When it comes to investing in rental properties, purchasing the property is only the first step. To put your investment to work for you, you’ll need to find a tenant and rent the place out.
With tenants comes the risk of rental property damage. This can range from a mild annoyance such as walls that need to be patched or repainted, all the way to major problems such as water or fire damage. While you can’t avoid 100% of rental property damage, here are some tips to help you minimize it, as well as what to do should a problem occur.
Choose Your Tenants Carefully
Most landlords ask for a damage deposit when they rent a property out, but if major damage is done, this deposit will only cover a fraction of the repair cost. The best way to deal with rental property damage is to avoid it altogether. You’ll find that by choosing responsible tenants, the likelihood of property damage drops greatly.
How do you find good tenants? First of all, by being a great landlord and making your property high-quality and attractive to the best tenants. Next, you’ll want to ask for references to learn a bit more about potential renters. Also, run a credit report to determine how responsible they are (as well as verify any previous addresses they’ve provided you on their application).
Foster Good Communication
Just as with your primary residence, a small problem that goes unrepaired in a rental property can turn into a big issue overtime. One great example of this is a leak — either from the roof or a damaged pipe. If your tenant contacts you when they first notice a sign of moisture or hear a drip, drip, drip, there’s a greater chance of fixing the problem before wide-ranging damage is done.
If you don’t have a good relationship with your tenants, however, you run the risk of them not treating your rental property like it’s their own home. Once you find a good tenant, do all you can to foster a great relationship and open communication with them. It’ll make their stay more pleasant, and it will also make it easier for you to discover and deal with small issues before they turn into huge problems.
Take Care of Maintenance
If you’re doing your part in being an excellent landlord, this topic will already be covered. However, if you aren’t already, you must start taking care of everyday maintenance items. This includes things like keeping gutters cleaned and trimming back dead trees that may threaten the property. From rickety stairs to old kitchen appliances that may pose a fire hazard, ensure that all parts of your property are in good working condition for the safety of your tenants and to maintain the value of the property itself.
What to Do if Rental Property Damage Occurs
Sometimes, even if everyone is on their best behavior, property damage will occur. A fire could break out due to faulty wiring in an appliance or a natural disaster may strike, causing water or structural damage.
If this happens, you’ll want to protect your investment with the right insurance coverage. Property, casualty, landlord liability and general liability coverage will help cover the basics. You can also add personal liability insurance and an umbrella policy that expands your landlord coverage. Good communication with your tenants, as discussed earlier, will also help as you work through repairing the damage and (hopefully) getting them back into their home as soon as possible.
Cover All Your Bases With a Property Management Company
Most folks who own investment properties don’t have the ability to become a full-time landlord. Screening tenants, keeping in touch, and taking care of maintenance and repairs is time-intensive, not to mention finding and securing the right insurance to ensure that you have the proper protection.
That’s why many rental property investors rely on property management companies to assist them in managing their assets. From finding the right tenants to managing the house if rental property damage occurs, having someone to keep track of it all turns a potential full-time job into something that is a wonderful way to generate passive income.