Risk Management as a Rental Owner
Having a rental is, at its core, the same as having a business. Having a business means you are constantly taking (hopefully calculated) risk with the hope that the reward surpasses the risk. Hopefully that is not new information to you. In this blog post we will talk about a few practical ways that rental owners can minimize the risk exposure of their rental.
Obviously the overall purpose of purchasing any type of insurance policy is the transference of risk. Property owner become rental property owners for various reasons and at various stages in life. As a property manager, I have seen many property owners turn in to rental owners and never review their home insurance policy at that transition. Please talk to your insurance provider about your rental. Change the policy according to their advice and read every word of the policy. Communicate any insurance requirements to the property manager. Part of our job is to keep you in compliance with your insurance policy. More often than not, when I see a rental owner review their insurance, not only does their knowledge of their potential exposure go up but their insurance bill goes down as they drop the coverage they do not need… such as coverage for belongings within the property. What you don’t know can and will hurt you when it comes to your insurance policy.
Finding low risk tenants
It is critically important to find the best tenant for your property. Someone with a clean criminal background, a verifiable means to pay the rent, and a credit history that demonstrates credit worthiness are generally good indicators of a low risk tenant. This is where a property management professional over your property becomes a huge advantage. They will help you find the best tenants out there while keeping you legally compliant. After you find that right tenant, it becomes good business sense to keep that tenant in the property as long as they would like to be there. Having a high quality and reliable tenant takes a lot of the financial risk out of rentals.
Stay on top of it!
Stay on top of maintenance issues. Do regular inspections. As a side note, Bridgepoint offers quarterly inspections to all clients at no extra charge! Inspections and open lines of communication with the tenant will reveal exactly what is going on with your property. Once maintenance issues come up, take care of them. Make sure you have enough set aside to cover the cost of any major repair of your rental. Deferring maintenance is the best way to kill that golden goose of a rental.
Stay organized and plan ahead
As will any business venture, planning ahead is critically important. Save money for inevitable maintenance issues and document everything. Coincidentally, Bridgepoint excels here also by taking copious notes on your property on sight visits, communicating well with tenants and rental owners, and having excelled financial diligence can take a lot of the headache out of this. Give us a call and we would be happy to help you. We love rental properties and we love helping you have a healthy rental property!