Investing in and managing your own rental properties in Southern California is admittedly an incredibly challenging process. However, being a rental property owner can be quite rewarding when done strategically. Specifically, if you chose to manage your own investment property in lieu of hiring a professional property management company, you will have to wear multiple hats and take on various roles.
Below we will discuss the top things you need to know about managing your own multifamily rental property in 2021.
Purchasing The Right Rental Property
Before you even officially become a landlord, your first major decision will be selecting a profitable rental property. To do this, you must conduct comprehensive due diligence. It’s especially important that you don’t skip this step. At the bare minimum, you should review the investment property analysis and the market analysis for Los Angeles and Orange County to get a better understanding of how the property will measure up financially. This advice is still applicable whether the property is primarily commercial, residential, or mixed-use.
Understand Your Local Laws
One of the biggest mistakes that new landlords make is not knowing and understanding their local laws. Specifically, as a landlord, you must first understand real estate laws and California laws as it pertains to leasing, discrimination, and lease agreement provisions. Next, you must understand the eviction process and what behaviors the tenant may be evicted for under California law. It is best that you work with an experienced California real estate attorney who has experience in Los Angeles and Orange County. They will be able to keep you up-to-date on your local laws and explain to you how to conduct a legitimate rental business. Not following the laws, even if by mistake, can be very costly and could result in fines, lawsuits, and penalties from tenants and local government agencies.
Overall, having a firm understanding of the local laws can prevent costly lawsuits against your property management firm.
Optimize Rents And Minimize Risk And Expenses
When managing your own rental property, you must understand the property’s income and expenses so that you can optimize the building’s rent roll. Specifically, you must ensure a steady cash flow to pay property bills, such as property taxes and property insurances. To increase your cash flow, you should aim to lower the property’s vacancy rate. This shouldn’t be too challenging in markets like Los Angeles, where there is a steadily high demand for affordable housing. Setting the correct rental rate is an art form. You want to ensure that you’re not overcharging or undercharging tenants.
Another way that property owners can optimize their rents for properties located in Southern California is to ensure that their properties are well maintained. Well maintained properties can demand higher monthly rents. Specifically, addressing smaller repairs before they become larger issues is the best strategy to minimize costly repairs and renovations down the road.
Have Up To Date Disclosures And Lease Documents Handy
In addition to understanding local and federal laws that are applicable to your property, you should also ensure that you have up-to-date disclosures and lease documents, as required by law. Most property managers and owners have an attorney or legal consultant to ensure that that they are complying with the applicable laws as tenant screening is a highly regulated aspect of property management. Additionally, real estate agents and brokers can likewise provide some guidance regarding the required disclosures and tenant screening process.
Once you have found a suitable tenant(s) for your property, you must have an attorney-reviewed lease agreement that you can utilize for all of your tenants. At the bare minimum, your lease agreement should address things such as when the rent payments are due, security deposit, tenant responsibility, move-in, and move-out procedures, and eviction procedures. However, most lease agreements require additional provisions and riders depending on where the property is located. An experienced real estate attorney can help with this.
Refine Your Time Management Skills
Depending on how large your property is, more than likely, managing it will take a significant amount of your time. As such, you must develop impeccable time management skills. Specifically, having access to professional property management software is a great way to keep track of important documents, disclosures, management fees, and rent payments. This alone saves you a lot of time. Also, hiring a support staff that you can delegate certain activities to, also saves you time when managing your own properties.
Set Rules And Regulations For Your Property And Tenants
From the very beginning, you must make it clear to your tenants how you expect to be paid your monthly rent. You should also clearly lay out the tenant’s obligations pursuant to their lease agreement. For example, you can set a clear rent collection process and offer multiple ways that tenants can pay, like allowing tenants to pay their monthly rent online. It may also be a good idea to attach a lease rider detailing the building’s rules for things such as parties and guests. Finally, ensure that you are prepared to take legal action and move forward with evictions when tenants become a problem.
Hire An Experienced Team
Even if you decide to be in control of your property management services, you still need to hire an experienced real estate team in your area. This team may include but is not limited to real estate agents and brokers, attorneys, accountants, general contractors, cleaning services, and a professional property management company. A good team will save you time and money and will make the process much more manageable and stress free.
Overall, being a landlord, owning investment properties, and managing renters are not for the faint of heart. Property management is multifaceted and requires years of experience and training. Commercial property management and residential property management in Los Angeles and Orange County each come with their own challenges. Generally speaking, there is a steep learning curve for new property owners, no matter their niche. In the event that managing your property becomes overwhelming, or you simply want to enjoy passive income from your investment property, you can always hire an experienced Southern California property management company like us to take over the day-to-day operations of your property. This will ensure that your property runs smoothly.
Give AllView A Call!
AllView Real Estate Management is Orange County’s premier property management and investment firm. We offer not only exceptional property management, but also real estate investment consulting and management. Call us at (949) 400-4275 or send us an email at email@example.com for real estate investment expertise.