Do you have investment properties in Detroit? If you are a landlord with multiple properties, you probably have problems with your tenants or handling maintenance and repairs. And, you probably don't have time to manage all your properties. If that is the case, there are many ways to protect your property portfolio and your passive income. You can get landlord insurance, hire a property manager to protect your investment, budget for maintenance, create an LLC, develop a stellar lease, inspect your properties, enforce the lease, keep good tenants—the possibilities are endless. Each strategy will help you protect yourself and your investments in Detroit, and you will get better profits while saving yourself time and stress.
We've broken down 4 of the top strategies for protecting your investments. Read on to learn what they are and how to put them to work for your properties.
1. Strategies to Protect Your Investments Before Move-In Day
Before new renters ever move in, it's important to make sure that you are making the right moves to protect your investments. Some strategies you should be utilizing long before you ever start screening tenants include:
Get a Landlord Insurance
If you are starting your rental property business, the first thing to do is to get landlord insurance. Landlord insurance covers property and liability protection. This insurance will protect you from financial losses. This means that it covers physical property related to your investment property, including the dwelling, equipment to maintain the property, and structures on your investment property. You must take into account the deductibles and limits of the insurance.
The insurance has liability protection, which covers medical bills or your legal expenses if someone is injured on your investment property. So, if your tenant has an accident and the court determines that it's your fault, you could be responsible for his medical bills, legal costs, etc. Landlord insurance will help you pay for these expenses up to its policy's limits.
Landlord insurance may also cover vandalism, burglary, rental property under construction, building codes, etc. This type of insurance doesn't cover maintenance and equipment breakdowns, tenant's belongings, and similar costs. This means that your tenants have to get their own renters insurance to protect their belongings.
When you have multiple investment properties, the best thing you can do is to have an LLC business. If you have properties in your name, you should consider transferring their titles to the LLC. It will help you to protect your assets. So, if your tenant wants to file a lawsuit, he would have to sue your LLC business and not you.
When you have an LLC business, you must report your business profits on your income taxes.
Another way to protect your investment property is by creating a stellar lease. A property manager will help you to write a lease agreement to protect your investments in Detroit.
Create a Stellar Lease
The best way to protect your property is by creating your lease agreement. You can add clauses and terms that will protect your property, including limits on occupancy, maintenance and repairs, property inspections, deposit, and late fees, subleasing, pet policy, property damage, and illegal behavior terms.
A property manager can help you to add those terms to protect all your investment properties. Also, a property management company handles property inspections, maintenance, and repairs to protect your investments in Detroit.
2. Tips to Maintain Your Properties
Maintaining your properties and keeping them in top shape not only helps to protect them long-term, but also helps to keep your tenants happy.
Budgeting for Maintenance
If you have multiple properties, the best you can do is budget ahead for maintenance. There are always repairs and improvements that you have to do if you want to avoid legal issues and pay for medical bills if an accident happens.
Having money to cover maintenance and repairs will help to protect your property investment. Your property investment will be kept in good condition, and you will avoid legal issues and wasting money.
A property manager will help you to handle maintenance and inspections to keep your property in good condition. Hiring a property manager will help you to save money and time. It would be a fixed maintenance cost that will help you to avoid expensive repairs.
A property management company has experience handling maintenance and taking care of your investments in Detroit.
A property manager handles move-in, routine and move-out inspections. When the tenant moves in, you should check if the property is in good condition. It helps you to know if you have to repair something. Also, it gives you a baseline for comparison when you are doing the move-out inspection. A move-out inspection will help you know if the tenant damaged the property. That way you can deduct any costs for repair from the security deposit.
A property manager should inspect the property while the tenant is living there to spot any issue. Early maintenance and repairs will help you to avoid expensive repairs. Hiring a property manager is a great investment that will boost your passive income.
3. Strategies to Protect Your Inhabited Properties
Every property owner dreams of landing the "perfect" renters, who care for your property and follow the rules. This isn't always the case. Enforcing the lease is a must if you want to keep order. Of course, if you do find yourself with a great tenant, you're going to want to do all that you can to keep them there.
Enforcing the Lease
If your tenant violates the lease agreement, you may want to give the tenant a chance to fix the problem. If this doesn't happen, you must enforce the lease agreement. Many tenants fix the problem when you send them a written notice, but sometimes you have to enforce the lease agreement or evict them. A property manager would handle this situation and follow the local laws, so you don't have to worry about it.
Following the lease agreement will help you to protect yourself and your investment. If you don't follow the lease agreement, the tenant has the option of enforcing the lease.
Keep Good Tenants
A good tenant always communicates with you about any issues, pays the rent on time, and takes care of your investment. You want to do all that you can to keep a good tenant to avoid finding another one that may damage your investment property.
A property manager can handle screening to find quality tenants that will take care of your investment property from the start. Tenant screening involves checking background, credit score, employment status, income, rental history, etc.
You may want to make an upgrade to your property to attract quality tenants that will protect your investment or increase your profit. Making upgrades isn’t always a necessity. In some areas, you can't increase the rent as much as you want, even with top of the line upgrades. For this reason, it’s always a good idea to consider the potential ROI on any upgrades you’re thinking about before you start a new project.
There are some smart and simple upgrades that you can do to increase your passive income and keep your good tenants. For example, adding durable flooring in your property, adding fresh paint, and investing in energy-star certified appliances tend to offer a good return on your investment.
A property manager has the experience to know what upgrades are a good investment to maximize your passive income.
4. Hire a Property Manager
A property manager takes care of your investment and helps you to maximize your returns. Hiring a property manager is the best investment you could make. A property management company is responsible for tenant screening, marketing, collecting the rent, and handling disputes and complaints, maintenance, repairs, etc.
A property manager also deals with lease violations like nonpayment of rent, over-occupancy, property damage, and more. If you hire a property manager, you don't have to worry about legal battles, evictions, or losing money.
If you don't know what to do when you discover more tenants than are on the lease, you should hire a property manager to add them to a new lease agreement or legally evict them.
Similarly, if you don't know what to do when tenants disappear and leave belongings behind, a property manager would know how to handle this situation following the lease agreement and the local laws.
When a tenant damages your investment property, a property manager knows what to do. If you want your tenant to fix it, a property manager may give him a written notice. If the tenant doesn't want to fix it, a property manager should legally evict him and file a lawsuit to pay you back the expenses.
Protecting Your Property Investments in Detroit
From investing in landlord insurance to performing tenant screenings and inspections, there’s no end to the ways you can protect your property investments in Detroit.
But the best way may be to hire a property manager. These professionals will step in to handle repairs, tenant screening, complaints, lawsuits, and more, so you don’t have to.