Real estate is always a sound investment, especially considering just how many Americans are now renting their homes. In fact, the U.S. Census Bureau estimated in 2017 that roughly 36% of American households were renter-occupied. The state of the current housing market indicates that there’s a lack of affordable housing for would-be buyers. And since many younger renters are saddled with debt or simply want the flexibility of forgoing property ownership, it’s clear that now is a great time to rent out a property.
That said, your endeavor may not be as lucrative if you don’t know what you’re doing. Whether you manage your property yourself or trust a third party to handle the task, you’ll need to educate yourself on the best practices of being a landlord. If you master these tips, you’ll be met with satisfied tenants, steady cash flow, and increased property values.
Make Some Upgrades
When you sell a home, upgrades are usually part of the deal. The same goes for rental properties. Before you ever list a property for rent, you’ll want to do what you can to show it in a positive light. Even if it means having the apartment stay empty for a little longer between tenants, some of the changes could make it well worth it.
For example, replacing carpeted floors for hardwoods (like one of the more than 100,000 species of natural wood that grace the planet) could really make the apartment shine — and help you fetch a higher rental price. Upgraded plumbing fixtures and countertops, energy-efficient windows, and increased storage can also work wonders for interest in the property and income potential. And since more than 40% of homeowners use outdoor spaces for entertaining, it wouldn’t hurt to add a green space (or at least spruce up the landscaping and the building’s exterior). Curb appeal matters to renters too, you know.
Become Familiar With Laws
A lot of landlords make a habit of playing fast and loose with legalities. Some might include non-enforceable clauses in a lease, while others don’t pay nearly enough attention to tenants’ rights. Every state has its own landlord and tenant act, which covers everything from security deposits and evictions to screening procedures and the obligations of both parties involved in the agreement. Be sure to obtain a copy of the pertinent legislation in your state from the Department of Housing and double-check to ensure your lease documents, screening practices, and ongoing interactions with tenants comply with the rules. By doing so, you’ll have happier tenants and you’ll likely be able to stay out of civil court. To protect yourself, be certain to obtain the right kind of insurance coverage, too.
Keep Up With Maintenance
It’s not enough to perform upgrades before renting out the unit; you’ll also need to respond promptly to any notification of necessary repairs or upkeep concerns. Around 85% of U.S. homes were built prior to 1980, which means the majority of rental units will likely need ongoing improvements. Even if the unit is a new build, you’ll still need to prioritize regular maintenance and repairs. From normal wear and tear to faulty installation, appliances tend to break down and renters will report issues on a quasi-regular basis.
Be sure to schedule repairs quickly, particularly if the problem presents a health and safety issue, and communicate clearly with tenants to let them know they’re a priority for you. If you manage multiple properties, it may be tough to juggle all of the necessary maintenance. However, remember that this is what you signed up for when you became a landlord. If repairs are not made within a reasonable timeframe, you’ll have unhappy tenants on your hands and you may even give them a reason to break the lease or take legal action against you. You can more easily keep track of maintenance tasks by setting regular reminders or even using a property management software system to ensure these responsibilities don’t fall by the wayside.
Make Staying Put Easy For Tenants
You can’t always let compassion and empathy run your business, as this can make it easy for certain tenants to take advantage of your kindness. However, it’s important that you make renewing the lease a no-brainer for your renters. For one thing, you should always be respectful of your tenants’ privacy and personal space; never show up without advance notice (unless it’s a true emergency) and be sure that any inspections or other visits take place during regular business hours. Be sure to listen to tenant concerns and do what you can to keep a good tenant around. While you should always exercise caution when screening and accepting tenants, you should make it a point to reject any biases you might have and stick to the facts. Offer incentives for tenants to renew, as well. Even if you need to increase the rent in the coming year, you can offset this by adding a special upgrade or perk to the property. You may also want to provide the opportunity for tenants to renew early and keep their current rent price. Another way to appeal to tenants (and to improve your cash flow) is to allow for online rent payments. Above all else, make sure you’re available to tenants (within reason, of course) and that you foster this relationship. Essentially, you both want the same thing — to rent this home — and you’ll accomplish that goal more readily if you put the effort in.
In 2020, the rental market is poised for growth. Thanks to equipment rentals, a booming market, and a higher demand for rental properties, there’s no better time to become a property manager. But success isn’t guaranteed without hard work. With these tips in mind, new (and established) landlords can have a truly profitable new year.
We spoke to a Denver real estate investor about the importance of being a great landlord for your tenants. Shaun, an investor, who has been buying houses in Denver for over a decade stated “I believe many landlords focus too heavily on the cost of damage instead of considering the cost and benefit of happy tenants. Now a balance has to be drawn between the two, of course. However, spending a little to keep a good tenant in your rental property is an investment well worth it. For example, we recently did a rent renewal upgrade that cost us $1700.00. This is may seem like a lot of money and it is. However, it was a well-thought upgrade that adds ongoing value to the house, improves the quality of living for the tenant, and ultimately keeps everybody happy and by this I mean rent is paid on time every time!”