Even if you just have one property – even if you only have one tenant – your rental is a business, treat it as such! And as business owners, there’s always room for improvement. Here’s a few tips to help get more out of your rental business and maximize your dollars.
Advertise for renters
If you have a rental opening and you need new renters for a place, you’d be surprised how well word-of-mouth marketing works and using your local neighborhood. Post signs in your local neighborhood or Craigslist. Work out of a coworking office like those offered by WeWork which new professionals often use before they have a home base or home office when they move.
One of the things property managers skimp on, especially when rushing to fill a vacancy, is screening. Many people put their life savings towards property investment – you wouldn’t want to hand over the keys to a huge chunk of that investment to just anyone, right? We didn’t think so.
Before you agree on anyone, you need to make sure to get a potential renter’s history, as well as credit and employment records. Personal references are also crucial when you’re screening your applicants.
However, if you’re new to the game you may wonder how to run a background check or credit check on tenants. There’s a lot of options out there – many just a click away – that make the whole process really easy.
Not all screening services are the same, so make sure you do your due diligence and research the best tenant screening services. You’ll want a screening service that vets rental applicants by verifying their identity and delving into their credit and criminal history. Doing a full background check on possible new tenants will help you make better choices about who you let rent your property.
Most importantly, proper screening helps you avoid the hassle of eviction by finding responsible, rent-paying tenants in the first place.
While screening does help prevent turnover (which is one of number one culprits when it comes to lost profit), there’s a few other things you can do to help ensure you keep the good ones around. Mostly, it boils down to appreciation and showing your tenants you care.
Make a note of special occasions. Remember their birthdays and send Christmas cards. Every couple years, offer to repaint and let them choose the color. You should always maintain your property, and make sure you’re available should issues crop up. You may also want to consider offering incentives to tenants who consistently pay rent on time with an end-of-the-year bonus or gift card, or reward those who help fill vacancies.
If you’re renting out a place that includes furniture, make sure it’s cozy and homey. Don’t leave basements unfinished, turn them into another room like a home theater that will increase the overall value of your rental property.
If the apartment you’re renting out to tenants comes empty, maybe leave out a book with interior design ideas that are apartment-safe (no permanent hangings, for example). Small, thoughtful touches make all the difference.
Unfortunately, at some point, you’ll need to raise rent prices in order to keep up with the market and to continue making a profit. No one likes it, but it’s a reality. Every business at one point or another has to adjust cost if they to protect their growth, and the same goes for property. However, this is an area you’ll want to approach strategically. Make sure you have a good understanding of property value and rent costs in your area, which is easy to research online.
You should also make sure you have a solid handle on these values before notifying tenants of an increase. If you raise prices too quickly, or too high, you run the risk of losing loyal tenants. Also keep in mind that you may not be able to raise rent. It’s important you check your local rental laws.
Typically, rent is fixed for the term of lease. Meaning it can’t be raised until the lease is over. Month-to-month agreements differ and usually requires 30 to 60-day notice.
In some areas with rent control, you can’t raise rent at all. Be sure to thoroughly research local and state laws before notifying tenants of a price increase.
Draw the line
For the sake of your business, it’s really important you treat tenants as your customers and not like your drinking buddies. Sure, it’s human, and natural, to make connections with people and to build relationships over time. Especially, if you have long-term renters.
But unfortunately, it’s easy to blur the lines when it comes down to money. In a bind, such as a lost job, sudden illness or other circumstance people may ask for exceptions or extensions. This could quickly become an awkward situation when you have to say, “no.”
Outline the rules: make sure your lease agreements clear outline when rent is due, what forms of payment you accept and what happens should they miss a payment. Always enforce your terms and do so from the start.
With these tips, you’ll be on your way to a successful rental business. Properly screen your potential tenants, enforce your lease agreement policies, and practice good landlord behavior to encourage good renters to stick around.