The First 3 Steps All New Rental Property Owners Should Take for Success
Synopsis
First things first: Congratulations on purchasing your first rental property! As a new Independent Rental Owner/Operator (IRO), you’re embarking on an exciting journey filled with opportunities and challenges.
Setting yourself up for success from the beginning is crucial to ensure a smooth and profitable experience. In this first blog of our two-part series, we’ll explain the first three essential steps you should take right after acquiring your property:
- Join your local apartment association
- Set up your company
- Get insurance
These foundational steps will help you navigate the complexities of property management and better position you for long-term success. But first, let’s level-set on what an IRO is and does, and then we’ll expand into the three steps for success.
An IRO is an individual or individuals who are active in both the ownership and management of their properties. The main characteristics are that they have their own money invested in the property (with or without partners), are actively involved in the management of their properties, and self-identify based on these criteria and not by portfolio unit count.
1. Join your local apartment association
For everything that you’re trying to figure out right now about your new rental property, your local apartment association has members who can help. Learn which of TAA’s 24 local associations is in your area.
Joining and getting involved with your local apartment association gives you:
- Local access to a network of other owners
- Education about important industry issues
- Supplier partners to help your business run more efficiently
- Automatic membership in the Texas Apartment Association (TAA) and the National Apartment Association (NAA)
With your membership in TAA, you’ll have access to:
- TAA Click & Lease, including complimentary access to TAA’s lease if you have 10 or fewer units, and
- TAA’s REDBOOK Online, an invaluable legal handbook that provides industry operational information and practical guidance.
2. Set up your company
The main benefit of forming a partnership or corporation for your investment properties is personal liability protection.
Explore the type of business establishment that is right for you. There are various ways to establish a business entity that protects you/your assets from liability.
3. Get insurance
While you’re setting up your company, make sure you explore and secure insurance. If you don’t already have an insurance agent or broker, check with your local association for a connection to a member company.
The insurance you need depends on the property you are insuring. A few types of insurance you may explore or need:
Liability Insurance: If your property is not mortgaged, you may decide to forgo full property insurance and secure only liability insurance. There is risk involved should the property realize a loss such as fire or flood as you will not have replacement coverage.
Flood Insurance: If your property is mortgaged and located in a flood zone, you will be required to carry flood insurance. If your property is not mortgaged, you do not have to have flood insurance.
Taking these initial steps will lay a strong foundation for your new venture as an IRO. By joining your local apartment association, you will get access to valuable resources and networking opportunities, while also establishing your company. These resources can also extend to helping your business operate within legal parameters and protect your personal assets. Lastly, securing the right insurance safeguards your investment against unforeseen events.
Look Inside the TAA IRO Guide
The Texas Apartment Association’s IRO Guide is an invaluable resource that can further assist you in your business journey. The guide offers comprehensive checklists to ensure you don’t miss any crucial steps, sample lease agreements to help you draft robust contracts, and a collection of helpful resources to help you learn and navigate.
Stay tuned for the second part of our series, where we’ll explore three more essential tips to help you succeed in the rental property business. TAA is here to support you every step of the way with our comprehensive IRO Guide and other resources.