8 Steps To Get Your Property Rented

You never know when you may want, or need, to rent a property. There are many investors who got their start in the business by renting out their primary residence after the mortgage collapse. There is also a large segment of investors who decide to rent after putting their rehab on the market. A solid rental property can be a great addition to any portfolio. That being said there is a lot that goes into it. You can’t simply put a “for rent” sign on the lawn and wait for checks to roll in. Like anything else in the real estate world there is a certain process that needs to be followed to ensure results. Here are eight steps you need to take to get your property rented.

  1. Research Local Rental Rules And Guidelines. The first step you should take if you are considering renting is to research the local rental rules and guidelines. There are often specific rules based on the town the property is located in. You don’t want to spend time and money in finding a tenant only to discover that your property is not eligible for rental. There are many quirky rental laws out there for student housing, zoning and the maximum number of tenants that may be allowed in the property. Before you get too far in the process you need to know what you can and cannot do.
  2. Look At Market Rents. The rental market is very much contingent on local rental prices. The next step is to look at every rental property on the market within a five mile radius of your property. The closer the property is to yours the more reliable of a comparable it is. Look at important items such as size, room count, square footage, parking and other amenities. It is important to fight the urge in placing a higher rental value on your property based on some upgrades you made. Let the numbers guide you as to what kind of rent you can generate.
  3. Understanding Expenses. There are a few hidden expenses that can quickly eat away at potential cash flow. All property owners are aware of the monthly principal, interest, tax and insurance payments. However there are many rental property expenses that can take you by surprise. Water bills, lawn maintenance, snow removal and sewer bills are just a few of them. You also need to figure out how you plan on managing the property. A good property manager will make your life easier but they will also take roughly 10% of the monthly rent received. It can be very disheartening finding out that your rental property is breaking even when you thought you were positive $300 a month. Avoid this mistake by understanding all rental property expenses.
  4. Get The Word Out. After you run the numbers and make the commitment to rent you need to spread the word. Gone are the days when a classified ad in the newspaper was your best bet. Today there are many more rental listing sites than ever before. Between social media alone you can quickly reach hundreds of people. You can also utilize Craigslist, Kijiji, and any other rental site you can find. Finding a good rental is often a numbers game. The more people that know about your property the better chance you can quickly find a tenant.
  5. Schedule Showings. Just because a prospective renter is interested doesn’t mean they are going to take the property. With every showing you need to always showcase the property in the best possible light. Make sure the property is clean, odor free and ready to rent. You may have to show the property half a dozen times before you find a tenant that ready to act. This is all part of the process. Good tenants rarely just fall on your lap.
  6. Tenant Screening. One of the most common mistakes that inexperienced landlords make is renting to the first person that shows interest. Your goal isn’t to find a tenant but find the right tenant. You need to spend some time screening each interested tenant. Give them an application, ask for a credit check and follow up with the references listed. Your tenant is going to live in your house for at least nine months. As easy as a good tenant is a bad one is a nightmare to deal with. Take your time and screen every interested applicant.
  7. Lease Review. You can probably find a generic lease online in a matter of minutes. This may be easy and inexpensive but will it protect you if an unexpected issue comes up? You are better off spending some money having an attorney draft your lease. Once you are comfortable with your lease you can present it to your tenant. Sit down at the property and review any items of particular importance to you. If you are adamant about pets or smoking rules now is the time to make it clear.
    Final Walk-through. After you and your new tenant have signed the lease and collected the security deposit there is just one more step to go. You should meet your tenant at the property on move in day for the walk-through. You should be ready to hand over the keys and provide specific information about the property. You should also document the condition with pictures or videos. Doing this now will make things easier for you when the lease is over.

Things will rarely go smoothly over the course of the lease. Take things as they come and be ready for anything. Use these eight steps as a guide the next time you have a property you want to rent.

Leave a comment

How To Get the Most Out Of Your Vacation Rental Property

Warming weather is a usually a sign that summer is right around the corner. For many real estate investors this signals the start of their vacation rental property season. Even if they have found tenants the last few months their peak season is typically May to September. How well they do in these few months will often determine their success for the entire year. Your rental may be in a great location and generate demand but there are still a few things you need to do to keep your property booked and your tenants happy. Here are five things you need to do to ensure vacation rental property success.

  1. Market To The Right People. The best vacation rentals are those that can rent on a weekly basis during peak times. To do this you need to keep your property booked months in advance. Even if you have a great property you need people to know about it. Positive word of mouth is nice but may not be enough to fill vacancies. You need to constantly focus on marketing to the right people. Start by researching the marketing for the local area the property is located in. Get your property in as many local publications and websites as possible. Additionally you should establish a relationship with a local real estate agent, or two, that can help find tenants. This will come at a cost but whatever the cost it is typically better than a vacancy. Once a tenant stays at your property you should put them in your database and send them an email every season. How well you stay on top of finding new tenants directly determines you vacancy factor.
  2. Get A Good Team In Place. In addition to a good local real estate agent there are a few other people you need on your team. Most vacation rentals are not in close proximity of where you live. Even if they are relatively close it is not worth it for you to travel 30 minutes each way a few times a week. This underscores the importance of having a good team around you. Start by hiring the best possible property manager. They will be responsible for running the day to day operations of your property. They will handle any questions that your tenants have and take care of minor issues that always pop up. Along with a good property manager you should also find a good local handyman. You never know when a toilet will clog or a lock needs to be changed. Your tenant only has a week or two in the property and it is essential that things are fixed quickly. The final team member is a good cleaning company. Your vacation rental needs to be turned over much quicker than regular annual rentals. These properties may only have a few hours before the next tenant enter. A reliable cleaning company can help make your property presentable and your tenants happy.
  3. Furnishings And Updates. A good vacation rental is often judged more on the location than the amenities. That being said you can’t ignore the interior. Your property should be treated like the investment that it is. If you spend money on certain furnishings and updates you will see a return on your investment. You don’t need to break the bank with your updates but your tenants should open the door and feel comfortable living there for a few weeks. You want to have a balance between quality, practicality and luxury. Look at other rental properties in the area and make your updates accordingly. If your rental is just a little nicer than your competition at roughly the same price you will have an easier time finding tenants.
  4. Screen & Security. Every property owner wants to find tenants as easily as possible. As a vacation property owner you fall victim to this as well. Even though you may need to fill a vacancy it doesn’t mean you have to lower your standards. One bad tenant can do significant damage to your property. You need to spend as much time in screening tenants as you would for any other property you own. Take the time to review the application and call any references listed. If you have some doubts you should not hesitate in finding someone else. Once you settle on a tenant you have every right to ask for a security deposit. If your tenant causes damage this is the only recourse you have as protection. As long as this is clearly disclosed this should not be a problem with your tenants.
  5. Understand Local Market. Your rental will be compared to every other one in the market. Because of this it is important to understand your competition. Look at publications and websites and see what else is out there. Rental prices may have shifted one way or another. There may be an influx of properties that are well below your asking price. Certain properties may offer certain amenities that make them appealing. The better you understand your market the easier it is to price your rental accordingly and make any necessarily changes to attract tenants. Even if you have a property manager you can’t rely on them for everything. It is still your property and you still impact the bottom line. Your market may change every few months. It is up to you to stay on top of these changes.

A well performing rental property can be a great addition to any investment portfolio. There are times when they require a little more work on your end. By doing just a few little things you can keep your property full and increase your bottom line.

Leave a comment

Benefits Of A Quality Rental Property

A good rental property can completely change your portfolio. While most investors are only focused on the next deal a quality rental property can supply long term wealth. Five, ten and even twenty years may seem like a lifetime from now but often comes much quicker than we think. With a strong rental portfolio to lean on you don’t have to worry about making money in your retirement years.

Rental properties can also be used to generate short term monthly cash flow. This monthly return is often greater than anywhere else you would park your money. Additionally, there are a few not so obvious benefits that by themselves make rental ownership worthwhile. If you are on the fence as to whether or not a rental property is for you here are four benefits that might change your mind.

  1. Monthly Cash Flow. An investment property may produce streams of income years down the road but unless it has an immediate impact most investors will look in another direction. The first benefit of rental properties is in the monthly cash flow. A basic definition of cash flow is the residual income that is left after subtracting all the expenses from the income received. On a high performing property this equals hundreds of dollars every month. The percentage of income generated is typically higher than bank savings rates, mutual funds and most bonds. The best part is that you also own the underlying asset of your investment, the property. As long as there are no significant changes to the property taxes or other expenses you can expect to generate roughly the same amount of cash flow for as long as you own the property. This money can be used to pay down other debt, grow your business, buy other property or reduce the balance of your mortgage. Receiving monthly cash flow alone would make rental properties an attractive investment but there are additional reasons as well.
  2. Appreciation. Appreciation is the second benefit of owning a rental property. It is not first because you never want to buy on future appreciation alone. You never truly know where your market may be headed. While it is certainly possible, and even likely, that the value will rise there are times when the unexpected happens. That being said historically speaking property values have always increased over the years. Depending on when you buy and the market you buy in you may be sitting on a large amount of potential equity. Every payment you make reduces your principal balance in some form. Even though most of the payments for the first ten years is to the interest you can still make a good dent on what you owe. This directly impacts your bottom line if you decide to sell. Your initial investment of your down payment (10-20%) can lead to three or four times that if your property appreciates over the years. All the time you are still receiving monthly cash flow.
  3. Tax Benefits. One of the hidden benefits of owning a rental property is the tax benefits. Most investors list appreciation and cash flow as the reasons they bought a rental without thinking about their taxes. When it is all said and done the tax benefit could be the biggest benefit of them all. For starters you can write off all of the payments for the mortgage interest, insurance and property tax payments. You can also write off most of the expenses associated with the property including utilities, snow removal, lawn care, repairs and maintenance. What makes rental property so attractive from a taxpayer standpoint is that you can also use depreciation to your property even if your value has appreciated. After all is said and done it is possible to turn an income tax negative into a huge positive. Instead of owning Uncle Sam you may receive a return of thousands of dollars. This may not happen on every property you own but is certainly within the realm of possibility. The final tax benefit occurs when you sell the property. Instead of being taxed at the full capital gains rate this number is lower based on your years of ownership. Tax benefits may not have the sizzle of cash flow but they could end up being just as beneficial.
  4. Multiple Options. Having your tenant pay down your principal balance gives you a handful of different options. You don’t have to wait until you own the property free and clear to sell if the market appreciates. It is quite possible that even if you have owned the property fewer than five years you can sell at a handsome profit. If you want to retain the property but pull out some equity you can consider refinancing your existing mortgage or taking out a second loan. The more equity you have the more options there are with the property. In just a few years your equity may grow to a point that you can take cash out through a refinance to cover your initial down payment. With interest rates still hovering near all-time lows your monthly payment will not take a substantial hike. Whether it’s selling, refinancing or taking a second loan a good rental property offers multiple options.

Rental properties can have their share of ups and downs but they also have numerous benefits. Once you see the impact that a rental property can have will be sure to explore adding one to your portfolio.

Leave a comment

4 Tips To Help Self Manage Your Rental Property

At times managing a rental property can act as a full time job. Even if you have great tenants property issues always pop up from time to time. Most of these are minor in nature but nevertheless still needed to be treated with a sense of urgency. How well you take care of these will often define your success with the property.

On certain properties there is not be enough cash flow to warrant hiring a property manager. In these situations you are forced to cover their responsibilities. Fortunately with the right attitude and the right team in place this can be easily achieved. Here are four tips to help self-manage your rental property.

  1. Handyman On Speed Dial. Regardless of how handy you are it is essential that you have a handyman on speed dial. Anyone that has ever owned a rental property knows that little things pop up from time to time. Between clogged toilets and broken appliances alone you can expect to be at the house a few times a month. Instead of having to drop what you are doing, drive to the house to access the issue, find the parts and repair what’s broken you should have a reliable handy man that you can call. This will save you at least an average of a few hours a week and allow you to focus on other areas of your business. What you never want to do is pay to have work done twice. By using a reliable professional that can handle multiple tasks you can be assured that you are not just putting a band aid on the job but actually fixing it right.
  2. 24 Hour Reply Rule. As the owner you should treat your tenants like you would treat a guest at a hotel. You should expect that there will be issues that come up from time to time and work to make them happy. While these issues may not seem like a big deal to you they are critical to your tenants. The house will run without a working washing machine or dishwasher but your tenants will be disappointed. As the owner/property manager you need to make a point to return all calls within 24 hours. The longer your tenants wait the more they begin to doubt you as an owner. Instead of calling you with a small problem they will hide it and let it turn into a bigger one. Instead of taking care of the property like their own they won’t be nearly as enthusiastic. This is especially the case if you have any interested in bringing your tenants back. They can find other properties where the landlords are more active and treat their tenants better. As soon as you get a call from your tenant you need to get on it as soon as possible.
  3. Start New Tenant Search Early. One of the biggest mistakes that novice landlords make is not starting their tenant search early enough. A dedicated property manager would strive to have a new tenant lined up weeks before the current lease is over. With everything else going on in your business it can be easy to overlook this part of the process. If you don’t have new tenants coming in nothing else matters. You need to give yourself plenty of time to not only find your next tenant but find the right one. This should start as soon as 90 days until the end of your existing lease. There are more real estate websites than ever before not to mention the growth of social media. You should never have to scramble around a week or two before a vacancy. Give yourself plenty of time to find your next tenant.
  4. Move In/Out Rules. If you are going to manage the property yourself you need to have clearly defined move in and out rules. A typical property manager would handle the lease review and final walk through. Without their aid this is one of the areas that can make or break a lease. You need to spend time going over the lease so there are no surprises. Discuss expectations, rules and guidelines. Go through the lease line by line asking if they have any questions or concerns. A few extra minutes before the lease starts will make your life much easier over the next nine months. You should also give yourself plenty of time discussing the end of the lease. Starting two months out you should discuss the end of lease procedure. Explain the condition the property needs to be in and which items need to be where. Make it clear how the walk-through will occur and when security funds will be returned. The end of the current lease and start of a new one doesn’t have to be filled with stress and anxiety. The better communication you have up front the smoother the transition will be.

In a perfect world you could just hire a property manager and let them deal with the headaches. Not all rentals have this luxury. There are plenty of good landlords who self-manage their rentals. The key is that they acknowledge that they are constantly on call. Having this mindset allows them to deal with whatever comes their way.

Leave a comment

Be A Better Landlord And Run A Better Property

To run an efficient rental property you need to be a good landlord. There are many rental property owners who do not have the residual cash flow to hire a dedicated property manager. This puts them in the front lines with all of their tenants. Instead of treating it as a job you should think about all of the positives the property is affording you. In addition to any cash flow received there are tax breaks and equity created. All you need to do is keep the cycle of tenants coming and going. Being a good landlord means thinking of the little things that are important with tenants. Here are four hidden actions that will make you a better landlord.

  1. Take Care Of The Property. You can be the nicest person in the world but if the refrigerator doesn’t work it won’t make a difference. The single most important thing you can do for your rental property is take care of it. It may sound like a cliché but the best landlords treat rental properties like their own. When something needs to be repaired or replaced they do it as quickly as possible. They wouldn’t want to be without heat in the winter or without a working refrigerator in their primary residence so they don’t stand for it with their rental property. Not only do they fix things in a timely fashion but they take care of the property year round. They perform seasonal maintenance on the furnace in the winter and the HVAC in the summer. They are always one step ahead of any potential problems and don’t ask questions or point fingers when they occur. If you want a better property and better tenants you can start by taking care of it.
  2. Know Your Tenant. There are many landlords who will tell you to run your property like a business. While this is certainly true you also need to factor in human feelings and emotions. You are renting to real people and not just a name and data on an application. Take the time to get to know your tenants. You don’t have to be best friends but there is nothing wrong with asking questions and building a relationship. To take this a step further every time you see your tenants you can ask them how work or school is going. If you know their favorite sports team mention last weeks game or something relevant that is going on. What the by the book landlord doesn’t know is that little acts like this that have a big impact. If your tenant personally likes you they will be more inclined to insist to their guests to take care of the property. They will call you when minor issues pop up that could save you thousands. They will be more likely to pay their rent on time, every month, regardless of what else is going on. All you need to do is spend just as few minutes getting to know your tenants.
  3. Referral Discounts. Most landlords will tell you that the most difficult task they have is finding new tenants. Even if hot markets the odds are you will have to screen a handful of tenants before you find one you are comfortable with. Additionally this means you have to drive to and from the property for showings and spend time reviewing applications. In a perfect world you would be able to find a referral source to eliminate all this work. There is often no greater referral source than your existing tenants. Start by asking your tenant what their intentions are for after the lease. Assuming they are not leaving the area they very well may want to stay but aren’t sure how to go about asking you. When you are within a few months of lease end come out and ask them if they want to renew their lease. If their answer is no you should ask them if they know anyone that may be interested. Furthermore, you should offer an incentive if they find someone. A $100 gift card is a small price to pay to avoid having to screen and find a new tenant. If your tenant is on the fence and you are happy with them why not offer a slight rent reduction to get them to stay. A $25 reduction in rent won’t have much of an impact either way to your bottom line but may make all the difference to your tenant.
  4. Firm But Fair. Being a good landlord is a lot like being a good parent-you need to know where to pick and choose your battles. The common thought amount landlords is that you have to rule your property with an iron fist. Well, sometimes this can have a negative impact. If your tenant is a few days late you shouldn’t badger them with phone calls. Yes, according to your lease you have every right to collect a late fee and demand your money but you need to be smart about it. From time to time a tenant may have a temporary problem. Instead of getting your rent on the first you don’t receive it until the 8th. Is this ideal? No. Is it the end of the world? No for that as well. Instead of freaking out and threatening eviction you should get to the root of the problem and find out if it will happen again. If you are comfortable that the issue is short term your tenant will appreciate you not going over the top. If the issue is a sign of trouble you have every right to take further action. But, before you do you should ask yourself if you really want to deal with an eviction. Sometimes it makes more sense to look at the big picture.

Sometimes the simplest approach with your rental property is the best. Think about your tenants and treat them, and the property, how you want to be treated.

Leave a comment
Style Selector
Select the layout
Choose the theme
Preset colors
No Preset
Select the pattern