The term “Landlording” is not commonly used in the Philippines but this is also known as Property Management. If you own a piece of property and you are renting it out or you are managing it for someone else, then you are in the business of “Landlording”.
Landlording is the BUSINESS of protecting and growing ones property through the careful placement and overseeing of tenants. Again, it could be your own property or other people’s property. Noticed that I capitalized the word BUSINESS, because whether you realize it or not, you are running a business. It is very important to understand this fundamental concept from the start before owning rental properties because most have a tendency of running it like a hobby.
Investing in rental properties doesn’t end with investing. You can invest in stocks, gold or mutual fund without much management but real estate is a different animal. You cannot just invest in rental properties, sloppily put a tenant and hope that it smoothly produces for you without head aches. It needs to be managed well by having a good system and process in place.
Also, the success of your investment does not depend on the board of the directors or the market, it’s success is dependent on it’s manager. When I say manager I mean the owner or a professional property manager. Which is good thing because that means you have full control.
Some real estate investors are lucky to find a really good deal that significantly increases their net worth overtime but without effective management this great deal will become a source of misery and frustration.
Like I said earlier, most owners are running their properties like a hobby and this is a disservice to them and the tenants. They’ll fail to find good tenants and good tenants will become frustrated, creating animosity and stress.
Ok, you might be thinking that I keep talking about effective management and you’re wondering if there’s any real value you can get from this article. Ok here it is… to give you a good grasps of what what common tasks involved in a “professionally run” rental property, I will list it down for you. 🙂
Common tasks of a Professional Landlord
- Preparing a property for rent
- Collecting the forms needed for the business
- Create digital marketing collateral (e.g. Professional Photos, Virtual Tours, Video Tours, Landing Pages etc.)
- Placing ads online. With beautiful photos and persuasive copy writing.
- Placing signs in the yard or at the window of the condominium unit
- Determining fair market value
- Determining security deposit amount
- Setting minimum qualification standards to be met by prospective tenants
- Taking phone calls from prospective tenants
- Pre-screening tenants
- Scheduling appointments to show properties
- Meeting with prospective tenants
- Answering questions about the property or the community
- Selling the features of the property. In other words persuading them to rent your property.
- Distributing and accepting application (This and #15 make sense only if your unit is in high demand)
- Further screening the tenants by verifying their income
- Call previous landlords.
- Approving great tenants
- Denying tenants
- Accepting reservation fee
- Schedule signing of lease agreement
- Sign the lease agreement and it’s supplements
- Inspect and produce a report of the condition of the property before they move-in
- Have the move-in condition report signed by the tenant
- Accepting rent and depositing rent to the bank
- Have the lease agreement notarized and give copies to all parties
- Creating a tenant file to house their information
- Accepting phone calls from tenants
- Dealing with maintenance requests
- Settling disputes between tenants
- Raising the rent when appropriate
- Ensuring tenants comply with their lease
- Ensuring tenants keep the property in good condition
- Scheduling regular inspection of the property
- Finding and maintaining a list of reputable contractors
- Managing contractors to make sure the work gets done
- Checking the progress on any repairs and ensuring tasks are completed
- Paying contractors
- Dealing with late rent and getting the required legal form served
- Evicting bad tenants (but this should be minimized by the screening process)
- Making sure that the property is operating in compliance with the city’s ordinance
- Bookkeeping to keep track of income and expenses
- Keeping a record of tenant communication
- Monitoring the bills that are supposed to be paid by the tenant
- Monitoring and paying the bills outside of tenant’s scope or account
- Performing a move-out inspection after the tenant vacates the property
- Handling the repairs or repainting after the tenant moves out
- Getting the tenant’s security deposit returned or applied toward repairs.
- Scheduling a cleaner or someone to change the locks
- Keeping the tenant happy as much as possible
- If managing for other landlords, keeping owners happy as much as possible
- Keeping the property running at peak performance
- Starting back at the beginning of the list and doing it all over again for each property (LOL!)
Whew! that’s a long list. From the outside, people thinks that Landlords simply just collect rent and do repairs, but there’s really more to that under the hood.
For would be Landlords, I did not make this list to scare you but to give you idea of all the moving parts. A lot of it are not that tedious and I just simply broke them down to a granular list. The good news is, this becomes easier and repeatable after a few lease term. I’ll be touching on each of those item in my succeeding posts. Most of you might enjoy the process of learning, but for those who are for sure will not like the learning process, it is possible to compress this list into 1 line item… hire a professional property manager.
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