calls and notes to the tenant (according to your written policies) as soon as they are late with their payments.
Set the Right Budget and Have Backups
Another problem that you may experience is that the income process doesn't go as smoothly as you would hope. There can be many ups and downs as a landlord, so you'll need to make sure that you have a good savings fund to keep your property afloat in case of prolonged vacancies, property damage, or costly repairs. Otherwise you could experience penalties on your mortgage, lawsuits from tenants who are seeking repairs, or further property damage from not fixing problems up front. The best thing to do is to speak with your property manager to create a budget for your property that accounts for these disasters, and make sure you have enough cash set aside.
In order to have a positive cash flow and ensure that you're making the profits you anticipate, it requires you to put many moving pieces into place and secure great tenants and contractors. This can be a challenge for many new landlords, but there is always help from an experienced property manager if you need it. The best thing that you can do is to put great management policies in place from the beginning and work with reliable people.Share