When you own a rental property, you have to treat it like a business (not a side hustle). And like any business, your investment needs to be protected if you want to grow it, profit from it, and sleep well at night.
The truth is, a lot can go wrong with a rental property. From problematic tenants to costly repairs, what starts as a minor issue can quickly become a big deal.
If you want your rental to generate income long-term rather than drain your bank account, you need to be proactive. These six strategies will help.
- Take Tenant Screening Seriously
Your biggest risk isn’t the building – it’s the people living in it. A bad tenant can trash your property, skip out on rent, or even drag you to court. That’s why tenant screening has to be one of your biggest focal points.
Always run a full background check, verify income, and check rental history. You should also go the extra mile and call previous landlords and ask questions about the tenant’s payment habits, cleanliness, and whether they followed the terms of their lease. At the end of the day, you’re looking for someone who will treat your property with respect.
If you’re not comfortable handling this process yourself, this is one of many areas where a property management company can step in and help.
- Keep Your Insurance Up to Date
You’d be surprised how many landlords discover (much too late) that their policy doesn’t cover the things they assumed it would. Your standard homeowner’s policy won’t cut it once you start renting the property out. You need a landlord insurance policy, which includes protection against property damage, liability claims, and loss of rental income due to covered events.
As your rental business grows, revisit your policy. If you’ve made improvements or added amenities, you might need to adjust your coverage. A good insurance broker can help you identify the right policy for your specific situation.
- Conduct Regular Inspections
You don’t want to find out after a tenant moves out that there’s mold in the bathroom, holes in the walls, or the HVAC hasn’t worked in months. Schedule regular inspections – at move-in, move-out, and ideally once or twice during a lease term (with proper notice, of course).
This isn’t just about keeping tenants accountable – it’s about catching small issues before they turn into big ones. Water damage, pest infestations, and broken appliances are easier and cheaper to deal with when caught early. Plus, you’ll get a better sense of how the tenant is caring for the property and whether they’re likely to renew.
- Hire a Property Manager
If you’re juggling multiple properties, a property manager can be your best defense against risk. They’ll do everything from screening tenants and collecting rent to handling maintenance requests and coordinating repairs.
A good property manager really helps in a variety of ways, including reducing vacancy rates and increasing tenant satisfaction. And because they’re familiar with local landlord-tenant laws, they’ll help you make sure your operation stays compliant. (Yes, they take a percentage of your rental income. But in most cases, the peace of mind and increased efficiency far outweigh the cost.)
- Stay on Top of Maintenance
Deferred maintenance is one of the fastest ways to sabotage your rental property investment. A leaking faucet can lead to mold. A cracked window can lead to break-ins. An aging roof can suddenly cost you five figures. (The list goes on and on.)
Preventive maintenance isn’t glamorous, but it’s what keeps your investment running smoothly.
- Create a recurring schedule to check your property’s systems, like HVAC, plumbing, appliances, roofing, and electrical.
- Fix things quickly when they break. Don’t put it off longer than you have to.
- Don’t forget curb appeal. Overgrown grass or peeling paint tells tenants and neighbors that you don’t care. Make landscaping and exterior maintenance a part of your regular routine, too.
- Create a budget and set aside a maintenance reserve fund. That way, when something breaks – and it will – you’re not scrambling to come up with the cash.
- Know the Law
Landlord-tenant laws vary by state (and sometimes even city), and ignorance is never a good defense. Whether it’s fair housing regulations, eviction procedures, or security deposit limits, understanding the rules keeps you protected from lawsuits/fines.
Make a habit out of staying informed about your responsibilities and rights. If you’re unsure about a law or situation, consult a real estate attorney or a local property manager. It’s always better to spend a few hundred dollars upfront than face a legal battle later.
Laws also evolve, especially as the rental landscape continues to change. So make sure you revisit your lease agreement annually and make updates based on new legal or market developments.
Adding it All Up
Take the time to implement these protective measures today and you’ll thank yourself tomorrow. But never sit back and rest on your laurels. There has to be an ongoing commitment to doing the little things right over a long period of time. That’s how you keep your investment safe (and profitable).