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.
As a landlord, you want tenants who look after your property, pay rent on time, and stay till the end of their lease (or even renew it). Getting fantastic and affable tenants begins with the screening process and knowing how to do it without getting into trouble is an art that every landlord should learn.
Create a Screening Process
Don’t make your screening process ad hoc. Instead, create a step-by-step screening process. Make sure you have an application that asks them the following questions:
§Reason for leaving this current home or apartment
§Place of work
§Information about their bank accounts
§Personal habits, like smoking
Create criteria for approving a prospective tenant’s application. This will help you select one who fulfills your requirements.
Educate Yourself about Federal Fair Housing Laws
There are federal laws that protect prospective tenants from being rejected for no reason by landlords. It is important you know the laws, so that your screening process conforms to them. Make sure you don’t select or reject prospective tenants based on their gender, sexual orientation, race or religion. In fact, you cannot question tenants about these things at all.
Let Applicants Know the Terms of the Lease
Make sure you let applicants know about the terms of your lease from the very beginning. For instance, if you have a security deposit, let them know the amount. By letting them know the terms, you let prospective tenants also decide whether they want to rent your property. If they don’t want to, they walk away, ensuring you don’t waste time or effort trying to market your property to them. Write down the terms and give a copy to the prospective tenants, so that they can read and understand them.
Perform a Thorough Reference Check
Although time consuming, you will thank yourself later if you check the references the applicants provides. Get permission to call the workplace, existing landlord and other references that the applicant has provided. Be sure to question the prospective tenant’s character.
Refuse in Writing
If you refuse to rent out your property to a prospective tenant, always do so in writing and keep a copy in your file. Make sure you clearly highlight the reason for refusal, so that the applicant knows the exact reason.
Screening tenants and finding a dream tenant can be time consuming. However, if you hire a stellar and reliable property management company, every aspect of the screening process will be taken care of. You don’t even have to worry about legalities, as such, since a company has knowledgeable property managers who know federal laws and make sure it is a win-win process for the landlord and tenant.
As a rental property owner, it makes sense to collaborate with a property management company. Besides getting the right tenants and ensuring proper rent collection, the dedicated property manager will also help in the maintenance of your property, saving you money and future headaches. They may even save you from serious legal matters by preventing you from having to deal with tenants which can be troublesome at times even if you do vet them.
Here are some ways that property manager from property management companies handle the maintenance of rental properties.
Emergencies come without warning. A burst pipe, heating not working in the dead of winter, or blocked drain are some emergencies that require prompt action. The moment you call the property manager, he will arrange for emergency services to fix the problem, even after hours. This will save you the headache of running around trying to fix something that is broken or not working. You can inform your tenants to contact the property manager for emergencies, but be clear on what constitutes an emergency.
Determining Tenant Neglect
Property managers are outstanding and judicious professionals. This experience allows them to determine what is tenant neglect and misuse and what is fair wear and tear. This way, the landlord is not held responsible for it. When property gets damaged due to tenant neglect, it is the tenant who has to fix it at his own expense.
Authorized Repair Limit
When you have a property management company handling your rental property, the agreement you sign with the company will clearly mention the value for repair limit. This basically means the property manager can sanction repairs to the tune of that amount.
Anything over and above the amount will require your permission. So, it makes sure the authorized repair limit is reasonable that lets the property manager handle maintenance issues without delay and also does not suck your funds dry. With this clause, you ensure your property manager has the leeway to fix maintenance issues quickly and keep tenants happy.
Property managers always work with licensed and insured vendors, so that you are not held liable for anything. Since property management companies handle many rental properties and offer contractors high volume of work throughout the year, you can rest assured knowing you will get quick service and competitive rates. This helps you save money on rental property maintenance without you even realizing it.
Doing Things the Smart Way
So, if you are a prudent landlord, you will work with a property management company that offers you a dedicated property manager for your rental property. The manager will handle all maintenance-related issues, leaving you free to expand your rental business or focus on other professional pursuits.
As a landlord, you want to have fantastic tenants, who pay rent on time and respect your property. So, if you want reliable tenants, you will have to do some work. Of course, a part of your quest to get the best tenants involves pricing your property fairly, ensuring you maintain the property well and placing ads in multiple places to get your property noticed.
In addition, there are few more things that you should do to secure the tenants you desire.
1. Determine the Kind of Tenants You Want
One of the keys to obtaining the best tenants is first figuring out the kind of tenants you want to work with for a long time. Check with property managers to find out what features tenants are looking for in rental properties in your neighborhood. You can even call up realtors and check with them. Most tenants look for properties that offer easy access to the local school, public transportation, hospital, grocery stores, and so on.
But beyond this, tenants want homes with certain amenities and if your property can offer those amenities, you will be able to attract the right kind of tenants. Some of the amenities tenants look for are air conditioners, dishwasher, neat and safe surroundings, stellar plumbing fixtures, and modern appliances.
2. What is the USP of Your Rental Property?
Why should prospective tenants choose your rental property over others in the neighborhood? This is what will give you the unique selling proposition (USP). Rather than focusing on the number of bedrooms and bathrooms, focus on something that makes your property special and unique.
This could be a short drive from the best shopping area, located close to an award-winning restaurant that has affordable dishes, the best garden to bring the countryside to urban life or watch the most amazing and mesmerizing sunsets. You will want to include the USP in your advertisement to appeal to the right tenants.
3. Sell Your Property for its Benefits and not Features
When creating the advertisement for your rental property, focus on how tenants will benefit from renting your property. Usually, rental property ads are all about features – fresh paint, number of bedrooms and bathrooms, and the appliances. Remember, you don’t want just another tenant. You want the best tenant. So use the ad to demonstrate how the tenant will benefit from renting your property.
Finding the right tenant for your rental property can be tough. That’s why landlords collaborate with property management companies. These companies work on your behalf to get the ideal tenants, so that you can enjoy your life as a landlord. So, go ahead and forge a partnership with a reputable property management company and get the tenants you envisaged and covet. Forging the right relationship will make your life much more enjoyable in the months ahead.
With some of the world trying to go green and the Internet dominating most financial processes, it is a prudent time to consider managing your rent collection online. It provides convenience to both you as the property manager and your clients, as well. It allows you to cut down on the paperwork and administrative staff expenses. But most of all it helps you obtain the following major benefits:
1. Improves customer service
Customer service is all about delivering convenience. And with the online system of collecting rent you provide your customers just that. At the same time, since you will be concentrating less on personally collection rent, you can use that time saved for more productive work like marketing to new renters or building stronger better relationships with your present customers, or watching Transformers or the World Series!
2. Reducing disputes with paper trails
Any kind of online payment leads to the creation of paper trails in the digital format. This is also the case with online rent collection. In case, a renter claims to have made payment, you can instantly check through the online system if the transfer has been made. Property management software systems allow you to automatically mark the date and time when a payment is made and transfer the rent amount to the property owner’s account. It also gives you the details of all the tenants who have and have not made their payment for the month.
3. Control over the management of fees
With the online system of rent management, the administrative staff requirement is reduced in half. This means you will spend less resources to manage the rent collected. And, this, in turn, helps you spend more on things like property management or reduce the cost of your entire service package.
4. Improve security
The risks associated with payment of cash are reduced. You do not have to deal with miscalculations or fake notes. The rent amount will directly be transferred to your business account. As a result of this limited risk, property insurance companies are likely to charge you a lower coverage rate.
5. Keep payments on schedule
Some people tend to forget that their rent payment is due, resulting in delayed payments which caused a crunch to occur in their cash flow. This can affect your business since you have bills to pay too with that money. With the online payment system, payments can be made on the due date itself. You can also send the renter an email to remind him that his rent is due a few days before it is due, this way you do not have to deal with delayed payments or at least mitigate the chances of this occurring.
If you don’t have this capability available, it’s about time you made some changes to your rent collection system and keep your client, the landlord, happy.