Commercial real estate is one of the few steady and growing investments at the moment. When so many people have to delay or discard their dreams of home ownership, rental properties become more lucrative. However, owning a rental property means you have to be more than an investor or owner – you also have to manage the tenants and property. You're now a landlord.
Whether you are jumping into the business of being a landlord or looking to sharpen your skills, the responsibility is no easy task. Along with initial renovations, necessary repairs, and maintenance, the process of interviewing, screening, and managing potential tenants can be a difficult mission.
Screen Tenants Before They Move In
Screening tenants is a critical portion of making sure you turn a profit. Even if the tenant is ready with a deposit in hand to sign on the proverbial dotted line, it is essential that you screen them first.
Run a credit check. Look for any late or missing payments or any negligent accounts. This gives you an accurate picture of their responsibility and ability to handle rent and turn it in on time.
Then check their criminal history. Any committed offenses should be considered. Next ask yourself: “Does their history indicate that they will be irresponsible with you or the property? Will they disrupt their neighbors?”
After that, call their referrals. This can be difficult because you cannot verify the legitimacy of the referral. Nevertheless, if it comes down between two applicants, you may want to hear from a source who can attest to the candidate’s reliability and trustworthiness.
Enforce the Lease Terms
When the tenant or tenants sign, they are bound to the contract. So long as the terms are within federal, state, and local law, the tenants must comply or they can be evicted or be taken to court. Despite the power of a contract, many landlords make the mistake of not holding tenants to it. Unfortunately, it is not always enough to have good faith in your tenants that they will have integrity and follow the contract.
There will be times throughout your landlord career when you will have to enforce your authority. You have to remember that the people are not your friends but your tenants. You are running a business, and a business cannot be run efficiently without the tenants’ responsible participation. This is also important for your protection—if they disrespect your property, you can find yourself in financial ruin.
More often, you will run into the problem of paying rent. While not all tenants will be an issue, there may be some, over time, that will need to be firmly held to the lease terms. Again, avoiding renter payment problems can be tricky because you want to maintain decent relations.
However, if you allow late payments without some sort of penalty or fee, they may take advantage of you in the future.
Tip: treat this relationship like a business instead of a friendship, and you will have an easier time exerting your authority.
Balance Your Real Estate Income
Managing your own real estate rentals can be a full-time job, and you may not be diversified across property types or regions. That puts your income at risk of tenant problems and larger market crashes.
The best way to balance these risks is to also invest in real estate crowdfunding through different platforms.
Real estate developers and other investors offer their projects on real estate crowdfunding sites. The platforms have analysts that verify the properties and the developer’s history, with only about 5% of submitted deals making it in front of investors. Investors can then pick which deals in which they want to invest, usually as little as $1,000 per deal.
Besides the opportunity for professional management of your investments, crowdfunding allows you to diversify your portfolio with deals in different property types and across the country for a fraction of the cost it would take with direct ownership.
Make Repairs as Soon as Possible
If you have good tenants, you will want to keep them happy. This means, among other things, being timely with repairs. If your tenant calls or emails you about a leaky faucet, or a broken radiator, it is best to get it repaired within the week. If possible, some issues, like plumbing, will need to be taken care of within the day.
Prevent poor relations with your tenants by showing your urgency to fix problems on the property. In addition, offer services that will help maintain the property. For instance, offer gardening services if you have tenants in one unit with a yard. If you offer services such as these, you can raise the rent so that they can enjoy the luxury of living in a place that's well taken care of.
Resolve Conflict With Tenants
One of the best ways you can improve your effectiveness as a landlord is to work on your communication skills. At times, there may be a conflict between the tenants within the unit, disagreements between tenants in multiple units, or various other conflicts you will have to manage. In order to solve these skirmishes, you will have to communicate with all members involved to come up with a reasonable solution.
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This article was produced and syndicated by Wealth of Geeks.
source https://wealthofgeeks.com/effective-landlord-real-estate-investing/
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