8 Killer Management Tips for New Real Estate Investors

Once you purchase and close the deal on your first real estate investment, you virtually become the CEO and managing partner of your own small real estate investment business.

Of course, you feel good about becoming a landlord and owner of your own private moneymaker. But unless it's raw land, your work has just begun. Now you must manage the property. You are a real estate investor who has chosen the renting of space as a business, therefore your goal now is to keep the units full, and at the highest rent per square foot possible. In other words, now it's time for you to focus on property management and the day-to-day activities of running the property.

In this article, we want to consider some basic property management principals that anyone connected with real estate investing should understand and implement.

1) Property condition - Getting the best tenants and commanding the highest rent is the primary goal of property management. It starts with a sharp-looking building that has good curb appeal; you must keep the structure, landscaping, common areas, and parking in good clean condition. Landlords must present a product that is clean and sanitary to new potential tenants so get prepared to purchase mops and brooms regularly because smart real estate investors make every effort to maintain and improve the property.

2) Tenant applications and screening - Require each potential tenant to complete an application and then follow up to verify their employment, rental history, and credit and criminal history. Remember, it's always easier to get tenants into your building then it is to get them out. It's recommended that you avoid department store rental applications and obtain the forms from your local apartment owners association. If you haven't already done so, check online for the apartment owners association nearest you and contact them. They are one of the best organizations real estate investors can join.

3) Emergency repairs - Always have reputable maintenance personnel on call to service emergency repairs. Whether you want to do it or hire someone, your tenants must have access to a repair "help line" they can call 24/7 and report something that must be fixed immediately. Remember, your tenants are your best clients, and you are in a unique business that requires your client to pay you money to use your product. And if you want to build cash flow to maintain the property and put money in your pocket, you need your tenants. Keep your tenants happy by listening and responding.

4) Aggressive marketing of vacancies - Get the word out about an upcoming vacancy instantly. Use signage, advertise in the newspaper, post flyers, offer a modest referral fee to existing tenants, or post it on the web. Signs and banners displayed out front are a proven way to find tenants who might want to rent your vacant units. Just avoid cheap-looking, poorly worded signs. Take a few extra minutes to show that you take pride in your building and care how it appeals to others.

5) Move-in/move-out coordination - Always get a vacant unit ready to rent within a day or two after it becomes vacant. If you have tenants ready to move in, they usually want to move in as soon as possible. Even when you don't have a new tenant in the wings, it's much easier to rent a unit that's clean and ready to move into. Things such as dirty carpet, scuffed paint and walls, torn screens, broken or faulty appliances, and so on should be corrected and repaired. You might not want to show the unit until it's ready. In the meantime, simply show a prospective tenant the manager's unit if there's one available.

6) Keys and locks - It is always a good idea to change locks each time you have a turnover in tenants. This added security is good for you and your new tenant. Once the existing tenant vacates the unit, simply call a local locksmith and change the locks. The cost is minimal and the benefit optimal.

7) Learn the laws about eviction - Even when you think it might not be necessary, know what you must do to evict a deadbeat tenant. This way, should you do find yourself in court with your tenant, you'll be prepared. Unfortunately, many states have passed laws that don't favor the landlord. Low-income tenants, for instance, have generated a tremendous amount of sympathy that requires landlords to be extra meticulous in their defense against complaints that wind up in court.

8) Keep accurate books and records - Maintaining a good income and expense history is vital to your rental property business and the cornerstone to profitable real estate investing.

Okay, now here's an alternative to self-managing your investment real estate.

Many real estate investors simply turn their properties over to professional management companies. The advantage being that it relieves the real estate investor of the time and stress of having to deal with tenants and repairs, and puts matters like late rents into the hands of experts. A professional management company is not free, and in cases the idea of having to pay an outside fee for professional property management might not be palatable or even justifiable. But hiring a professional property management company is a reasonable option for investors who dare not or cannot manage the property themselves.

Should you account for property management during your property analysis?

Yes. If you're purchasing rental income property, during your cash flow analysis (whether in a spreadsheet or with real estate investment software) be sure to include 5 to 10 percent of the gross operating income to cover potential property management fees, even if you plan to self-manage the property. Here's to your success.