While Donald Trump is often mocked for his perceived arrogance, and his rather unique hair, he’s still achieved something in life that many of us would also like to do- he’s become a true property mogul. It would probably feel great to actually write “property mogul, “ or if you like, “property tycoon” or even “property baron” when you need to enter something in the occupation field of an official form, although becoming someone who owns and develops rather a lot of real estate isn’t something so easily accomplished. While property ownership is no longer the safe investment that it once was, it’s still a relatively stable way to generate funds, whether by purchasing your own home and watching it appreciate in value (and yes, the appreciation is slower and not as much as it used to be), or by purchasing an investment property and renting it out. There are a number of things that you need to be aware of when it comes to renting out your investment property, but by following a few simple tips, you can make sure that you maximize your profit. After all, property tycoons need to start somewhere!
The First and Most Important Step
Perhaps the most important thing is the selection of your tenant. You need someone who will pay their rent in full, on time, as well as someone who will respect the property and won’t force you to invest in costly repairs when they’re gone- so that seemingly nice family who like to breed Rottweilers are probably not the best choice. Place a listing with an online rental database, or even take out a newspaper classified if you’re feeling particularly retro, and wait for the applications to come flooding in. The rental market is rather competitive, and in some parts of the world it can be brutal, so you’re likely to get a wide selection of applicants. Online rental applications are probably easier from your point of view, since you can more quickly respond to applicants and request additional information. Be sure to ask about rental history and employment status, and once you have a few finalists, you might want to invest in a formal background check. The rental authority in your area can refer you to private companies who perform this service, but be aware that you need to get the OK from your potential tenants before you do this sort of check.
How to (Fairly) Increase Your Profits
A furnished property costs more than an unfurnished one, and while the furniture doesn’t have to cost much, it can increase the overall rent, which means more money in your pocket. Any old, unwanted furniture in your main home could fill up your rental property, and you can also find good quality inexpensive items available on sites like Craigslist- and you can sometimes even find things for free. Most apartment buildings charge some sort of management fee, and you can easily pass this onto your tenants, usually by dividing the amount by twelve and adding it to the monthly rent. After all- the tenants are the ones who will be living there! It’s also appropriate to request an annual increase in rent, usually on the anniversary of the tenants lease. This shouldn’t be an exorbitant increase, but a rise that reflects inflation, as well as a small amount extra to reflect the fact that the property only exists to make you money.
We don’t suggest that you take your tenants on a guilt trip, but they’re more likely to look after the property and accept legitimate rent increases if you’re a good landlord, so be available for them and promptly address any concerns that they might have, whether it’s the guy next door who plays bad rap music at full volume until 4am, or a leaky faucet. It can often be a case of scratching their backs, so they scratch yours.
Categories: Real Estate