The winter months are often a quiet time for rental property owners. Because fewer people are moving during this time, it affords landlords an opportunity to catch their breath, and reflect on the overall health of their rental property business.
What can you learn from this year’s experiences? Are there ways to improve your rental business and thus increase your profitability?
Here are some questions to ask yourself:
Is your property vacant now?
If so, consider whether your leases mature at the wrong time of year. October through December rentals have a disadvantage because of a limited number of available prospective renters.
This strategy may seem wise. After all, yours is the only unit being offered, so everyone will apply. But the fault in that reasoning is that those people are moving at a time that throws their motives into question. Is this applicant breaking his or her current lease? Are they being evicted? Have they been rejected for other properties? Are they simply not yet ready to move, but trying to plan too far ahead?
If your vacancy is unplanned, it’s likely that you have had to struggle with a problem tenant. This is when the cumulative cost of renting to a bad tenant becomes apparent. One bad tenant can cause an alarming financial loss. If you’ve had more than your share of these problem tenants, it may be time to review your tenant screening policies. Are you running tenant background checks? Are you speaking with previous landlords to investigate your applicants’ rental history?
Did you have late-paying tenants?
This problem is so pervasive that some landlords believe it is inevitable. But it is possible to adopt policies that limit or eliminate this nagging problem.
If you haven’t already, look into electronic payments so that rent is transferred automatically each month. It may help to send invoices or email reminders each month. You can also encourage on-time payments by setting the tenant up to Report Tenant Pay Habits. A history of on-time rental payments will earn tenants a good credit history and a Certificate of Satisfactory Tenancy that they can provide to their next landlord.
A policy that is lax when it comes to the first late rent payment can encourage more late payments down the road. Understand what your rights are as a landlord when it comes to late rent. For instance, you may be able to serve the tenant an eviction notice after just a few short days. Allowing the tenant to remain in arrears, or accepting a change to the payment requirements sometimes only prolongs the inevitable eviction.
When you go to lease your property, do you get an avalanche of applicants, or a trickle?
Surprisingly, either is a problem. Too many applicants is a sign that you may not be prequalifying renters in your ads, which is going to be a tremendous time drain. It may also show that the rent you are offering is too low for the market, which will cost you profits for years to come. Make sure your ads contain specifics about your rental policies so that prospective renters can match their qualifications to the property. Provide enough detail that the applicants can “self-qualify” if they can pay rent, and accept the other terms and conditions.
On the other hand, too few applicants leaves you few choices and landlords run the risk of accepting a so-so applicant rather than endure a longer vacancy. If you have ever rented to a problem tenant, you will understand that this choice can cause significant losses.
Analyze your policies starting with advertising. Do you rely on just one source? Have you experimented with others to see if there may be a better option? Free ads are attractive, but do not necessarily offer the widest publication. Many online rental listing services now offer incentives to tenants that encourage more views, and offer a more targeted demographic of applicants.
Is it possible you are eyeing an applicant pool that is too narrow? Many landlords envision an “ideal” candidate for the property, and by doing so, discount other perfectly fit tenants. Consider any applicant who can demonstrate sound financial sense, a good rental history, and the ability to get along with others.
Have your tenants lodged complaints about the condition of the property?
Cost-effective upgrades and maintenance are an integral part of the overall health of your rental investments. Do you have a long-term strategy for making upgrades?
Turnaround costs often tax a landlord’s budget, and must be kept in check. If you find that even your good tenants are causing extensive wear and tear, it may be time to look at damage-proofing your property. For instance, our previous blog post, How to Reduce Wear and Tear on Your Rental, provides some tips for preventing costly mishaps during moves.
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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.