With home costs continuing to rise and U.S. housing affordability at an all-time low, many of today’s consumers have moved into the rental market. While fix and flip investments remain highly profitable, many investors have pivoted into the single-family rental market.
These industry dynamics have created a surplus of soon-to-be first-time landlords. Success as a rental property investor and landlord hinges on your ability to:
- Properly research and evaluate the market
- Routinely audit and update tenant screening and application processes
- Understand and maintain regulatory compliance
- Be proactive with maintenance
- Keep positive relationships and communications with tenants
- Secure the right rental property financing
While it may seem like a lot, taking the time to find the right property and learn how to be a successful landlord pays dividends. The following property investment tips for landlords will help guide you to rental and financial success:
Finding & Securing the Right Property
Long before you start checking boxes off your first-time landlord checklist, it’s essential to find the right property to invest in. With the rental market heating up, it’s important to do your due diligence, researching the best areas for rental properties in 2024.
To uncover emerging neighborhoods and profitable markets, look for rental area hotspots with:
- Bustling job markets
- Population growth
- Housing affordability
- Low unemployment rates
Once you have identified the right market and property, it’s important to secure flexible business purpose loans through private lenders to ensure fast, flexible funding. By teaming up with a reliable capital partner, you can renovate the property to meet the needs and wants of today’s consumers.
With 66% of today’s homebuyers considering sustainability during the home buying process, and smart technology becoming a necessity in today’s market, smart, energy-efficient, and eco-friendly home improvements are highly coveted. These features can attract tenants and boost your monthly asking price.
Auditing Tenant Screening & Application Processes
For first-timers, one of the biggest adjustments to becoming a landlord is the process of finding, vetting, and approving tenants. As a landlord, the burden falls on you to pick the right occupants for your property.
Missed monthly payments–or refusal to pay–or unruly, destructive tenants can quickly turn a prime rental investment into a money-draining nightmare. Implementing effective tenant screening is the cornerstone of successful property management.
Utilizing tenant screening technology simplifies the tenant screening process, but it isn’t a set-it-and-forget-it process. Like the real estate market, screening processes must be monitored and adjusted to keep up with evolving tenant and regulatory requirements. This is to ensure you are maintaining an unbiased, inclusive screening process.
Adding annual tenant screening and application audits to your rental property business plan:
- Ensures you are approving reliable tenants
- Helps maintain legal and regulatory compliance
- Minimizes tenant turnover
- Enhances neighborhood and property safety
The transition into property management and learning how to become a successful landlord can be a lot. Recurring screening and application audits are an easy way to protect your investment and gain peace of mind.
Maintaining Rental Compliance
Rental property regulatory rules and guidelines are constantly changing. From fair housing laws to data protection rules, navigating the evolving regulatory challenges in the residential rental property market consistently and accurately is essential to becoming a successful landlord.
Here are a few quick tips to help streamline rental compliance:
- Stay up-to-date on evolving fair housing regulations, eviction moratoriums, and tenant protection laws.
- Familiarize yourself with long- and short-term rental laws specific to your property’s jurisdiction.
- Look to partner or seek guidance from local and accredited affordable housing organizations.
- Work closely with experienced architects, engineers, and contractors to avoid code violations.
- Implement thorough cybersecurity software and protocols to protect tenant and personal data.
Become a Proactive Landlord
You never know what troubles lie around the corner, especially when maintaining a rental property. What makes a good landlord great is a proactive approach to repair and maintenance. Start by researching vendors beforehand, and familiarize yourself with local plumbers, HVAC professionals, and other handy(wo)men in the area.
Communication with tenants should be a main requirement of a landlord. Open communication minimizes repairs and ensures tenant satisfaction. Equip your tenants with the knowledge necessary to maintain certain appliances. Inform them on how to operate the garbage disposal, when and how to change HVAC filters, and other household maintenance needs.
Maintain a Positive Tenant / Landlord Relationship
Maintaining regulatory compliance and being a proactive and communicative landlord will help facilitate the tenant-landlord relationship. Build on that by striking the right balance. Don’t be so strict and unwelcoming that your tenants fear you. That’s how damages get swept under the rug or exacerbated. However, you don’t want to act like one of their buddies because that’s how monthly payments get missed and overlooked.
Striking the right balance in your relationship with your tenants will help you figure out how to make money as a landlord effectively. Additionally, it will help you avoid the challenges of unruly, disrespectful occupants. Ensure your tenants are comfortable and listen to their needs. Be transparent about what you are responsible for (landscaping, changing lightbulbs, etc.), when rent payments are due, and any late payment penalties. This will create a respectful and trusting tenant-landlord relationship.
Secure Reliable Rental Financing
Most rental property investments require renovations before and after it goes to market. Landlords wondering how to start a rental property business that entices the right tenants, while also maintaining regulatory compliance and facilitating profitability and scalability, should secure flexible long-term rental loans through private lenders.
Traditional lenders, like banks and credit unions, come with extensive oversight, specific credit and downpayment requirements, and difficult approval processes. Private lenders, on the other hand, can offer:
- Flexible financing options
- Fast approval times
- No prepayment penalties
- Eligibility for investors with low credit or no downpayment
By taking advantage of private rental financing, landlords gain:
- The flexibility necessary to maintain compliance
- Access to additional funds for property renovations
- Liquidity to maintain cash flow and grow your portfolio
Finance of America Commercial: The Capital Partner of Successful Landlords
Finance of America Commercial (FACo) offers the most reliable and flexible long-term rental financing options on the home rental market. With several different term, rate, and prepayment loans available, our professionals will put you on the path to rental investment success.
Finance of America Commercial’s Rental Portfolio and Single Rental loan options offer:
- Competitive 30-year term loan options
- DSCR with no W2s, paystubs, or tax returns required
- SFR, warrantable cons, townhomes, PUD, and 2-4 units eligibility
Learn how to be a successful landlord by starting with the best financing from the best residential rental capital provider on the market. CLICK HERE to schedule a FREE consultation with a FACo loan expert today!
