Keeping score is a good thing, especially when it comes to evaluating your potential rental profits.
In the rush to fill vacancies or get through a one-year tenancy, it’s easy to lose sight of long-term goals. But there’s always time to step back and review your landlord policies to make sure you are maximizing your rental’s profit potential long-term.
Here are a few points to consider:
1. Is the property a good fit? A property that is not in good condition due to structural flaws or previous neglect is an uphill battle to use as a rental. Even with a low vacancy market, the better tenants are not going to tolerate a property’s poor condition — at least not for long. Tenants may move in, but will soon become unhappy. Disgruntled tenants may report the property to local officials, or stop paying rent. Persistent tenant complaints, legal disputes, and the possibility of fines make it untenable to invest in such a property long-term. If the condition cannot be fixed for what you are willing or able to put into it, it may be wise to sell the property, and try another.
2. Are you finding the time? Managing a rental property takes work. If you have been able to drop your other responsibilities from time to time and manage repairs, then the property will remain a good investment. But if you find that you are having a hard time balancing your time, the condition of the property is going to suffer. As the property slips, so will the quality of the tenants you can attract, and your costs will spiral. If you are in this situation, one easy work-around is to hire a property manager to service the property, at least for awhile. You can always goes back to “hands-on” once your schedule clears.
3. Do you have a long-term maintenance plan? Can you bring the property offline from time to time for a maintenance overhaul? Planned vacancy is a profit-boosting strategy used by the most experienced property managers who recognize the need to periodically add upgrades, which will generate higher rents in the long-term. They also find that vacant periods afford the best opportunity to perform needed work without disturbing tenants. Landlords with properties subject to rent control or caps on rent increases may have a harder time performing maintenance and recouping these costs without long-term planning.
4. Are you keeping up with current rental laws? From discrimination claims to dispute resolution, following the local tenancy laws is a profit imperative. A legal dispute can wipe out rental profits in one fell swoop. Often, the same mistake has been repeated with many tenants, so more claims may follow. Understanding the tenancy rules is the first step. Watching for updates is the next. Do you know where to find your local tenancy rules? Are you taking the time to network with other landlords at your local landlord association? These groups offer everything from landlord training, to rental forms, to support and advice when things get sticky. Learning from other landlords’ mistakes is time well spent.
5. There’s no doubt that consistently filling vacancies with great tenants will boost every landlord’s bottom line. But sometimes, in the rush to fill a vacancy, landlords may overlook the real value of a good tenant. It’s not just the benefit of on-time rent and having the property returned in fairly good order. The true value of a good tenant is measured by what a landlord doesn’t have to spend — on eviction costs or dispute resolution, on rehabbing a property or collecting unpaid rent. In addition to offering tenant screening tools, Tenant Verification Service provides free property management articles on our blog, including tips on tenant screening.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.