Acquiring real estate with the aim of leasing it can be an effective way to generate long-term passive income. However, in order to reap the rewards of this investment, it is crucial to implement property management that ensures profitability.

1. Property Management: Choosing Tenants

Choosing tenants is a crucial step in property management. It is essential to conduct a thorough evaluation of candidates to ensure that they are reliable and solvent.

Performs background checks, references, and ability to pay. Don’t get carried away just by the urgency of occupying space. It is preferable to wait for a suitable tenant than to regret a hasty decision.

2. Preventive maintenance of the property

Conducts regular inspections and attends to any issues in a timely manner. Investing in preventive maintenance can avoid major expenses in the long run. For example, if you have land on the beach, be sure to conduct inspections after the rainy season to prevent structural damage.

This not only strengthens your reputation as a landlord, but also encourages long-term tenant retention. These details can translate into greater financial stability for your projects, in case you are planning to invest in properties in the future.

3. Communication: Key in Property Management

Assertive communication is an essential part of property management. This can help resolve conflicts before they become more complex situations. For example, if a tenant informs you about a leak in their unit’s plumbing, act immediately. This shows your commitment.

However, effective communication goes beyond problem solving. It involves being available to answer questions, listen to concerns, and provide relevant information. Keeping your tenants informed about property policies, maintenance procedures, and coexistence expectations creates an environment of transparency.

4. Updating of rents

The real estate market is constantly changing. Therefore, it is important to keep your income updated in line with trends and inflation. Avoid the common mistake of keeping rates stagnant for long periods, which could affect your profitability in the long run.

Research the local context and adjust the rates established in the lease according to demand and supply. For example, if you notice an increase in demand for properties similar to yours in a townhome complex, consider raising the rent to reflect this increase in market interest.

Of course, also keep in mind that there are laws that regulate these movements. While in Florida there are no rules that establish the maximum value or frequency with which increases can be made, there are regulations regarding the written notice that must be given by property owners.

Here’s how it works:

  • If the contract is weekly, notice of the increase must be given at least seven days in advance.
  • If the contract is monthly, notice of the increase must be given at least fifteen days in advance.
  • In rental agreements of one year or more, the rental can only be modified at the end of the rental period or according to the terms specified in the contract. (Maslow, 2023).

5. Contingency reserve

Unexpected expenses, such as major repairs or vacancy periods, can impact your cash flow. Keep an emergency reserve that allows you to cover them without compromising the profitability of your properties.

Thus, if one of your tenants suddenly leaves the property, you will have a financial reserve. This will allow you to meet the expenses so that a new tenant can settle as soon as possible without inconvenience.

Beyond the numbers in the financial statements, effective property management encourages the creation of secure and calm relationships with your tenants. Secure your fruits in the long run!

References

  • Indeed (2022) What Are Property Administration Resume Skills? (Examples). Indeed,
  • Maslow, J. (2023, April 23). Florida Rent Increase Law: Essential Guidelines and Impact on Tenants. Legal Scoops.