The old axiom about real estate is that no one’s making any more of it. While the enterprising engineers of the Netherlands may be trying to test that rule, the fact remains that the relative inelasticity of real estate makes it a highly lucrative venture for property owners in search of renters. Whether you’ve made a complete career change, you’re looking for supplemental income, or you’ve taken a new tack with saving for retirement, owning and managing a rental property brings about a host of new responsibilities. Here’s what first-time rental property owners need to know as they embark upon a new career in real estate.
Don’t Rent To Just Anyone
While your conscience may tell you to be forgiving and permissive to those in search of a place to live, the cold, hard realities of property ownership dictate that you take a dispassionate and analytical approach to tenants—even those who tug on your heartstrings. To protect your sizable investment, require thorough credit and background checks of prospective tenants, along with a rigorous and ongoing pre-screening process. At the same time, be ever mindful of fair-housing legislation, and never invite the possibility of litigation due to perceived discrimination.
Leave Cleaning Between Tenants To the Pros
While new tenants deserve a clean slate, you don’t deserve to do the difficult work of cleaning up someone else’s mess. Overseeing property is deceptively stressful work, and deferring to the experts when it comes to thorough cleaning will help you cut down on the pressure you’re under. Contracting with professional cleaners means you won’t have to store a full complement of cleaning supplies dedicated to cleaning your rental units. Best of all, it keeps your pre-move-in weekend free.
Put Everything in Writing
Just because you don’t have a storefront or a shelf full of inventory doesn’t mean you’re not running a business. As such, you’ll need to keep meticulous records of your operations and refrain from relying on handshakes or oral agreements. Make sure your tenants sign written rental agreements, and keep all documents on file.
Find the Price-Point Sweet Spot
The art and science behind putting a price tag on your place is something first-time rental property owners need to know how to do. If the rent is too high, you could face long periods of non-revenue-generating vacancy that defeat the purpose of owning the property in the first place. Conversely, if the rent is too low, you risk devaluing the unit and inviting tenants who ultimately prove problematic. Use property calculator tools and extensive research to find exactly what your unit is worth.