The biggest mistake that I see when investors buy a property is that they think it needs an elaborate renovation. Before attempting any work you should see how much it is going to improve your income (are you going to be able to charge more rent from these improvements?) and how long it will take for you to get your money back on the improvement.
If you are in a certain area where the houses are all alike then it might not be worth adding what you think the tenants may want. More often you will find people are satisfied with the way the house is built and there is no need for renovation. Most are looking for affordable rent, a clean environment, and working plumbing.
I would suggest if you are thinking about renovationing you might wait till you find a good tenant to work with. You can tailor their needs around the renovations and not what you would want if you lived there. This will also encourage the tenant to stay in the property longer and have a better relationship with the landlord.
Review Your Outgoings
Are there repairs that you could do yourself without hiring a repairman? Most everyone can change batteries in a smoke detector or light bulbs.
At some point the property will be vacant while you are finding a new tenant. A quick advertisement in the local newspaper and a “For Rent” sign in the yard of the property will usually generate enough calls.
The most important expense at this point is tenant screening. To offset the cost you can charge a fee to perform a credit check. You can get references but from my experience you have to be very careful with these.
I had one renter who told me he worked at a factory and gave me his supervisor’s number. Everything checked out – he had a great paying job and been there for many years. After a few months and the rent wasn’t paid I found out the reference he gave me was his brother. His brother did work at the factory and was a supervisor but the tenant never worked there (or anywhere else).
What is the cash flow of the property?
A good rule to follow is that you want the rent to cover your expensives on the property. If you’re digging deeper into your pocket to support your habit of being a landlord then you might have a problem.
- Always make sure the new tenant puts the utilities in their name and you call to have them taken out of yours.
- Set a time to inspect the property with the tenant. I would recommend about twice a year. Many tenants don’t call their landlord about leaking roofs etc until you have a major problem with major expense- they think if you are putting money into the property then you are going to raise the rent.
- Every year have the furnace/space heaters cleaned and inspected
Your landlord responsibilities should include providing a safe, smoothly functioning home for your tenants. That means, for example, making sure plumbing, wiring and appliances function, outdoor areas and stairways are safe.
If you must evict do your homework. Make sure you are following the law and consult a lawyer if necessary.
You have to be able to smile, walk up to the individual, be polite and friendly. You must be able to treat them like a customer. Many tenants don’t understand that this is income to you and think that you are being unfair when wanting your rent on time.
I would suggest once the eviction process starts that you have no contact with the tenant. You should try to make the eviction go as smooth as possible to prevent damage to the property.
Rental property is a business, and if it’s not a business you like, then it might be time to consider selling.