4 Easy Ways to Increase Profits and Your Rentals

Cha-Ching! It’s the first week of the month and time to cash these checks. It is not always easy, but I love owning rentals; especially now when rents are through the roof. The challenge now is finding property to buy. If you were lucky enough to pick up a few properties the last few years you are likely doing very well, but maybe you could be doing even better! Here are four ways to do even better on your rental portfolio.

Consider renting extra space separately. There is a tremendous amount of upside in this. Garages immediately come to mind, but I have also rented storage sheds separately and have heard of people renting sections of the lot for horse boarding or additional storage.

I have a property now that I rent the garage out separately. It is a two car garage that I rent for $200 a month. This one strategy increases my revenue by 10% and there is little to no expenses with the garage lease, so it actually increases profits by more than that!

Rent extra items. I have heard of rental property owners renting out items such as TVs, computers, or furniture to increase revenue. I have not done that, but I have rented washer/dryers separately. Washers and dryers tend to break down so I will never include them with my rental units. If I buy a property with a washer/dryer or I get one from a tenant that has moved out, I will typically either offer it to the tenant for free or rent it to them. Obviously, renting the washer and dryer will increase the monthly cash flow, but you will be responsible if something goes wrong. It could increase your headache, but it will also increase your profits. If the tenant does not want to rent them from you, you can offer it to them for free or you will want to remove them. The last thing you want is the responsibility of insuring the washer and dryer works without any income for the additional hassle.

Bill tenants for utilities. For some reason this was a hard one for me to do. I was taught early on that I, as the landlord, should pay for the water. The argument is that water is the one utility provider that can lien your property for nonpayment. Although that is true, it still makes since to have the tenant pay water. The worst case is the tenant does not pay and you have to.

In my market, it is becoming more acceptable to ask the tenant to pay all utilities, so why not give them what they expect? The two benefits are increase in cash flow for you and they will use less. I just spoke to Travis in my office about this. He has a tri-plex that had extremely high water bills. He was having trouble figuring it out and was paying that bill each month as the landlord. This was cutting into his profits by more than $300 a month!! The solution for him was to pay a company $2,500 to put in a system to individually meter each of the 3 units. Within one month, he discovered that one unit was responsible for most of the water usage and discovered that they were growing marijuana. Those tenants were asked to leave and were replaced with a much better tenant saving Travis over $150 a month. His next step will be to start sending invoices to each tenant for their water usage, which will increase his revenue by another $150.

Reduce turnovers. This one might sound obvious but is often overlooked. Turnovers can be very expensive. In fact, it is not uncommon for one turnover to ruin your profits on a unit for two or more years. The cause includes loss rent, marketing for a new tenant, repairs, and more. Reducing turnover can be complicated. Here are just a few ideas to help.

Screen tenants – This is the single best way to keep your turnovers low. It is extremely important to get quality tenants, and the only way to do that is to screen them properly. Obviously credit and criminal checks are essential, but it is also a good idea to interview your prospect about why they are moving and why they want to rent from you, call references, insure they can afford the rent and utility payments, have a stable drama free lifestyle, take care of their stuff (look in their car when you meet them), and have an emergency contact that will help them if they get into financial trouble.

Smaller rent increases – In a hot rental market like we are in, it is challenging to keep up with the pace in which rents are rising. Often times rent in the area is going up faster than I can raise the rent, which is a very positive thing. The reason this occurs for me is that I do not want to increase rent more than a tenant can afford. My experience is that if the tenant cannot afford the rent increase, they will not tell you. They will attempt to make it work and will eventually fall behind, creating a costly turnover. It is much better, in my opinion, to work with your tenant with reasonable increases and keep them happy and paying their rent each month.

Maintenance – I just had my maintenance team go out to a rental to unclog a shower drain. I got a bill for the service for $125. On the invoice it mentioned that he found hair in the drain. Why is it my responsibility to clear a drain that the tenant clogged? Well the answer is… it’s not. My lease states that I am not responsible for any clogged drain, so when I got the invoice I created an invoice that I sent to the tenant with a copy of the lease and a copy of the invoice I received for the maintenance call. I just got the $125 check in the mail today. Now the tenant is conditioned to take better care of the unit because I am not paying for issues they create.

The other thing about maintenance that has worked really well for me is to take care of items that I am responsible for right away. I do not delay at all. When I get a maintenance call, I will get my team on it right away. The tenant will normally hear from the person scheduled to fix the issue the same day. This has really helped me keep tenants. I have had tenants tell me several times how much they appreciate that. It is not uncommon for a tenant to ask me to rent them another place when they decide to move, and it is also not uncommon for me to hear that a tenant stayed longer than they wanted simply because I took care of them.

First Time Renter? No Chance!

We have all heard, “we only employ people with experience”! Well, the same principle applies to property rentals.

It is not uncommon for a landlord to say that they do not want first time renters; mainly because we have no way of verifying how they will be as a tenant. It is important to appreciate, if you are a potential tenant, that being a good tenant isn’t just about paying the rent on time (that part is easy for us to determine), it’s about much more. Most astute landlords are more concerned about having a good tenant who is looking after their valuable asset; is the tenant looking after the property well? It’s also important for a landlord to be comfortable in the belief that they will not get monthly maintenance requests for items that could easily be carried out by the tenant. All these factors come into play for a landlord when choosing a tenant.

Clearly the only real way we can find these things out is through carrying out a rental reference with the previous licenced agent (not a private agent or private landlord).

But don’t worry, as a first time tenant, it’s not all doom and gloom. Every tenant has had to rent their first property, and many landlords are prepared to give them a go. That said, there are a few tricks that can assist in securing your first rental tenancy.

Pay above the price

This sounds blunt, but it’s a simple concept for investment, “the higher the return, the higher the risk” this applies to all asset classes – yes, even rentals. By offering a few dollars more than the advertised price you maybe able to forward the argument that the landlord is making a little more in rental income, so maybe the landlord will be prepared to accept a little more risk by taking on a first time renter.

Use your strengths!

In addition to the tip above about meeting the property manager, be sure to tell the property manager a bit about yourself. Obviously if it is a busy “open for inspection” this will be hard, so maybe wait until the end when the crowd has dispersed. What sort of things should you mention? if you are from the country, are you a member of a community group, do you play local sport, connections to the area, etc. Any activities at all that you think may help spark the interest of the property manager. After-all, we are all human so show your human side.

Meet the Property Manager

Make sure that when you attend an “open for inspection” don’t just sneak in and out without saying anything, make sure the property manager (hopefully the person doing the inspection) knows who you are and that you have engaged with them, and please smile! It doesn’t cost a cent to smile and be friendly. If the property manager is not at the “open for inspection” try to find an excuse to meet them (don’t just drop into the office unannounced though), maybe call to arrange an appointment if you can. It will be the property manager who will go into bat for you; so if the Property Manager knows you, and the Property Manager has good relationship management skills and experience, the landlord will take their opinion and advice on board when choosing the property’s next tenant.

Be sure to add a cover letter

Oddly this only seems to happen with people from the country (yet again highlighting the good folk of the land) but a short few paragraphs with the application, best sent separately or dropped off by hand (finding that excuse to met the property manager) just saying a little bit about yourself. Write a letter that is like a brief CV, and remember to make sure that your cover letter has the actual property address you are applying for clearly noted at the top of the page.

Try to avoid a private landlord

Sure you may think that you are building a solid rental history, but the fact of the matter is private landlords are not taken seriously as a quality rental referee. They may not even be real people as far as we are concerned, not only that there could be a personality clash that would not reflect accurately as a rental reference or many other potential issues. I, for one, won’t bother ringing private landlords for a reference because I just can’t sufficiently verify their bone fides.

These are just a few small tricks that can help get you across the line and into your first rental.

Truth be told, it comes down to “fit” – are you going to be a good fit for the particular landlord? Often that question can really only be determined by the “gut feel” of the Property Manager, so be sure to go out of your way (without stalking of course) to befriend a Property Manager – she or he will be your greatest ally!

Good luck and happy renting! And don’t fear, like tenants, most landlords are great people too, and with some coaching by your Property Manager, they will be prepared to give you a go!

Best Three Tips To Find Your Rental Property

With the rising cost of properties, It has been harder than ever to buy a new home. Of course, people cannot do without a roof, and there comes the choice of rental properties. Finding the right home isn’t going to be easy, especially in US and Canada, where landlords are charging insane prices for almost every single home. As a smart tenant, you have to go a step ahead and decide on certain things before narrowing down to certain choices. In this post, we will talk of some of the things worth considering before you find your rental property.

Start with an online check

Gone are times, when you would need to spend hours on the weekend trying to find ads for rental homes! Thanks to the internet, things are much easy today, and you can find some amazing sites that enlist rental properties for most states and areas of US. You can check properties based on your needs, and it is very easy to sort a few options. Some of the sites connect the tenants with the landlord directly, which makes the process of negotiation and discussion much easier. Just make sure that you choose the right website, which has plenty of properties.

Check the budget

It is essential to have a budget for your home, but don’t set an amount based on your whimsies. There are always a few trends in the rental market when it comes to prices, and hence, you should spend some time researching on the same. Make sure that you check for the actual rent, added expenses if any and other long and short term expenses. Typically, rental sites can give you a good idea of how much you may need to shell for a particular type of house, but you can also check on other sites too.

Know what the lease means

Many tenants don’t read rental agreements in detail, and that can have serious consequences. There are usually a few things that you should note. The first thing is the length of the lease, which should be clearly mentioned. Secondly, you need to check for deposit requirement, and how the landlord is going to deal with the refund when you move out. The third part is property maintenance, and you should know if there are any expenses that are payable every month.

Also, not all home owners allow pets, so if you intend to bring your pooch home, always discuss the same. Sometimes, homeowners and landlords don’t allow changes in the house, like adding of special lights and painting, and hence, you should talk on the same. If you are going to have roommates, you need to know the arrangements with them, and the lease sharing clauses, if any.

If you can check for these aspects, it would be pretty easy to find a house that would eventually become a home. Always make sure to talk to the landlord directly, so that there are no misleading facts and talks. Start checking online right now!

How to Get Into the Field of Property Management

Property management is an exciting job that allows you to interact with people. By managing the site, you are responsible for taking payments, writing up lease agreements, hiring maintenance workers, and fielding problems from tenants. For someone who enjoys the day-to-day interaction with people and real estate, it is a good direction to go. So, how do you get into the field?

Education

While there are not many colleges that offer a bachelor’s degree specifically in property management, you can take other routes. By getting a degree in accounting, public administration, or business administration, you will have a head start on what you need to know. Earning your real estate license in the process gives you valuable information that will help you in your career.

No matter which path you take to earn your degree, there are a few classes you need to take, including courses that cover real estate law, leasing laws, and financial management. You should complete courses in bookkeeping, too. A certificate course that covers multi-tenant housing and government-assisted housing is also beneficial.

Licensing and Certification

In some areas, to be part of a successful property management team, you may need a license or certification. This requirement varies by state, so you should check with your state’s real estate board for specific requirements. If you are required to have a certificate or license, you will have to renew it on a regular basis, and you must complete a certain number of training courses each year to maintain that certification.

Even if your state does not require a license to work in this field, you should consider getting a certification. By going through the certification program, you can show potential employers that you have the knowledge needed to perform the job to their high standards. Prior to exams, however, most programs do require you to have some work experience as a leasing agent or assistant manager. Check with the National Apartment Association or Certified Apartment Manager sites to learn the exact requirements.

Career Experience

Once you get your education, you are ready to enter the field of property management. Of course, you need some experience in order to run your own office. You can start by working as a leasing agent for a firm to help gain necessary skills. Smaller groups may even allow you to take a job as an assistant property manager. This allows you to shadow the current manager and learn the necessary skills needed to run your own office in the future. No matter the size of the leasing agency, you need to prove that you understand maintenance and financial management before you will be allowed to be in charge of your own area.