Turning into a landlord doesn’t mean that you will be rolling in money or piling it up like the characters in Breaking Bad in a hidden storage rental unit and also have the perfect tenant. The real estate market across the country varies and hence, the kind of tenants your property attracts will depend on the location, amenities around the property, and the special features your property has. Being a landlord can be challenging and at times, frustrating. But if you succeed, it is a steady passive income stream.
However, before you decide to take out a mortgage to buy a property and turn into a landlord, there are few things that you should know and take into consideration.
You should have Cash, Lots of It
Banks are no longer doling out mortgage amounts freely because of the Barney Frank and Fannie Mae situation and Dodd/Frank and so on – the happy days are over with. They have tightened their lending procedures and this means it is necessary, you have the 20% down payment ready, should you want to turn into a landlord. And, if you cannot afford the minimum 20% then you are definitely not cut out to be a landlord yet.
It is not just about buying the property. You also have to have money to fix and repair the property to make it attractive for prospective tenants. So, if you want to turn into a landlord, make sure you have plenty of cash available.
It is a Risky Business Endeavor
Becoming a landlord is not just about making money from the rent. You should also have a high appetite for risk. Owning a rental property comes with its own share of risks, such as non-payment of rent, damage to the property, prolonged vacancies, tenant evictions, and lawsuits. If you have the ability to take these risks, you should do just fine. Otherwise, this is the wrong business to get into.
Your Property can get Trashed
The risk of bad things happening is omnipresent in the world of business. However, there is a reason why people who own properties don’t always turn into landlords. You may already have read about the way properties get trashed by tenants before they leave or during the tenancy.
Did you know these stories are often true? You will be surprised at the kind of damage tenants can leave behind. If this happens to you, your passive income stream will dry up until your property is fixed. Depending on the amount of damage, it could be a few weeks or months. You may even rise to new heights of frustration as well!
So before you decide to buy your property, be aware of what awaits you. Educate yourself and ensure you have the stomach for it. If you still want to turn into a landlord, go right ahead. You also can collaborate with a property management company to help you out and handle all aspects of your property. This will reduce your stress and work and allow you to focus on other business and personal endeavors that you may have.
If you are a first-time or even a seasoned landlord, it makes sense to work with a property management company. Remember being a landlord is not easy and you will have to don multiple hats simultaneously on top of the ones you are already wearing. It can make it daunting and overwhelming to find your way as a landlord. Here are some reasons why it makes sense to join forces with a reliable and dependable property management company.
The Sheer Work Involved
While it makes sense to hire a property management company if you have many properties, you can also flip the switch for this collaboration with a single property in your investment portfolio. As a landlord, you will have to vet prospective tenants, maintain the property, perform repairs, handle emergencies, advertise, and market your property when tenants leave and also handle rent collection. This is a lot of work and can make it tough to manage everything.
A property management company has experience in this field and has professionals to handle every aspect of the property. Such a company has a list of contractors to handle maintenance and repairs and also knows how to tackle tenants and their complaints.
Smooth Flow of Income
While a part of the rent should be kept to handle and pay for repairs, you won’t have to chase tenants for the rent each month. This part is handled by property management professional, so you always have smooth flow of income. Furthermore, the professional will know how to ensure 100% occupancy, so that your revenue stream is not disrupted.
They work hard to make owners, you, happy.
Knows Tenant-Landlord Laws
Property management companies know the laws of the state they operate in. And, this makes it easy to handle tenants without getting on the wrong side of these laws. As a layperson, you may not have sufficient knowledge of tenant-landlord laws and this could spell disaster for you if you don’t work within the ambit of the law. And, if you have to go to court, it can turn into a very expensive and long-drawn process. In the meantime, you will be unable to evict the tenant and not earn any income from your property.
Prudent landlords prefer working with property management companies because of the ease it offers. It allows them to focus on their other business interests without getting hassled by the rental property or tenant issues. So, if you want to enjoy the benefits of being a successful landlord, it is time to find a cogent and dependable property management company. Beware, some are better than others!
College students are in surplus now that summer is over and winter is beginning. This means new tenants, mainly close to a college campus. But this demography of renters can be a bit of an issue if you aren’t very careful. The benefits may be alluring. Like, most parents cover their children’s housing rent when they go off to college. College students are a lot less fussy compared to the regular kind off customers.
It is a lot easier to advertise to students because they understand the way the Internet works. So advertising and marketing will cost much less. Plus the rent they have to pay is much higher in a university town, for the most part.
So what are the risks, then?
The Risks of Renting to College Students
§College kids usually have everything done for them at home. So being inexperienced in taking care of property can be a disadvantage, especially if your tenant turns out to be reckless.
§Some college students are immature and out of control all together. This is a lethal combination that spells disaster and more expenses for you.
§Most kids plan to party during their college years away from home so. This can result in a much higher risk of damage.
§Since they will be staying for a short duration, they will care even less about maintaining the integrity of your property.
How do You Minimize the Risks?
Tenant Screening Make sure you thoroughly screen your college student tenants. It may be difficult to do this because of their limited credit history. But either way it is necessary. Apart from the students also screen their parents or guardians. Also, find out if the student has ever been evicted from a university dorm.
Special Lease Get our attorney to prepare a special lease when you plan on leasing to college students. There should be a clause requiring co-signers, specifying maximum occupancy, what will happen in the event of damages to the property and complaints against noise.
Explain the Rules Make sure you read the rules to the tenant so that they are made thoroughly aware of what is and is not allowed. Like no use of fire on the property in the form of fireworks, charcoal grilling, or burning candles.
Charge for Utilities To curb the unnecessary use of water and electricity, make sure you charge your clients. This way they will avoid leaving the water on and will learn to save power. And if they do not have pay their electric bill, there goes the TV and the computer!
Monitor the Property Get the services of a third party monitor in the building. This way, you can receive immediate alerts if the tenants do not pay attention to the terms of the contract.
These simple rules will help you recover the money owed to you by your college student tenants and prevent them from damaging our property. Hiring a property management company to help you screen and maintain the property would help ease your burden if you are renting out your property to students.
The winter haze makes property marketing difficult for many property managers. It takes a bit of ingenuity to show off the special features of the property you are managing during the winter season. But this mean does not mean that property marketing cannot be done effectively during the winter months. There are a couple of things you could try doing to generate customer interest during the winter.
Here are a few of them:
1. Showcase your winter wonderland
The winter season is a beautiful time of year. Use it to your advantage. If your property is meant for families to enjoy, make a snowman in the yard, put up a Christmas tree and sleighs. Ask around to know what winter activities are taking place near your property this winter. So when you market your property, use these activities as selling points. It will allow you to set your property apart from the rest without making your clients feel like you are over selling.
2. Keep the outdoor area clean
One of the biggest problems during the winter is the snow. It can be hazardous and a complete nuisance as well. So make sure the ice and snow from the driveways and walkways are cleared. Keep these entry ways clean and dry by using salt, it will make sure the property is safe and appealing as well. This will improve your chances of attracting renters because if the outsides are well maintained the insides should sparkle in proportion.
3. Take some suitable pictures
Make sure you have decent pictures of the property and its various features from the summer. It will show the renters what the property really looks like all year round. It is hard to know what’s hiding under the snow or behind the hazy cover of the winter time fog. Apart from the property you are managing, show your potential clients pictures of the amenities that surround the property, like the park, schools, hospital, or grocery store. They should be able to make quicker decisions once they know what the property looks like.
4. Who doesn’t like the holidays?
Create a warm fuzzy feeling inside and outside the property with holiday decorations. It is an astute way to let your clients know you are current and the property can satisfy their every need. Do not delve deep into religious themes because you are looking at a wide range of customers. So stick with neutral decorations. Stay away from over-the-top decorations and décor. The client should feel like the value of the house keeps appreciating with every detail they see.
With these tips in your marketing tool kit, you should get your property noticed this winter. If you cannot, no one can!
As a landlord, it is important that you set the rent of your property just right. It should be neither too high nor too low (many times the market will let you know if you are right or wrong in this endeavor). The key is setting rent that attracts tenants and still leaves you with money to pay for property-related expenses and earn you some profit. So, how do you set the rent and ensure it is just right?
The Desirability of Your Property
If you have multiple properties, it is easy to set one rent for similar properties. However, this will cause you more harm than good. You should set rent based on how desirable the property is. For instance, if you have two properties with two bedrooms each and one has additional storage space, it becomes more desirable. Hence, the one with extra storage should have a higher rent compared to the other one, since many people want adequate storage in their homes.
Some people do not though. Some people do not have that much stuff. Some people do not carry a lot of baggage and extra stuff around. They may want a lower rent for this very reason.
You can gauge the desirability of your property by taking into consideration the view from the property, upgrades that you have done, the size of the bedrooms, extra closets, window and/or balcony and floor level.
Rent Fixed by Your Competition
Check similar properties in the neighborhood and find out the rental of these properties. If possible, check out properties that are similar to yours and see what they offer that you don’t. This will give you a fair idea what to include in your property and the rent to charge.
What is the Market Demand?
Fixing the rent is not a one-time affair. You have to keep a close watch on the market to check the supply and demand. If the economy is faring poorly, people will not be able to afford their homes. This will cause the demand for rental properties to go up and in turn the rents will go up. Higher the demand, higher the rent. And, when the demand goes down, you will need to reduce the rent to ensure you don’t have to deal with a vacant rental property (certainly for not too long).
It is prudent to remember the right rent will attract tenants. If you don’t want the hassle to fix the right rent and then ensure you get the right tenants, collaborate with a salient property management company. Such a company has a wealth of knowledge and experience to set the rent based on market dynamics and ensure you still earn a profit at the end of it all. There is no doubt determining the right rent is tricky and it is best left to professionals who know the business inside out.