Lots of people make a good income by investing in and renting out property. They know that, like all other businesses, that it takes a lot of work and attention to details. Here is a list of 7 Steps to being a successful Landlord:
1) Prospective Tenants
Successful Landlords know that there is no easy way to size-up prospective Tenants without doing some research. The applicants who appear to have a spotless history can be very adept at misrepresenting their actual experiences in previous rentals. They may have many unpaid bills, a poor credit history, evictions, have caused major damage to properties, caused disturbances on the properties, etc. Some Landlords failed to do their research or just didn’t take the time to follow-up on contact information, checking credit histories, checking on references. Instead they rely on their first impressions of applicants or fall for a hard luck story. It is bad business to trust a new tenant with your multi-million dollar property and expect they will treat it with the same respect as if they owned it.
2) Checking Your Property
It is a rare tenant who actually cares about the state of a property they do not own. As a Landlord, you are sure to hear about plumbing issues, leaking roofs, leaking windows, broken stairs, holes in the floor, lack of heating or cooling, etc. – items that affect their living or business conditions. However, they are not so likely to report issues like missing shingles on the roof, drafts from defective windows, water leakage that creates rot and mold and those are the things that can be most costly when left in disrepair. By doing a regular inspection every few months with a checklist is a guaranteed way to avert costly repairs and, as well, indicates to the tenants that you are keeping an eye on the condition of your property and care about their comfort.
3) Raise the Rent Yearly
Raising the rent every year is important, assuming market conditions allow it. Your costs rise every year and have to be countered with a similar rise in rent to maintain your profit. For example, a good tenant who is happy in his unit is unlikely to move for a 3% to 5% increase on a regular basis, assuming the lease allows for such.
4) Maintain the Property
When you allow the property to decline, good tenants will move out and bad tenants who don’t care about the condition of the property will move in. Your costs to make repairs will increase, you will not be able to justify raising rent to cover costs of poorly maintained units, profits will be lost and you will find yourself in a vicious downward spiral of owning a declining property which loses its value.
5) Using Checklists for Procedures
Make checklists for Tenant selections, move-in/move-out procedures, maintaining property and so much more. Your memory may not always serve you, but accurate paperwork will. These are also good “check-ups” on your manager, too.
6) Implement a Written Rental Agreement
Tenants need to know exactly what is expected and required of them to leave no space for misunderstanding. Use an up-to-date Rental Agreement and have it reviewed by a competent real estate attorney. They are available from your local apartment or landlord association. They have been approved by real estate attorneys to reflect the latest changes in the laws. In this way, you will be covered in the event that a legal issue arises with a tenant.
7) Upgrades
Should you decide to update a unit between tenants, reflect that in the new rental amount, subject to market conditions and your competition. Most prospective tenants will appreciate a freshly redecorated residential unit or a clean commercial one and are willing to pay a little more. New vinyl, carpet or wood flooring, replacing countertops or bathroom fixtures, replacing cabinet doors, clean drywall, and a fresh coat of paint all add to the amount of rent you can command.
It is all up to you as the Landlord. If you want your investment in this business to be successful, you will have processes in place to guarantee its success, as with any other business.
Please remember to leave a comment!
WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete statement with it: ‘ “The Investment Property Insider” is published by Craig S. Higdon, a veteran commercial mortgage banker. He publishes the e-zine and blog, www.InvestmentPropertyInsider.com, for commercial real estate investors, developers, and industry professionals. Visit the blog and get this free report: “The 7 Biggest Loan Mistakes Real Estate Investors Make And How To Avoid Them.” ’
Craig Higdon, “The Insider”
www.ExcelsionMortgage.com, www.InvestmentPropertyInsider.com, www.CommercialLoanCoach.com
Craig Higdon has over 16 years experience in financing commercial loans, small business loans, construction loans, and land loans. He owns Excelsion Mortgage, a commercial mortgage direct lender offering a wide range of commercial lending resources to investors and commercial real estate service providers.
The © Copyright to all audio, video, images, and text are held by Craig S. Higdon and licensed under a Creative Commons License
