Owning a profitable rental property can completely change the way you think about the real estate business. Once you see that you can generate monthly cash flow while building equity, purchasing rental property becomes that much more of an attractive option. In time, you can develop a large rental portfolio. As great as this idea is, not every rental property will be a successful one. You need to find the right property and take care of it the right way to generate good tenants. If you fail to take care of the little things with your rentals, they can come back to bite you. If you are looking to get the most out of your rental portfolio, there are a few tricks you should try.
Everything starts with the right property. Even if you do everything else perfectly, not having the right property could hurt your profits. Having said that, location is very important. We hear this all the time when discussing rehabs, but the same concept applies to rental properties. Like anything else in real estate, your rental property needs to be in the right location. It makes sense to pay a little more to acquire a property in a better location. One of the mistakes that new landlords make is thinking that they can turn an inexpensive property in a poor location into a home-run. Improvements are always nice, but they often do not warrant a sizable rental increase. Prospective tenants will look at other rentals in the area and see how yours stacks up. New appliances and other amenities will help get your property rented quicker, but typically not at the price increase you desire. Price increases are usually based on the demand, which is based on location.
Once you have your property, you need to fill it with good tenants. This sounds fairly obvious, but not enough landlords spend the time to make it so. Your tenants are directly responsible for your success – month in and month out. You may assume that every tenant will pay their rent on time and take care of your property, but this is not always the case. One bad tenant who misses payments will cause you to pull funds from other areas, which can eventually lead to an eviction. An eviction means that no money is coming into the property for at least a few months. While you can never guarantee a good tenant, you greatly increase your chances with proper screening. Take the time to sift through applications and follow up with references. Never rent to the first applicant that shows interest in the property. You need to treat tenant screening like someone is applying for a job. The right tenants will make or break the success of your rental property.
The condition of your property is a direct reflection of you and what you think of it. By neglecting work that needs to be done, you are telling your tenants that you don’t care about the condition of the property. Instead of taking care of it like it was their own, they will neglect certain things or look the other way. Conversely, if you repair or replace all items as needed, you send a message that this is how you want your property taken care of. Your tenants will learn to treat your property better knowing that you expect things to be perfect. It is also important that you take care of items quickly after they are brought to your attention. Don’t make your tenant wait to repair or replace the dishwasher. These items may not seem like a big deal to you, but they are important to them. If you are going to get them fixed, you might as well do it as quickly as possible. Your rental property is an asset that you must take care of. If you take care of your property, your tenants will do the same.
Don’t underestimate the importance of reaching out to your neighbors. Regardless if you rent to college students or a small family, you need to let your neighbors know. Often times they can serve as your eyes and ears on the property. Ask your neighbors to call you first if there are any issues with the condition, noise or anything else with the property. This small gesture will also help protect your property. If you are friendly with your neighbors, they will be more likely to contact you if they see anything that feels off. This is a valuable asset if you live a few towns over and don’t want to drive by the property once a week. You should also reach out to them if you are doing any work that may be loud early in the morning. You don’t want your neighbors on your bad side. A quick phone call or knock on the door can greatly improve your relationship with them.
Rental properties can be a lot of work, but they can also offer a great return on your initial investment. You need to stay on top of them. To get the most out of your properties, start by following these simple steps.