Wanting your first rental property to generate the highest possible returns is perfectly natural. Considering how much capital typically goes into such investments, the desire to see big returns is understandable. However, if healthy returns are what you’re after, you can’t simply sit back and wait for rent checks to pour in. As the property owner, there’s a lot you can do to impact the profitability of your first rental, and if you fail to put your best foot forward, you’re unlikely to be happy with the returns.
Have a Rigorous Tenant Screening Process in Place
If you regularly take chances on unreliable rental applicants, you’re liable to wind up with a property full of unreliable tenants. Needless to say, if a tenant is unable and/or unwilling to keep up with rent, their unit isn’t generating any income – and units that don’t generate income only serve to lose you money. Furthermore, in some areas, evicting tenants who don’t pay rent can be a long, difficult and costly undertaking. So, no matter how dependable or respectable a rental applicant appears to be, you should never forgo the screening process.
With each applicant’s permission, you’ll need to explore a number of areas. For starters, have a look at their credit score. While expecting every prospective tenant to have perfect credit is simply unrealistic, applicants whose credit is abysmal should be regarded with caution. After all, if they’re currently awash with outstanding debt, what are the odds that they’ll regard keeping up with rent as a priority? Secondly, confirm that an applicant has enough income to comfortably afford rent. Many landlords require all applicants to make at least thrice the cost of rent each month, although depending on how expensive rent is, such an expectation may make it very difficult to find tenants. If an applicant makes an insufficient amount of money or lacks consistent income altogether, require them to have a dependable cosigner.
It’s also in your best interest to look into applicants’ criminal backgrounds. While being convicted of a crime shouldn’t necessarily prohibit someone from being able to rent from you, it’s important to take the nature of the offense(s) into account. For example, if an applicant was convicted of a crime that could compromise the safety of other tenants and/or the property as a whole, taking a chance on them may not be a good idea.
Be Vigilant About Property Maintenance
Staying on top of property maintenance is essential to protecting your investment. For one thing, the more vigilant you are on the upkeep front, the less likely large – and costly – maintenance issues are to come about. Adopting a proactive approach to property maintenance may strike you as cumbersome, but it will save you a considerable amount of time, money and hassle down the line.
Good property maintenance can also go a long way towards keeping tenants happy. Few things irk renters more than property owners who regard maintenance requests as afterthoughts, and if you have a habit of doing this, you shouldn’t be surprised to see your renter retention rates drop. Furthermore, a general indifference towards maintenance stands to make the property less safe and potentially place you in legal jeopardy.
If you’re looking for a crash course in property maintenance, get in touch with a knowledgeable real estate investment company. In addition to educating you on the ins and outs of proper maintenance, the right company will be able to answer any other real estate-related questions you might have. For example, if you’re curious about crypto vs real estate, these would be the people to ask.
Make Sure You’re Accessible to Tenants
Unsurprisingly, renters don’t like forking over a sizable chunk of their monthly income to landlords who are inaccessible, uncommunicative or generally unprofessional. To help ensure that you’re able to maintain favorable relationships with your tenants, make sure to provide each of them with a phone number and email address at which you can be reached during normal business hours, as well as a number to call in event of an emergency that occurs after-hours or over the weekend. Furthermore, if you have an office on the property, consider enacting open office hours, during which tenants will be able to voice questions, concerns and grievances in person.
Given how much money goes into the average rental property, the desire to see massive returns is perfectly understandable. However, no matter what kinds of amenities a property has to offer or how desirable its location is, expecting the property to generate income on its own is pure folly. If you truly wish to see this property become an effective vehicle for passive income, you’ll need to play an active role in bringing this about.