Real Estate Investing Guide: Tips for Newbie Landlords Looking for Tenants
So you’ve finally finished the renovations of your first income property and you’re ready to stage your units for show? You’re now entering the better side of the project - finding tenants and finally collecting that monthly income. However, getting to this latter stage is not going to be so easy. You first need to find the right tenants to ensure there won’t be any issues in the long-run. Then you have to plan for maintenance and similar problems. It’s going to take quite a few steps before you can sit back and enjoy passive income. With that said, here are a few tips to help you ease this process as much as possible.
#1 Determine Your Rental Price
The first step should be determining your rental price. If you’re not sure how much you should charge the tenants, here’s what you should keep in mind. Your monthly costs to run the rental property should be easily covered by its income. On top of that, add your mortgage payment and additional expenses such as HOA fees. This should give you a good idea of how much you should charge per month, given that you should leave some room for profit as well. Then, do some research and find out what the comparable value is, that is, how much do other rentals cost in your area (preferably the ones that are most similar to yours). It is important to find the right balance here, as the price will be the main factor that draws tenants in. However, don’t go too low to the point where you won’t be able to make any profits.
#2 Preparing for Tenants
Preparing your property for tenants means ensuring its conditions are ready for occupancy. In other words, the property needs to be fully functional and also appealing to potential renters. This step should include fixing any minor (or major) issues with appliances, electric and heating systems, and other amenities. You also need to ensure that you’re complying with the local zoning laws and that the property is aesthetically pleasing as well. Check whether all amenities and utilities are working and that the property meets the right safety standards and state housing codes. Don’t forget that you should have smoke detectors and CO2 detectors in place as well.
#3 Insure the Property
While home insurance may seem like another extra expense, it is one of the best investments you can make for your property. Keep in mind that the process of insuring a rental property is different from the process of insuring a house that you live in. Hence, you will need to look for landlord insurance policies that align with your needs. The benefit here is that the insurance will cover most (if not all) of the expenses in case of damage by the tenant. Make sure to research your insurance options before signing any deals.
#4 Do You Need a Property Manager?
While it is totally possible to do all the work yourself, it is good to know that you can get a helping hand at any point. Managing a rental property comes with a lot of work, from handling the basic landlord tasks such as collecting rent and paying bills to responding to problems and emergency cases. If you plan to take on property management yourself, keep in mind that your income from this property won’t be very passive. However, if the budget allows it, you can hire a property manager to take care of landlord tasks such as screening tenants and closing leases, handling finances and collecting rent, arranging for repairs and maintenance, issuing notices, keeping records, and so on. While it is completely up to you, choosing to hire a property manager will give you more time to focus on new projects if you want to be an investor first.
#5 Staging Your Rental Property
Last but not least, once all of these problems are taken care of, it will be time to stage your property. After calculating the rent cost, figuring out whether you need assistance for property management, and ensuring the unit is ready for occupancy, go ahead and stage it for viewing. By this time, you should have all the major issues fixed so the only thing left to do is to set everything up to make a good first impression. Make sure the unit is clean and tidy and that everything is placed neatly in its designated spot. Generally, it is best to stage the interior with neutral colors in order to appeal to a wider range of styles and tastes. If you need help, you can always hire a professional interior designer to give you a hand.