Considering how much money you’re liable to spend acquiring a good rental property, it’s only natural that you’d want this investment to generate healthy returns. And if you think that you can simply purchase a nice rental, sit back and wait for the rent checks to come rolling in, you’re likely to find yourself in for a rude awakening.
Although good rental properties can function as longtime sources of passive income for their respective owners, you’ll need to put in a fair amount of work before you’re able to reach this point.
Understand How to Add Value to the Property
If you’re looking to make your rental as desirable as possible, you may need to spend money to make money. For example, if the property in question is very old, certain repairs and/or renovations may be necessary to garner interest from prospective tenants.
So, in advance of making a serious offer for the property, take care to have it professionally inspected. This will ensure that you know exactly what you’re getting should you decide to go through with the purchase.
Before proceeding to get started on any paperwork, obtain contractor estimates for any work the inspector strongly recommends or deems necessary, as this will give you a good idea of how much you can expect to spend getting the property in shape.
Depending on how much this work will cost, you may deem it wise to amend your offer or walk away from the deal entirely.
Even if the property in question isn’t in desperate need of repairs or renovations, renovating and adding certain amenities may prove conducive to increasing its value.
If you’re eager to learn more about how to add value to a rental property, get in touch with a knowledgeable real estate investment company. Seasoned pros should be able to answer any questions you have concerning core, core plus, value-add, and opportunistic real estate investments.
Make Maintenance a Top Priority
As a property owner, there is no upside to placing maintenance requests on the back burner or ignoring them outright. For one thing, it’s likely to anger tenants, many of whom won’t hesitate to post their thoughts online, potentially harming your professional reputation.
Secondly, depending on the scope of the issue, ignoring it stands to compromise the livability of the property and potentially even place you in legal jeopardy.
With this in mind, you’ll need to make maintenance a top priority. This entails hiring dependable maintenance personnel, processing requests in a timely manner, and compensating tenants who are severely inconvenienced by certain issues.
For example, if a tenant is dealing with a maintenance problem that impacts their quality of life, a discount on that month’s rent may be in order.
Screen Rental Applicants
Without tenants who are able to keep up with rent, your property is going to have a difficult time generating rental income. Furthermore, depending on where the property is based, evicting tenants for nonpayment of rent can prove exceedingly difficult.
As such, you stand to save yourself a tremendous headache by properly screening every prospective tenant who submits a rental application.
So, with each applicant’s permission, take care to look into credit history, current income situation, and criminal background. When it comes to credit history, it’s unrealistic to expect every applicant – or even most applicants – to have flawless credit.
However, if an applicant is saddled with a copious amount of unpaid debt, this should give you pause. On the income front, many landlords require applicants to make thrice the cost of monthly rent. Of course, depending on the cost of the rent and the area in which the property is based, this may not be realistic.
Additionally, while a criminal conviction needn’t necessarily tank an applicant’s chances of approval, you may want to think twice if the crime(s) in question could pose a threat to other tenants or the property.
If you’ve never owned or managed a rental property, you’d be fully justified in believing that all rentals represent solid moneymakers. However, as is the case with many other types of investments, no rental is guaranteed to generate healthy returns – regardless of where it’s located or how many amenities it has to offer.
Helping your rental succeed requires a tremendous amount of work on the part of you and your team members, and if you opt to shirk this responsibility, you shouldn’t be surprised if this investment proves less-than-profitable.
